By the end of November, India had imported 8,000t of silver – up substantially on the 4,500t taken in during the entirety of 2021.

Traditionally, India’s precious metal dealers have received their gold shipments by air, but their silver normally came by sea.

That made sense due to the relative values per ounce of the two metals (with the gold:silver ratio now at 1:77).

However, such is the demand for silver in 2022 that this metal, too, is now being sent to India by air cargo.

The urgent need to find stocks of silver now is partly explained by the fact that demand was down last year due to Covid restrictions.

But that factor is being superseded by reports that new investment demand is flourishing, especially among the poorer Indians as well younger ones of all levels of economic wealth.

Foreign vaults seeing big outflows

In 2021, India imported about 4,500 tonnes of silver.

By the end of November, the import figures for 2022 was passing through 8,000 tonnes, around a 78% increase (and with a month to go).

The forecast for 2022 was for India to import 5,900t, so those predictions have been left in the dust.

At the same time, London vaults had by the end of September seen huge outflows of the metal.

These diminishing vaults stock levels do not appear to be linked to increased demand in the West. Silver ETF demand has been sidelined, yet there have been substantial withdrawals of physical silver from both Comex and London vaults.

Estimates are that those vaults have seen outflows totalling 400 million ounces (11,340t) so far this year.

Silver is poor man’s gold in India

The surge in imports has been partly ascribed to increased industrial demand, but jewellery offtake is the main consumer of silver in India.

After the US and Germany, India is the world’s third largest consumer of silver.

It has been described as the poor man’s gold, due to the fact vast numbers of people in the country see gold and silver as vital stores of value, but many — particularly in rural India — cannot afford the amount of gold they want in the form of jewellery, so silver is their alternative option.

In addition, Indian millennials — middle class or poor — seemingly favour the cheaper silver, and are not so interested in gold as are the older generations.

Indian small producer of silver

India when it comes to mining silver, is a very minor player. Its mining output annually is just 0.67t.

This compares with the world’s two leading miners of the metal: Mexico with annual production of 6,120t and Peru at 4,160t (and Australia with 1,220t each year).

The country’s largest mine is the Sindeser Khurd operation in Rajasthan, which produced 10,872oz in 2021. It is expected to close in 2027.

Another important mine is Zawar, in the same state, and this is expected to close in 2029.

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