Silver Crossed ₹2 Lakh. Soni Bazaar Is Not Celebrating.

You would expect a silver town to celebrate a record silver price. In Rajkot, most of the people I spoke to were worried.

A metal that more than doubled

Silver has more than doubled this year, and in December a kilogram crossed ₹2 lakh in Indian markets. It has outpaced even gold. The main reason is industrial demand. Unlike gold, most silver is used up in factories, in solar panels, electronics and electric vehicles. For five years in a row, the world has used more silver than mines and recycling produced, and the gap finally showed up in the price.

Rajkot is one of India’s biggest centres for silver jewellery and articles, especially anklets, chains and pooja items. Walking through Soni Bazaar, I expected traders to be happy. A higher price for what you sell sounds like good news. For most of the small workshops I visited, it was not.

Why high prices hurt the makers

Artisans earn from making charges, not from the metal. A craftsman who makes a pair of anklets earns a fee for the work, while the silver itself is passed on at market price. When silver doubles, the price of the anklet nearly doubles too, but the craftsman’s fee does not. Customers buy lighter pieces or postpone purchases, and the workshop gets fewer orders.

There is also a cash problem. Small units buy silver on short credit or with their own savings. When the price of their raw material doubles, they need twice as much money to make the same number of pieces. Several owners told me they had reduced stock because they could not afford to hold as much metal. A few had switched to taking orders only after receiving advance payment.

Who does benefit

The people who gained were those who already owned silver: families with old utensils and jewellery, and investors who bought silver ETFs earlier in the year. Some families came to Soni Bazaar to sell, not buy, which gave traders a little business in recycling old pieces.

The silver story is a useful reminder that a rising price is good for whoever holds the thing and difficult for whoever needs to buy it to make something. In Rajkot, the same metal makes some families feel richer and some workshops feel poorer, sometimes on the same street. When a commodity hits a record, it is always worth asking who is long and who is short.