Diwali, one of the biggest Indian festivals, is approaching with rapid speed, and of course, this means that people are getting their shopping done for it. Usually, this means that most families try to buy some amount of silver and gold.
Both are considered to be precious metals, not only having cultural and religious value but also being seen as a very good investment for a regular person to have. However, it seems that this Diwali, silver of all things might be difficult to come by.
Recent reports suggest that a combination of surging demand, global supply shortage, import shortfalls, and investment mania may indeed be creating a real shortage, especially in India, one of the world’s largest silver consumers.
The impact on the global supply of silver has even resulted in the price of the precious metal hitting a record high.
What Is Going On With The Supply Of Silver?
Silver is seeing an extreme shortage in supply, not just in India, but worldwide. A few days ago, reports came out about how demand for silver on a global level has surpassed supply for the last four years, and as a result, used up the surplus that was collected in the previous five years.
Anant Jatia, chief investment officer at Greenland Investment Management, speaking with Bloomberg, said, “I have seen nothing like it ever. What we are seeing in silver is entirely unprecedented. There is no liquidity available currently.”
This resulted in the price of silver in the market reaching record highs, with the international market climbing by 3.1% and costing around $52 an ounce, while in the Indian market, the price reached almost Rs 1.8 lakh/kg, with some reports even claiming it has reached Rs 2 lakh/kg.
This is an almost unprecedented price for silver to reach in recent times.
The reason for this shortage seems to come from London, United Kingdom, which is a very important player in the precious metals trading sector. The country has witnessed its silver inventories falling by a third since mid-2021, as claimed by a report of The Economic Times.
Apparently, the amount of freely tradable silver has gone down to 200 million ounces, seeing a 75% drop from mid-2019.
This, along with mine production declining and a demand for silver suddenly exploding around the world, has led to the supply of silver going down rapidly.
Dr Renisha Chainani, head of research at Augmont – Gold for All, speaking with India Today, said, “Geopolitical uncertainty and global monetary easing are also fuelling silver’s rise. Political instability in the US, France, and Japan has added to safe-haven buying, while the London market is facing a shortage of readily available physical silver.”
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The impact on India and consumers here is clear to see. India is heavily dependent on imports, with over 80 % of its silver demand coming from overseas sources.
However, Indian imports fell by 42 % to around 3,302 tonnes in the first eight months of 2025. With such a low supply but still a large demand, obviously, the prices have been affected, with silver in India trading at a steep premium above international rates.
According to reports, recently, Mumbai’s Zaveri Bazar jewellers have stopped accepting new silver orders due to severe shortages and steep premiums.
Rajesh Rokde, chairman of the All India Gem and Jewellery Domestic Council, commenting on this said, “The surge in the premium is primarily due to increased investment and industrial demand, both locally and globally. This has forced jewellers to stop fresh orders for ornaments and bullion.”
As per a Financial Express report, on the afternoon of 15th October, “silver deals in the Zaveri Bazar were happening at levels of over Rs 1,90,000/kg.”
The price of silver also moderated at a whopping Rs 1,75,109 at MCX and at Rs 1,74,000/kg at Zaveri Bazar, where just yesterday it had been trading at Rs 1,78.00/kg.
Additionally, several mutual funds and silver ETFs have suspended new subscriptions, citing difficulties in acquiring physical silver at acceptable premiums. These funds are required by regulation to hold physically backed silver, so if they can’t source it, they can’t accept new investments.
It is not just jewellers who are seeing the impact of this, though. In fact, a sector that might not be at the forefront of one’s mind that has felt the difference is the sweets and confectionery sector.
A lot of Indian sweets use silver foil or varakh to adorn sweets like kaju katli and barfi. However, with silver costs rising, many sweet shops are cutting back on the amount or substituting lighter designs.
As per some reports, the cost of one such silver foil sheet in Mumbai has jumped from Rs 5 last Diwali to Rs 8 now.
Thus, some halwais and sweet shop owners are now either reworking designs to use less silver to keep the product cost steady or, of course, increasing the price to combat the high cost of acquiring silver.
Image Credits: Google Images
Sources: The Economic Times, Forbes, Moneycontrol
Find the blogger: @chirali_08
This post is tagged under: Silver, Silver price, Silver shortage, Silver india, Silver global shortage, Silver price rise, Silver india diwali, diwali, silver gold, silver gold global supply
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