Silver spot price gains despite 61% drop in Indian offtake

on Nov 29, 2013
Updated: Oct 21, 2019

**, Friday 29 November:**

The latest report by the Gems and Jewellery Export Promotion Council (GJEPC) indicates that India’s gold and silver imports declined sharply in October on account of government-imposed curbs. Duties on precious metal imports were raised earlier this year as part of the Indian government’s measures to reduce a widening current account deficit and arrest the plunging value of the rupee.

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Year-on-year silver bar imports for October plunged by 61.23 percent, while gold imports fell 50.15 percent y/y. India has for many years been the world’s biggest bullion consumer but is widely expected to be superseded by China by the end of this year.
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VTB Capital yesterday reported the start of gold and silver bullion exports to India in an endeavour to develop its business in the Asia-Pacific region. The first deliveries have been made over the past few weeks to New Delhi, Hyderabad, Jaipur and Agra.

The Russian bank added that it was aiming to supply bullion to other developing nations in Asia to take advantage of strong demand for physical product in the price-sensitive emerging markets.
The spot price of silver has shed about 35 percent of its value this year, thanks to persistent speculation that the US Federal Reserve’s quantitative easing programme would be cut back by year’s end.

While the price drop has triggered a sharp liquidation of long positions among traders, it has also increased silver’s appeal to Asian investors seeking to capitalise on the opportunity to buy a cheap inflation hedge.
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Despite the softness in Indian bullion imports, the spot price of silver has gained about two percent so far today. The price is now hovering near its three-day highs (see chart above) and may be susceptible to some profit-taking.
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