Ask a jeweller this festive season what has changed and the answer will always be the same. People enter to buy gold, listen to the price and are driven towards the silver counter. Even a small chain has become a big investment, as 24-carat gold is at almost ₹1.5 lakh per 10 grams. The poor cousin is finally getting the attention.

The magnitude of the change is not something that can be underestimated. In September 2024, silver sold at ₹89,537 a kg. It has almost doubled in 160 per cent in 2 years, reaching ₹1,41,918 a year later and touching ₹2.32 lakh this month. The run will "make jewellery-buying a habit of the past," says India Bullion and Jewellers Association's Surendra Mehta to ET Online. Silver demand is projected to grow at double digits this year, and silver imports increased 127 per cent in August compared with the previous year.

The ride is not so smooth, as evidenced by screens on Tuesday. Talks with Tehran ground to a halt as spot gold and silver reached seven-week lows and crude oil prices rose. Silver futures for December delivery tumbled to below ₹2.30 lakh, gold futures fell to below ₹1.50 lakh to close at around ₹1.46 lakh per ten grams. Silver was trading near $60.5-$61 an ounce, and gold near $4,125, overseas. The current ratio of gold to silver is around 68.

It is that ratio that needs to be considered. By the beginning of 2025 it had topped 100, a price traders interpret as an undervalued price for silver, and by the middle of that year, it was trading around 87. It has compressed since then, but the long run range of 40-60 indicates that there is still some space to spare. There is also one less nice fact. Silver is now buying at about half its dollar record, which was set Jan. 29 this year by price trackers, on the metal's record price of $121.67 an ounce. Anyone who thinks that silver prices will only rise has not studied that graph.

Money is riding the price and Indians' households have become more like portfolio managers than ornament purchasers. FY26 saw an all-time high for exchange traded funds with a record corpus of ₹1.8 lakh crore, out of which gold and silver recorded a corpus of ₹99,280 crore, accounting for 55 per cent.

The collections of silver funds alone exceeded ₹30,000 crore. Gold ETFs experienced the highest monthly outflows of ₹725 crore in May while silver ETFs had the highest inflows of ₹2,133 crore. Indian demand for gold investment surpassed jewellery demand for the first time on record in the first quarter, as the World Gold Council reported investments in gold rose to 82 tonnes, while jewellery demand grew to 66 tonnes. Silver is passing that trait on to him.

The bulls have something to support themselves with in the world in general. The Silver Institute's World Silver Survey estimates Silver demand will be 46.3 million ounces in 2026, compared with Silver supply of 40.3 million ounces last year, for the sixth consecutive year.Silver demand is projected at 46.3 million ounces in 2026, compared to 40.3 million ounces last year, resulting in a deficit of approximately 762 million ounces since 2021.

Prospects for mine output in 2017 are 844 million ounces, slightly down from 2016, and the miners are not expected to be able to switch on supply very quickly as many ounces of silver are produced as a by-product of copper, lead and zinc mining. The demand for coin and bar is also projected to rise by 18 per cent to 257.6 million ounces, while American retail demand for coin and bar has been improving.

There is another side to it – industrial use – and another, a more fragile side. It accounts for about 57 per cent of demand (as can be seen from the pie chart), but has been declining. Industrial usage is declining by 3 per cent to 639.6 million ounces at the institute. The largest buyer, solar manufacturers, are also reducing the amount of silver to incorporate into panels due to the cost. Demand for PV is projected to decline 19 per cent to around 151 million ounces, while one analyst quoted by a bullion dealer is forecasting a 30 per cent decline. A big Wall Street forecaster cut its $90 fourth-quarter estimate to $63, mainly due to solar.

But there is a part to the story that India's own jewellery industry finds itself in an uncomfortable position. The same survey anticipates a decline in silverware consumption across the world by about 20 percent this year, and most of the drop is in India where gifting is an extra luxury and people do not like to shell out more for the same. Silver idols are being sold along with other retail merchandise and lighter jewellery, all to help move traffic and any size at a discount. Gold and Diamonds are still paying the bills. There are more Indians that are purchasing silver, but also, each person is purchasing lesser grams.

The bottom line is more important than the headlines. There is a 3 per cent GST charge for physical silver, with 5-10 per cent fees depending on the screen and, often, storage fees or certification fees that can add up to nearly 10 per cent or more to the screen price. Although ETFs avoid making charges, last autumn when metal stocks became scarce, some had surcharges as high as 12 to 18 per cent, above import parity. Look at the premium prior to purchase.

A national dimension is present as well. Silver is mined in very limited quantities in India, while most of it is imported, thus making every leg of the rally a burden on the import bill and the rupee, literally the Sanskrit word for silver. These are the same forces at play worldwide tariffs, oil price fluctuations, currency volatility and rate anxieties are driving savers all over to hard assets and when gold appears too rich, their choice is silver.

I think this is a budget-for-the-lovin' tale rather than romance. Gold's price knocked families down the ladder, a deficit market and ETF flows provided legs. However, a metal that is more than half industrial will be as dependent on orders from factories and expectations for rates as it is on the festival, and at ₹2.3 lakh a kg, "poor man's gold" is the latest overachievement.