INDIA, March 30, 2011 (FT): Indians are almost as crazy about silver as they are about gold and the country ranks as the third largest consumer of the bullion, according to the most recent research on silver from Deutsche Bank. But unlike India’s recent gold craze when Indians did their bit to to drive global prices higher, the rising cost of silver is seeing demand for the bullion wane.
Silver is largely viewed as a “show” gift in India. Unlike gold, it is rarely used for jewelry. Instead, silver bowls, boxes, figurines of gods – even silver motorcycles – are the choicest gifts for almost all occasions. But with a meteoric rise in the cost of the metal, silver is increasingly being used as an ornament in gifting items rather than a gift in itself.
Demand for silver has declined by 10 percent over the past year because of high prices, according to a jeweler in New Delhi.
India’s consumption of silver is very different from its consumption of gold. While the yellow metal is extensively used for all kinds of jewelry, use of silver in jewelry is limited to ornaments worn below the waist because it is considered inauspicious to wear gold on the feet.
Another reason for the lack of enthusiasm for silver is that it is rarely seen as an investment. Many Indian homes have pure silver figurines of gods and goddesses and it is common to use silverware in the home. But people are unlikely to sell their silver to cash in during a boom, traders say.