Rising silver prices nudge families to unlock value from old silver

Silver, once viewed primarily as a gift or spiritual purchase, is now being seen as a long-term investment option

When silver prices touched an all-time high last week, Ritu Gupta, 45, finally decided to act. She had been holding on to old silver coins and heirloom pieces for years, but the ongoing wedding season pushed her to make a move. "I thought it is a good time to sell silver and plan for the wedding season as we have never seen silver running so high," said Ritu. She converted her old silver into cash, hoping to use the proceeds for fresh purchases.

Ritu's move is part of a trend unfolding across India. Indian households have offloaded an estimated 100 tonnes of old silver in just one week, according to a report by the Economic Times citing Surendra Mehta, national secretary of the India Bullion & Jewellers Association (IBJA). Usually, only 10–15 tonnes of old silver enter the market in an entire month. Mehta attributed this sudden surge to "profit-taking, as well as household demand for cash because of the ongoing wedding season and holiday travel."

The timing makes sense. Silver prices have jumped nearly 137 percent compared to a year ago, when the metal hovered at Rs 76,980 for 1 kg of 999 purity. On December 5 it was trading at Rs 1.79 lakh.

The December 5 Augmont Bullion report noted that “Silver has risen due to concerns about market liquidity, following outflows to US and Chinese inventory, inclusion on the US vital minerals list, and a structural supply deficit.”

Yet even with so much old silver being sold, Indians are simultaneously increasing their silver holdings. Market players say buyers are now moving toward higher denominations. As Samit Guha, CEO of MMTC-PAMP, pointed out, “Current purchasing patterns also suggest that investors are increasing their holdings in silver by moving to higher denominations. Therefore, consumers buying 10-20 grams of the metal are now purchasing 50-100 grams.”

This reflects a shift in mindset. Silver, once viewed primarily as a gift or spiritual purchase, is now being seen as a long-term investment option. Silver ETFs have also gained traction. According to the Augmont report, “Silver-backed ETFs added almost 200 tons on December 2, bringing overall holdings to their highest level since 2022 due to strong demand.”

Interestingly, this buying momentum comes just weeks after the market was grappling with a shortage during the festive season. Gold analysts explain that when consumer demand spikes, it quickly strains supply chains, creating an environment of too much money chasing too little silver.

“We have seen a massive surge in silver prices over the last few days, weeks and months. Largely, it is because of the demand-side pull and the supply-side lag. During Diwali, the market witnessed severe shortage and tightness. After that, it has relaxed, but it continues to hover between $0.50 and $1 (per gram), or more, which is still a tighter market,” said Naveent Damani, Head of Research (Commodities) at Motilal Oswal Financial services Ltd.

For households planning to sell old silver today, the process is more nuanced than simply walking into a shop. Registered jewellers conduct a mandatory appraisal to determine the weight and purity of the metal. Producing original purchase bills makes this assessment smoother. Hallmarking, condition, and the prevailing market price have a significant impact on the final amount paid out.

A Delhi-based silver jeweller, requesting anonymity, noted the trend. "We have seen a surge in selling of silver jewellery given the increase in prices. People selling it as it fetching them good value."