Silver reaches record high, Indians race to withdraw cash!The India Bullion and Jewelers Association (IBJA) estimates that around 100 tonnes of old silver was sold in just one week, which usually takes months to materialise. Under normal circumstances, the domestic market receives only 10-15 tonnes of old silver in a month.The sudden surge in supply has been driven by rising prices, which hit a record Rs 1,78,684 per kg on Wednesday, according to IBJA retail data. Although prices fell slightly to Rs 1,75,730 on Thursday, they are still nearly 20% higher than the recent low, prompting many households to convert the metal into cash.IBJA National Secretary Surendra Mehta said that profit realization along with increasing household needs during the festive period has also played a major role. He said the wedding season and holiday travel have increased the need for liquidity, forcing many to sell their reserves. According to him, most of the influx consists of scrap silverware and pottery fragments.“Silver reached Rs 1.78 lakh per kg during Diwali and Dhanteras, then slipped to Rs 1.49 lakh. Now when prices are rising again, people are selling the metal to generate cash,” Mehta told ET.Silver has had a stellar performance this year, with its price more than doubling to Rs 86,005 per kg in 2024, overshadowing the returns of other asset classes. In contrast, gold has seen a gain of almost 60% during the same period. Analysts expect the appetite for profit booking to strengthen further if prices continue to rise, with many seeing the target of Rs 2 lakh per kg within reach.Naveen Damani, head of commodity research at Motilal Oswal Financial Services, believes that the current rally is not over yet due to widening supply gap. ET reported that they estimate silver to reach Rs 2 lakh per kg in the first quarter of 2026 and Rs 2.4 lakh by the end of next year, with dollar-denominated prices rising to $75 an ounce.Behind the rise in prices is a persistent shortage. Data from the Washington-based Silver Institute shows that global demand has outstripped supply every year since 2020. Most of the white metal is not mined directly but is produced as a by-product of gold, lead or zinc mining, which limits the possibility of sudden expansion in production.For 2025, mined silver production remains stable at 813 million ounces. Higher contributions from Mexico and Russia were offset by lower production in Peru and Indonesia. Primary silver production is expected to increase by just 3 million ounces to 227 million ounces in 2025, while total supply, including recycled silver, is estimated at 1.022 billion ounces. This is less than the estimated global demand of 1.117 billion ounces, keeping the silver market in continued losses.
