Indian silver jewelry demand blows…

Silver jewelry hitting the sweet spot! 

The strength of silver jewelry demand compared to jewelry demand for other metals varies hugely between countries. This is mainly due to cultural attitudes, such as consumers viewing silver as fashionable or a close, rather than a distant, relative of gold. (This helps explain why silver jewelry in the US is much stronger versus gold than it is in many other countries.) 

Similarly, some markets might accept pieces made in base metals if the design and branding are good enough (a common view in Europe), while others would dismiss say a necklace in bronze as worthless, said in a Silver Jewelry Report, Prepared for The Silver Institute under the head, Silver Jewelry’s Popularity!  

As shown below, Indian silver jewelry demand versus gold today is much stronger than silver is in China. This is due to both pro-silver facets in India (such as urban areas’ preference for silver for daily wear items) and pro-gold features in China (such as the effort that goes into R&D for 24-karat jewelry). 

In Europe, silver is typically stronger relatively in northern countries, but that is mostly due to the strength of gold in southern Europe rather than silver being particularly weak. 

We have graphed fabrication below, which does highlight a few apparent anomalies that require explanation, mainly for the major exporters. The fact that Malaysia is geared to gold jewelry exports and Thailand to silver jewelry exports (it is home to Pandora’s output) explains their respective divergent gold: silver fabrication ratios (GSFR) of 0.3 and 27.1 for 2019. 

Similarly, as Switzerland is home to many of the top watch and jewelry brands and as they focus on gold, it too has a very low GSFR. All three would have very different GSRs if shown on a consumption basis. 

The importance of cultural factors is highlighted by GSFRs tending to be fairly stable over time. As shown in the chart above, the obvious exception is India, where silver jewelry demand has grown strongly while gold has stagnated. 

This has been due to a variety of factors, including silver jewelry hitting the sweet spot in terms of price points as incomes rise (especially in rural areas), and the urban youth’s view of silver as fashionable. China’s GSFR has also fallen slightly over time, due to intense marketing and product development in gold, which has tended to push silver to third and fourth tier cities and rural locations. A final point to make is that major swings in prices can, for a short period, move GSFRs. 

For example, global gold jewelry demand grew more strongly (+25%) than silver’s (+17%) in 2013 even though the gold price fell by “only” 15% versus silver’s -24% as the yellow metal became sufficiently affordable for various countries’ mass markets.