Page 25 - Bullion World Issue 02 Volume 06 February_2026

Bullion World | Volume 6 | Issue 02 | February 2026

Liquidity, inventories Regional markets and premiums
and investor behaviour Regionally, the picture is nuanced. In India, participants
An important theme was that the current tightness is noted that, after an earlier phase of very high physical
as much about liquidity and metal positioning as about premiums – at times 25,000–30,000 rupees per kilo
headline deficits. Inventories at major exchanges and around Diwali 2025 – the domestic market has recently
warehouses have been drawn down significantly in flipped to a discount of roughly 8,000–10,000 rupees
recent years, with notable declines in COMEX, LME per kilo, or about 3%, relative to the exchange price,
and Shanghai stocks, even as a large share of global reflecting the latest balance of local demand and
silver is now sequestered in ETPs and ETFs and cannot availability. In the UAE, Dubai refiners are seeing strong
be readily mobilised. This has left a much smaller pool flows of large bars for conversion into kilo bars, with
of “free” metal available to meet surging investment GCC retail and investment demand buoyant and spot
and industrial demand, creating a liquidity squeeze in physical premiums typically in the range of about
key hubs and heightening sensitivity to policy rumours 1–3 dollars per ounce when buying urgency is high.
and shipping flows between London, New York and Globally, volumes and premiums are highly sensitive to
Asia. the timing of shipments, perceived policy risks and the
interplay between paper and physical markets in each
Industrial users: demand intact, centre.
cash flows strained

Industrial participants reported that end-use demand Scrap, jewellery and consumer demand
has not yet cracked despite the doubling of prices in Despite “astronomical” prices, India has not yet seen
a matter of months. EV and data centre applications the runaway scrap wave many expected; scrap flows
continue to grow, and Indian manufacturers supplying are elevated but far below what models suggested
silver contacts and components to both domestic and would occur at 1.5–3 lakh rupees per kilo. Households
overseas clients are still seeing steady or rising offtake. are indeed bringing in broken jewellery and old
silverware, but many still prefer to hold in anticipation
The real stress is financial: inventories that were of further price gains, particularly as the 2025–26 rally
carried at much lower prices now require two to three has been both rapid and psychologically difficult to
times the working capital, while receivables still reflect process. On the consumer side, domestic demand for
pre-rally contract prices, creating a significant strain articles and traditional silverware has softened, yet
on cash flows and forcing many industrial users to lean silver jewellery is seeing a clear shift in favour as high
harder on recycled silver to partially offset costs. gold prices push more wedding and fashion buyers
towards high-design silver pieces that mimic the look
of gold at a fraction of the outlay.

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