Gold replaced by silver, enters bearish mode.

KOLKATA: Ravindra Thakur, a 44-year-old soybean farmer from Samliyachou village of Indore district in Madhya Pradesh, has just bought some silver jewellery for his wife and daughters. Initially, he had thought of buying some gold jewellery but after his visit to the nearby jewellery shop he settled for silver.

"Around 10 gram gold jewellery was more than Rs 30,000, whereas the 10 gm silver jewellery that I bought cost me onlyRs 9,500 including the making charge. I am told that there will be higher returns in silver," said Thakur. Like Thakur, Navin Tiwari a cotton farmer from Vidarbha of Maharashtra has also bought some silver items instead of gold. Rural India is buying more silver this year than gold as price of the yellow metal has gone up.

"A psychological barrier has been created against gold and people are favouring silver. Reports are also coming that gold has entered into a bearish mode which is having impact on purchasing decision," said Haresh Soni, chairman, All India Gem & Jewellery Trade Federation.

Though figures are not final, the industry expects that the country's silver exports in 2013 will be around 5,200 tonne, higher than the 5,048 tonne of the previous year. In the first 10 months of 2013, silver imports was to the tune of 4,650 tonne.

Traditionally, gold is used for gifts at weddings and festivals, but the yellow metal has become costlier from middle of last year as the government introduced a slew of measures to check import of gold to bring down the country's trade deficit.

The finance minister has increased the import duty on gold to 10% and has told importers that a fifth of their purchases would have to be turned around for export, leaving only 80% for domestic use. "Silver imports will remain robust in coming months also as high rural demand will boost the consumption," said Lalit Jagawat, owner of Nakoda Bullion.

TM Srinivasalu, a leading silver merchant from Chennai said that rural demand for silver will gather momentum if the volatility in the metal is reduced. "At present silver is hovering in the range ofRs 43,000-46,000 per kg. If the metal gains some stability there will be more demand in the market," he said.

Source : economictimes.indiatimes.com​