India’s on/off love for silver

March 30, 2011 6:02 pm by Akanksha Awal

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 jewellery. 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.
“When we give presents we like to show, but with the price of silver what it is, people can only afford very small things and it does not show. So they prefer to go for other items,” said a silversmith at Sunder Nagar market of New Delhi.
Demand for silver has declined by 10 per cent over the past year because of high prices, according to another jeweller in the market.
“Previously people used to gift pure silver figurines of Lord Ganesha [known as the god of  success] as corporate gifts, but these days, many choose terracotta statues with little silver ornaments such as earrings, to reduce costs” said Jasjit Johal, a silverware designer.
India’s consumption of silver is very different from its consumption of gold. While the yellow metal is extensively used for all kinds of jewellery, use of silver in jewellery 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.
However, this trend may be changing. Rural citizens are beginning to invest in silver. And even some of the city’s elite have ordered bulky silver items such as tables and giant Ganesh statues as an investment, according to one silversmith, Madhavi Mehra of Ellora, in the capital.

http://blogs.ft.com/beyond-brics/2011/03/30/indias-onoff-love-for-silver/