Byline: Abhishek Shanker and Mansi Bhatt

AHMEDABAD: Every cloud has a silver lining. High gold prices in recent months have led to a slump in buying and trading in gold and gold jewellery.

This has brought the other precious metal, silver, into the limelight. The demand for silver,

The demand growth has been backed by high industrial as well as rural consumption. In rural and semi-urban areas, high prices of gold jewellery are pushing people towards buying gold-plated silver jewellery.

According to an industry estimate, sales in the gold jewellery market in India this year, were hit by as much as 35%, compared to last year's trade. Silver jewellery, on the other hand, has shown about 15%-20% growth in volume terms. As a result of growth in demand, the consumption of silver in '05-06 is expected to grow over 15% to touch 3,500 tonnes. The consumption in '04 was about 3,100 tonnes.

"We have witnessed a rise in demand of about 15% for silver jewellery and kitchen-ware in the past six to eight months," says Chandrakant Jayantilal Kansara, owner of the biggest manufacturer and exporter of silver jewellery and other articles in Rajkot.

Rajkot alone caters to almost 30% of the country's demand for silver jewellery and related products. "With gold jewellery demanding high investment, the youngsters and working women in big cities prefer rhodium-polished silver jewellery," says Dineshbhai Zaveri, Ahmedabad-based, gold and silver jewellery retailer.

"Silver jewellery being much cheaper than gold, the demand for the white metal is increasing heavily among youth and rural consumers," says Sandhya Patel, jeweller and chairperson, business women wing, Gujarat Chamber of Commerce and Industry (GCCI).

In terms of price of the two precious metals, in the past one year, prices of both gold and silver have witnessed a surge. While gold prices rose from $437.5/ounce in December '04 to touch $517/ounce in December '05 registering a growth of 18%. Silver prices grew much steeper, by over 29% to touch $8.82/ounce in December '05 from $6.80/ounce last year. "The increase in demand is also due to industrial demand of silver which is on the rise," says Saurabh Soni, member, Ahmedabad Gold and Silver Traders Association (AGSTA).

Minerals and Metals Trading Corporation (MMTC), one of the major supplier of silver, booked nearly double the quantity of silver they procured last year. MMTC-Gujarat alone booked 509 tonnes silver this fiscal with the government of India. "The demand of silver is gradually increasing," said V Singh, deputy manager of MMTC-Gujarat.

In last three months, MMTC has sold close to 270 tonnes out of the 509 tonnes. The corporation hopes to sell the rest by the end of this fiscal. Out of the total silver sold by MMTC in Gujarat, nearly 70%, has been sold to the traders in Rajkot.

Interestingly, negligible or no silver has been imported this fiscal due to high price disparity in domestic and international silver prices. When domestic silver is sold at around Rs 13,000 per kg, the imported silvers costs nearly 15% more-around Rs 14,500-15,000 per kg.