Silver prices traded above Rs 1,00,000/kg on Wednesday on MCX December futures — the most active contract for the white metal — for the first time ever. The December futures saw a high of Rs 1,00,081/kg and currently at Rs 99,000/kg.
In Mumbai’s Jhaveri Bazaar spot market, it was trading at Rs 98,862. In the current Samvat 2080, silver has returned as much as 40%.
In the global market, silver is trading at $34.58 per ounce, a level not seen in 12 years. The all-time high price internationally was $49.84, reached in April 2011.
However, while investors have been rooting for the white metal, the demand in the spot market for jewellery isn’t very high. Given there is a Goods and Services Tax of 3%, silver is selling at Rs 1,02,000/kg. In fact, the demand for silver is shifting from jewellery to industrial commodity.
However, while investors have been optimistic about the white metal, demand in the spot market for jewellery remains low. With a Goods and Services Tax (GST) of 3%, silver is currently selling at Rs 1,02,000 per kg. In fact, the demand for silver is shifting from jewellery to industrial applications.
Surendra Mehta, National Secretary, Indian Bullion and Jewellers Association, said: “Investment demand has been good even at this price but the jewellery segment is becoming smaller and less significant to influence demand for silver.”
Anuj Gupta, head (commodity & currency), HDFC Securities, said that even at these high prices, market players have increased their bullish bets.
This month, silver futures price increased by 9.58% and open interest increased by almost 20% in all silver contracts. As of October 1, it was at 202,000 lots and on October 22, it was at 242,000 lots.
Gupta added that the major demand is coming from silver micro contracts, indicating small and retail investors are buying silver on futures market.
Chirag Sheth, principal consultant, Metal Focus, an international bullion research firm said: “US Federal Reserve’s change in stance is a principal driver, followed by the geopolitical issues is leading to rally in both gold and silver. Industrial buying particularly from solar penal makers has also supported silver,” which is now rising faster than gold.
The gold-silver price ratio which was above 80 has fallen below it and now 78.8 which means silver has risen faster than gold in recent weeks.
Sheth projects a 25-30% return in silver in 2-3 years. Although he said the short term will see volatility amidst profit booking but our target is $43 in 2-3 years.
Even silver imports have been good despite rising prices. Silver price reached the one lakh level even after accounting for a 9% cut in silver import duty in July 2023.
However, in August, silver imports reached one of the highest monthly totals at 1,421 tonnes, followed by 941 tonnes in September 2024. In the first nine months of 2024, total silver imports amounted to 7,090 tonnes, more than double the total for all of 2023, which was 3,475 tonnes, according to Metal Focus data.