Mumbai’s iconic Zaveri Bazaar has taken the extraordinary step of halting new silver orders due to a severe shortage of physical metal.
The decision comes as the festive season, marked by auspicious moments like Dhanteras and Diwali, begins, and as precious metal prices touch unprecedented highs. Gold has breached the record mark of ₹1.29 lakh per 10 grams, crossing the $4,250 per ounce mark internationally. At the Multi Commodity Exchange (MCX), silver has seen massive demand, with prices hitting ₹1,64,660 per kg.
The surge in prices and the physical shortage are creating a point of concern for consumers, causing a sense of panic in the market. According to industry experts, the sudden upsurge in physical demand is outstripping available supply. The shortage is not limited to India; countries like Australia, Turkey, and China are also facing similar demand surges, which has created global delivery backlogs.
The price surge is attributed to a mix of global factors. According to Ajay Kedia of Kedia Commodities, the upsurge is due to geopolitical issues, central bank gold buying, and other key factors. He stated that a price correction would only occur in the long run, once global crises are resolved. Regarding the silver shortage, he noted it is due to heavy demand ahead of Dhanteras and strong consumer sentiment.
The high prices are also being driven by strong industrial demand. Approximately 60% of global silver demand stems from industrial use, particularly in sectors like solar panels, electric vehicles, and electronics. This structural demand, combined with a persistent supply deficit for the fifth consecutive year, has led to a market where physical silver is scarce. In Zaveri Bazaar, the premium on physical silver has surged to as much as ₹30,000 per kilogram over the benchmark price.
While the short-term prices will remain volatile, industry experts suggest that in the long run, the fundamentals point to a positive impact. They advise consumers to consider buying in smaller quantities and prioritize certified products, viewing their purchases as a strategic investment. The ongoing volatility and shortage underscore the need for consumers to be cautious and make informed decisions during the festive season.
