Indians are rushing to cash in on their family silver as prices of the precious metal skyrocket to unprecedented levels. A staggering volume of old silver, estimated at about 100 tonnes, flooded the market in just one week, a quantity that typically takes several months to surface under normal circumstances.
Unprecedented Sell-Off as Prices Soar
The trigger for this massive liquidation is the record-breaking rally in silver prices. According to retail data from the India Bullion & Jewellers Association (IBJA), silver touched a historic high of Rs 1,78,684 per kilogram on Wednesday. Although prices corrected slightly to Rs 1,75,730 on Thursday, they remain nearly 20% higher than recent lows. This sharp appreciation has prompted households across the country to turn their idle silver into much-needed cash.
This surge in supply is extraordinary. The domestic market usually receives only 10–15 tonnes of old silver in an entire month. The one-week figure of 100 tonnes represents a seismic shift in market dynamics, driven purely by profit-taking.
Festive Needs and Profit-Booking Drive Sales
IBJA national secretary Surendra Mehta explained that the confluence of high prices and rising household needs during the festive and wedding season is fueling the sell-off. "Profit-taking has played a major role, alongside rising household needs during the festive period," Mehta stated. He added that the wedding season and holiday travel have increased the need for liquidity, leading people to sell their reserves.
Most of the inflow comprises old silverware, utensils, and scrap pieces. Mehta recalled the price trajectory: "During Diwali and Dhanteras, silver hit Rs 1.78 lakh per kilo, then slipped to Rs 1.49 lakh. Now that prices are rallying again, people are offloading the metal to generate cash."
A Stellar Performer and a Lofty Forecast
Silver has been the standout asset of the year, with its price more than doubling from Rs 86,005 per kg in 2024. This performance has overshadowed gold, which saw a gain of roughly 60% in the same period. Analysts believe the appetite to book profits will strengthen further if the climb continues, with many eyeing the Rs 2 lakh-per-kg milestone as within reach.
Naveent Damani, head of commodities research at Motilal Oswal Financial Services, is bullish on the metal's prospects. He believes the current uptrend is far from over as the supply gap widens. Damani forecasts silver to touch Rs 2 lakh per kg in the first quarter of 2026 and Rs 2.4 lakh by the end of next year. He also projected that dollar-denominated prices could move up to $75 an ounce.
The Root Cause: A Persistent Global Deficit
The fundamental driver behind this relentless price rally is a persistent structural shortage in the global silver market. Data from the Silver Institute shows that global demand has outpaced supply every year since 2020. A key constraint is that most silver is not mined directly but is produced as a by-product of gold, lead, or zinc mining, limiting rapid output expansion.
For 2025, mined silver production is flat at 813 million ounces. While Mexico and Russia contributed more, reduced output in Peru and Indonesia offset those gains. Primary silver production is expected to increase by only 3 million ounces to 227 million ounces. Total supply, including recycled silver, is projected at 1.022 billion ounces, which falls significantly short of the estimated global demand of 1.117 billion ounces, ensuring the market remains in a continued deficit.
This combination of record prices, festive liquidity needs, and a tight global supply picture suggests that the silver market in India will remain highly active and volatile in the coming months.
