Silver prices surge 33% in 2 years, lead to a dip in jewellery demand

Silver, the poor man's gold, is losing its sheen. Demand for silver statues and utensils has dwindled while the metal’s price has gone up by 32.55% from January 2011 to January 2013.

The price spike has also impacted the demand for heavy silver jewellery among rural folks, particularly tribal women, who have now shifted to lightweight silver jewellery. Suresh Hundia, managing director of silver importing firm, Hundia Exports, said:

“There is hardly any demand in the domestic market for silver jewellery, statues and utensils. High price is the main factor that has led to a decline in demand.” In January 2011, a kg of silver cost Rs 43,000 but this January the price has climbed to Rs 58,000.

This has largely happened because the rupee has weakened against the dollar making silver imports costlier. PK Bedi, owner of Delhibased Pravesh Bedi & Sons which has been into idol business for 35 years, said there was a distinct shift among people from silver to brass and marble statues. “Only a few buy silver statues these days,” he added. There is also a decline in demand for silver utensils.

“Earlier, people mainly from north India would prefer silver utensils for joyous occasions that centred around small children. But that trend is fading out gradually. The younger generation no more prefers this sort of products.

They are interested in silver coins,” said Lalit Jagawat, director, Nakoda Bullion. “Earlier, tribal women used to wear heavy anlets, bracelets, necklaces and earrings. A high price has taken a toll on the demand for these products. Moreover, they have come in touch with the urban crowd and their taste has started changing. They now prefer lightweight jewellery,” said Hundia.