Mumbai’s iconic Zaveri Bazaar is facing a dire silver supply crunch: jewellers have stopped accepting new orders for silver jewellery and bullion.
Even as silver prices underwent a sharp dip (down ₹2,000/kg to ₹1.74 lakh) in one session, the core issue is the lack of physical availability of silver in the market.
Traders are now selling silver only at heavy premiums—some as high as ₹30,000 per kg over the standard quoted rates.
According to Hitesh Subhash Jain, chairman of the Zaveri Bazar Welfare Association, silver is now being treated “like new gold” given its scarcity and surging demand.
Why Is This Silver Shortage Happening?
A confluence of global and domestic factors is compounding the shortage:
- Global supply deficit: Silver has been in a structural shortfall for multiple years—much of it is produced as a by-product of other metals, limiting the responsiveness of supply
- Rising industrial demand: Demand from sectors like solar, electronics, EVs is putting pressure on silver supply.
- Import constraints: India depends heavily on silver imports (> 80 %) and recent import volumes have fallen—up to 42 % lower through August 2025.
- Investor behaviour & premiums: With tight supply, silver is trading at as much as 10 % premium over global benchmarks.
- Festive demand: With Diwali and Dhanteras approaching, demand for silver as gifting, ritual, and auspicious purchases spikes—exacerbating the squeeze.
These factors have together created an environment where physical silver is scarce, and those holding it are reluctant to part with their stock at regular pricing.
Market Reaction & Immediate Consequences
- Jewellers & bullion traders suspend new orders: Many in Zaveri Bazaar, as well as in other hubs like Ahmedabad, have halted accepting fresh silver bookings
- Premiums soar: Some traders are quoting premiums of ₹30,000/kg in jewellery markets.
- ETF / fund disruption: Mutual funds managing silver ETFs / Fund of Funds have suspended new inflows due to the inability to acquire physical silver.
- Delayed deliveries / backlog: Inventory depletion means buyers—even after placing orders—may face long wait periods for delivery.
- Shift toward gold: With silver less accessible, many buyers are turning to gold — especially smaller bullion or coin forms — instead.
- Corporate / industrial stress: In “Silver City” Khamgaon and industrial hubs, shortages are affecting sectors dependent on silver for electrical, signalling, and electronic applications.
What This Means for Consumers & Industry
- Increased costs
Because of premium pricing and spot market scarcity, costs for silver jewellery, coins, or bars have surged—consumers will likely pay significantly more than “quoted” rates. - Limited availability / delayed fulfillment
Even those placing fresh orders may face delays—some jewellers are reportedly telling customers of 1–2 month wait times. - Investment caution
Silver-related ETFs or funds with physical backing are under strain. New subscriptions might stay suspended until supply stabilizes. - Potential for substitution
Buyers may lean more toward gold or other precious metals as silver’s availability becomes unreliable during the crisis window. - Industry & supply chain stress
Jewellery manufacturers, coin / bar producers, electronic component makers may face interruptions or must procure substitute materials or redesign certain usages.
Outlook & What to Watch
- Premiums may moderate: Some analysts expect that spot premiums may ease once festival demand subsides or new supply flows in.
- Fund houses to release silver holdings: If mutual funds and ETFs begin offloading parts of their silver reserves back into the physical market, it could ease scarcity. Reuters
- Policy / regulatory moves: Requests have been made to SEBI to allow funds to intervene and release holdings, which may help bring some relief.
- Global supply reaction: If mines or major producers ramp up output—or recycling picks up—global restocking could help ease pressure.
- Longer-term demand vs. structural deficit: Even after the crisis, silver’s growing industrial applications may keep demand high, supporting prices over time.
