Rajkot's Silver Artery Sees Unprecedented Upheaval as Prices Swing Violently
At Pedak Road in Rajkot, often dubbed the silver artery of Gujarat due to its dense concentration of silver traders and manufacturers, a profound crisis is unfolding. Arvind Limbasiya, secretary of the Silver Gold Bullion Association in Rajkot, paints a grim picture from his office. "There is just no work," he states. "A bullion trader who previously sold 25-30 tonnes of silver monthly is now barely managing one tonne."
Livelihoods in Peril as Business Grinds to a Halt
The slowdown has severely impacted livelihoods. "We open our office, sit for a few hours, and by 1 pm everyone goes home," Limbasiya explains. "It's a struggle to pay workers. Most wholesalers have let go of contractual staff and are only managing salaried employees. Nearly 1.5 lakh workers have been affected by this volatility." Rajkot, renowned as one of Asia's largest silver trading hubs for its intricate craftsmanship in bracelets, earrings, and necklaces distributed across India, now finds itself at the epicentre of an unprecedented upheaval in the precious metals trade.
Drivers of the Price Rally and Its Devastating Impact
Silver prices, after surging nearly 160% through 2025, have begun swinging violently. This rally was fueled by demand from AI-linked industries, solar energy, and EV manufacturers, compounded by global supply anxieties after China placed silver under rare-metal export restrictions and the US designated it a critical mineral. For traders, the metal's industrial promise has translated into financial whiplash. According to local reports, 44 trading firms in Rajkot have declared insolvency, with settlement differences estimated at Rs 3,500 crore. Manufacturers are struggling to settle accounts, and delays are cascading through a supply chain built on trust and long credit cycles.
Breakdown of a Traditional System
Under normal conditions, bullion traders sell pure silver bars to manufacturers, who convert them into jewellery. Wholesalers then buy ornaments in bulk and distribute them to retailers nationwide, with payment often following delivery and modest price movements absorbed over weeks. This system has broken down due to massive price rises. When prices jump by Rs 30,000 in a single day, the gap between delivery and payment becomes an unmanageable risk. Wholesalers have stopped placing new orders because, with sales dropping, they cannot pay manufacturers for old orders.
Manufacturers face a triple whammy: inability to buy silver due to price hikes, losses on orders accepted without anticipating rapid raw material cost increases, and a drying up of new orders as retailers have no buyers. Silver jewellery has suddenly become unaffordable for a large segment of India's population.
Trader Perspectives on Market Volatility
Kunal Jagani, a bullion trader in Rajkot, highlights the severity: "One tonne of silver would earlier cost Rs 10 crore; the same quantity was costing Rs 36 crore two weeks ago and is now about Rs 26 crore. How can one do business in such a volatile market?" He notes that while weekly fluctuations of Rs 4,000-5,000 were once manageable, daily swings now reach around Rs 15,000. "No business can absorb that kind of shock. In a year, silver prices usually increased by Rs 10,000, but last December, it increased by over Rs 60,000."
From Assurance to Anxiety: A Shift in Precious Metals Perception
For generations, gold and silver have been India's dependable constants—bought in good years, leaned on in bad ones, and passed down as security and sentiment. However, volatility over the past year has turned that certainty into a source of anxiety. In early 2025, gold traded below Rs 1 lakh per 10g and silver under Rs 1.1 lakh per kilo, allowing the trade to function within familiar rhythms. Then came the rally. By January 2026, silver raced to nearly Rs 4 lakh per kilo, while gold touched Rs 1.83 lakh per 10g, driven by global safe-haven demand, geopolitical unease, and investor inflows.
What followed was equally dramatic: silver suffered one of its sharpest single-day falls in years, plunging over 25%, while gold corrected sharply amid profit-taking and a stronger dollar on January 31. Volatility has since become structural, unsettling a trade built on incremental price movement and predictable demand. As of Monday, February 9, gold prices were Rs 1.59 lakh per 10g, and silver retailed at Rs 2.61 lakh per kilo.
Altered Demand Dynamics and Investment Trends
The rally altered the balance between buying for adornment and safety. Investment demand soared even as physical consumption fell. In value terms, gold investment demand in India rose to Rs 2.97 lakh crore in 2025, up 73% from the previous year. According to the World Gold Council, total gold demand in India fell 11% by volume to 710.9 tonnes, but its value surged 30% to a record Rs 7.51 lakh crore. Jewellery demand told a similar story: volumes dropped 24%, but higher prices pushed up the overall value of purchases.
Uncertainty Grips Mumbai's Zaveri Bazaar
In Mumbai's iconic Zaveri Bazaar, the impact is equally unsettling. Footfall has thinned, negotiations have lengthened, and routine purchases are being postponed. "People come in, check the rate, and step back," says Mithil Jodawat, a jeweller near Dagina Bazaar. "Even wedding buyers are downsizing. Heavy sets are being replaced with lighter, minimalist pieces, or purchases are postponed entirely. Compared to gold, silver is still in demand due to affordability, but volumes have dropped by 50%."
Silver, long considered the affordable alternative, has lost that role. "If one couldn't afford gold, people would at least buy silver. Now, even that is unaffordable to many," he added. Kumar Jain, president of the India Bullion Jewellers' Association, notes that volatility is the biggest challenge. "You quote a price in the morning, and by the next day, it has changed. Holding inventory feels like a gamble now." Although prices have crashed recently, they are yet to stabilise. "Buying has improved a bit because of the price drop, but unpredictability keeps buyers away."
Consumer Hesitation and Downgraded Aspirations
For consumers, aspiration has turned into hesitation. Divya Munot, a buyer who visited Zaveri Bazaar last month, shares: "When I got engaged in October, gold was Rs 1.27 lakh per 10g. My parents had planned to buy two necklaces, four bangles, and two rings. At current prices, we have no choice but to reduce our purchases by half." A group of office colleagues looking for anklets as a wedding gift quickly decided to downgrade to silver. Sabrina Sheikh explains: "We planned a lightweight gold ring or small earrings with our Rs 10,000 budget. Now, Rs 10,000 buys you nothing, so we're shifting to silver."
Many buyers are opting to wait. Vishal Singh, an IT professional, says: "I had saved Rs 80,000 to invest in a gold coin, but I don't know when is the right time. I've been holding on for over two months now."
Liquidity Crisis: The Challenge of Selling Precious Metals
Another problem hitting retailers and customers is the lack of liquidity. Customers who bought silver or gold coins earlier and want to sell them are not finding buyers, as retailers have no money. Nitin Patel recounts: "I had a 500g bar of silver, purchased as an investment a few years ago, and went to sell it in Zaveri Bazaar last week. I visited four shops—no one was buying, and I finally sold it to a trader at a much lower price than expected. What is the point of buying metal as an investment when no one will buy it back when rates go up?"
Jewellers note that many women participate in small monthly deposit schemes, colloquially called 'bhishi', where they deposit a fixed amount monthly for 11 months, and the jeweller adds the 12th instalment, allowing the purchase of gold at prevailing rates. Kumar Jain observes: "These deposits are small monthly savings. Now, lower-middle-class or even middle-class women are not getting a half-decent pair of earnings at the end of 12 months."
Looking Ahead: A Quest for Stability
Across India's bullion markets—from Rajkot to Mumbai—the question is no longer how high prices will go, but whether stability will return, and at what level. The crisis underscores the fragility of a trade built on trust and predictable rhythms, now shaken by global economic forces and industrial demand shifts.
