Silver import could fall to 5-year low as note ban hits demand

Silver import by India, one of the world’s top buyers, will probably shrink this year to the lowest since 2012 as the government cracks down on undisclosed money, farmers struggle for cash and stockpiles remain ample.According to Chirag Sheth, an analyst at Metals Focus, an independent precious metals research firm in Mumbai, purchases from overseas plunged 60 per cent to about 3,000 tonnes last year and would contract further in 2017. Nifty Trading Tips

Demand for jewellery has suffered after Prime Minister Narendra Modi scrapped high denomination notes in November last year to clamp down on the black market and bring more transparency to the financial system. That hit the rural economy, which depends more on cash than urban areas, and hurt the demand from farmers. Inventories were ‘sizeable’ after record imports in 2015, Sheth said.

“Investment demand for silver will continue to fare badly and we wouldn’t be surprised to see a 10 to 12 per cent drop this year,” said Sheth, who has track precious metals for 13 years. Future & Option Trading Tips