Mumbai's silver shortage hits festival shoppers hard

So, what's really happening at Zaveri Bazaar?

Walk into Zaveri Bazaar today and you'll feel it in the air: traders stunned, counters empty, and prices climbing like they're on fast-forward. Physical silver is trading around Rs 2 lakh/- per kg, well above the India Bullion & Jewellers Association closing rate of Rs 1.78 lakh/- per kg. Festival stock — the seven-to-ten-day bonanza — ran out in three days. New orders? Mostly stopped. Traders are even selling what little they have at premiums north of Rs 30,000/- just to keep lights on. (Wild.)

Why is this shortage so stubborn?

Look, shortages don’t happen from a single cause. This one feels like a perfect storm.

• Demand is surging from India, Australia, Turkey and China — not just for jewellery but for industrial use and investment-grade physical metal.
• Supply is sluggish. Mining growth is slow, recycling channels are strained, and getting physical metal across borders right now is harder than it should be. Think of it like a tap turned on full, but the drain clogged.
• Financial flows aren’t helping. Major mutual funds paused subscriptions to silver ETFs — a sign that institutional access to silver is tightening. That pushes more buyers to the physical market, which only raises premiums.
• Gold remains stable for now, so some investors still prefer it as a safe-haven. But when silver moves, it can swing faster because the physical market is thinner.

Analogy: imagine a crowded market where everyone suddenly wants apples, but the sellers only had yesterday’s stock. Prices spike. Same idea — except silver doesn’t grow on trees.

What does this mean for you (and the market)?

If you were planning silver gifts for Diwali — hold up. Expect higher prices and lower availability through the festival, and possibly beyond. Small jewellers and household buyers will feel the squeeze most acutely. Traders halting new orders means less hedging, more price volatility. That’s risky for businesses buying inventory ahead of seasonal demand.

For investors, it’s a tricky moment. The market could see a temporary price correction around November, as some analysts expect. But the more structural view — led by industrial demand (solar panels, electronics) and restrained mine output — suggests elevated prices could persist longer, maybe across this decade. Some traders, like Hitesh Subhash Jain, are bullish on holding till 2030 for significant gains. Could be right. Could be wrong.

So, what should you do?

• If you're a retail buyer: don’t chase the spike. Consider small, staggered purchases or wait for a correction.
• If you're a trader or retailer: explore hedging and diversify suppliers. Expect higher working capital needs.
• If you're an investor in ETFs: be mindful of subscription pauses — they signal liquidity strain in the silver market.

Here's the thing: this isn’t just about metal prices. It’s about festival cheer, small businesses, and portfolios. A prolonged supply bottleneck in silver could ripple into consumer wallets and jewellery trade sentiment across the country.

Expect drama through Diwali. And after that? Plan for sustained tightness — unless new supply or policy steps change the story fast.