After gold, Indians chase silver

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NEW DELHI: Indians, the world largest gold consumers, are now stocking up on silver to reap better dividends from rising prices, compared to the costlier yellow metal.

Demand for silver, currently traded at about 58,500 Indian rupees per kg (RM4,034), soared across India, as sales hit 600 tonnes until this April, while last year’s total consumption was only 2,800 tonnes.

In the Indian metropolitans, gold was pegged at about 22,820 Indian rupees (RM1,574) per 10g.

“The gold price is too high, so people are buying more silver as it is cheaper and the appreciation higher.

“They are beginning to diversify for investment purposes.

“If the monsoon is good, this year’s total silver demand will be easily between 3,500 and 4,000 tonnes,” Prithviraj Saremal Kothari, Bombay Bullion Association president told Bernama.

India imports nearly 800 tonnes of gold annually and another 3,000 tonnes of silver to meet local consumption.

But gold, which is considered an auspicious item in Indian households, still remains much in demand.

After the scorching summer, Indian farmers are waiting for the wet monsoon to arrive, which means a better harvest and more money in their kitty.

Interestingly, a large section of rural Indians are the biggest buyers of silver.

“Seventy five per cent of rural Indians buy silver, so future demand depends on the monsoon,” added Kothari.

As in the past, demand is expected to spring from rural India, where 65 per cent of the Indian population lives, mostly investing in jewellery.

Indian speculative buyers are piling up on silver bars, jewellery and coins — all easily disposable in the robust Indian bullion markets.

“The silver price rose 100 per cent in one year in (Indian) rupee terms but the gold price appreciated only 30 per cent.

In the next six months we can see about a 16 per cent growth in demand for silver in India.

“Income in rural India has increased due to good monsoons, better production and due to various government employment schemes.

“This monsoon will be better,” Anjani Sinha, chief executive officer of the Mumbai-based National Spot Exchange Limited said.

An increasing number of middle-class Indians entering the silver market plus the introduction of e-silver, where sales and purchases are done online, continues to fuel demand for the metal.

The southwest monsoon rains started to drench parts of Kerala on Sunday, arriving two days ahead of forecast. — Bernama