According to the latest Silver Market Trend Report by Silver Institute, about physical holding of silver trend turning to India, this has typically been the world’s second largest physical investment market, but on occasion has eclipsed the US to hold the number one spot. The country has a long-standing tradition of owning physical silver, typically in bar form. To put this into context, between 2010-2024, cumulative Indian bar and coin demand stood at 840Moz (26,100t).
In a broadly similar fashion to the US, these holdings have generally been quite sticky, reflecting Indian investors’ typically bullish price expectations. However, there have been brief periods when the market has seen heavy liquidations, such as in 2020 when the rupee silver price surged.
Nonetheless, this selling back has usually been short-lived. It is also quite revealing that in the current market, with the rupee silver price hitting successive records highs and breaking through the psychologically important Rs.100,000/kg level the scale of selling back has been surprisingly modest.
This mostly reflects how deeply held positive price expectations are in India, with many investors looking for the international price to revisit its record high in dollar terms. Although this report focuses on bar and coin demand, with regards to India it is worth briefly touching on the exchange-traded product (ETP) market. These were launched there in 2022, but initially struggled to gain much traction.
That, however, has changed significantly over the past 18 months or so, with holdings (as of end-June) exceeding 58Moz (1,800t), a jump of 51% since end-2024. While these ETPs do offer an alternative route for Indian investors looking to gain exposure to the silver market, our understanding is that instead they have served to broaden the investor base by appealing to those already active in the equities market, who typically might not have bought physical metal.
In terms of recent trends, Indian physical silver investment surged in 2022, to its highest since 2015. Although purchases fell back sharply in 2023, they remained historically high in absolute terms. Furthermore, 2024 saw
a modest recovery, helped by the surprise bullion duty cut in July. That led to a step-change down in the rupee silver price, which encouraged bargain hunting.
As a result, leaving aside the 2022 spike in demand, last year’s total was the highest since 2015. This year, we forecast a slight drop as further price gains lead to both profit taking and momentum buying. As such, the full year total will still remain historically high.
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