Silver set new price records by reaching Rs.89,680 per kg on MCX last Friday, with market prices including GST hitting about Rs.92,000 per kg. Customer presence in the market dwindled due to the unprecedented highs, while futures market investors faced losses. China attributes the inflation to haphazard purchases, speculation, and global circumstances.
The surge in silver prices benefited investors in both MCX and the market, with the futures market's minimum price in January at Rs 72,973 per kg escalating to nearly Rs 90,000 in mid-May, delivering a 22 percent return in five months. In early May, silver on MCX was priced at Rs 80,275 per kg. Silver's heightened industrial use, particularly in electrical and electronic devices, has substantially increased over the past four years.
Given China's significant role as a producer and top consumer in these sectors, the country's indiscriminate silver purchases have surged, coupled with speculative activities. Pankaj Arora, National President of All India Jewelers and Goldsmith Federation, noted that silver's price surge surpasses that of gold, potentially surpassing Rs.100,000 per kg soon.
Inflation has deterred customer participation in the market, prompting suggestions for jewelers to prioritize gold investments over silver for profitability. Vinod Khanna, Vice President of Rudra Stocks and Brokers Ltd., highlighted the price escalation from Rs.70,000 to Rs.90,000 per kg since Diwali, emphasizing the influence of speculation on pricing.