India, a country known for its gold demand, is buying a lot of silver lately…helping push silver prices up near a record high for 2017.
Silver Buying in India
How much silver is India buying?
In the month of June, $178.04 million worth of silver was imported into India. (Source: “Quick Estimates For Selected Major Commodities For June 2017,” Ministry of Commerce and Industry, last accessed August 3, 2017.)
If we assume that the average price in June was around $16.50 an ounce, then India imported 10.79 million ounces of silver—in one month!
Demand for silver in India has been strong all year long. In May, $442.97 million worth of silver was imported into the country. This was 1,020.16% (no misprint) higher than the same period a year ago. (Source: “Quick Estimates For Selected Major Commodities For May 2017,” Ministry of Commerce and Industry, last accessed August 3, 2017.)
If we go further, we can see that April, March, and February were all strong months for silver imports to India when compared to the same months a year ago.
Why Are Indians Buying So Much Silver?
Here’s the thing; India is known for its gold consumption. But, gold prices haven’t come down in Indian rupees as much as one would think. An ounce of gold in India costs around 81,000 rupees. That means buying an ounce of gold would require several months of salary for an average Indian.
Looking at all this, it’s not irrational to make one assumption: Indian consumers might be leaning towards silver because they can’t afford gold anymore. An ounce of silver in India costs around 1,100 rupees…much more affordable than gold.
Silver Prices for the Rest of 2017
Silver prices are up over seven percent this year. And I wouldn’t be surprised to see them go much higher before 2017 is up. That’s because, on the supply side, I see dismal production figures for 2017 coming from the major silver mining companies.
My prediction of $50.00-an-ounce silver remains unchanged. Aside from the boom in the new solar panel industry, other new technology, and the old industrial need for silver, when a country like India is importing over four percent of the total annual production of silver into the country in just two months, higher silver prices are just a matter of time.