Record Indian Silver Import Support Silver Squeeze Breakout

The talk of silver being about to significantly outperform gold continues to grow.  As one of Australia’s largest bullion dealers we get to see first hand how each comparatively performs sales wise, as a measure of the collective mood. Last week and observing this weekend’s online orders confirms a definite shift in buying behaviour toward silver.  Call it the ‘rubber hits the road’ measure.  Some recent data supports this is well beyond Ainslie and Australia.

India is one of the biggest consumers of silver in the world. Indeed it alone accounts for around 1/8 of all demand. Data for October just showed an all time high import of silver of over 1700 tonne in one month!

As you can see this comes off a slower year to date in 2023, off a collectively record year in 2022.  India is also a huge producer of solar panels too, silver being an important ‘ingredient’. What is potentially particularly instructive about October’s record number is that it was absolutely dominated by bar format not the grain preferred by many manufacturers as you can see below.

Also interesting is the comparison with the timing of the last such spike in 2011. Silver went on an exponential rally taking it from around $22 to $49 in just 6 months. In that time the gold to silver ratio (GSR) went from around 70 to 31 and coincided with a (much milder) rally in gold. As a reminder, we are currently looking at a still sky high GSR of 83! If the GSR reverted to 31 again you would see a $98 silver price in AUD off the current gold price.

Silver traditionally lags gold, and when gold rallies, silver takes off and outperforms.  It then of course has deeper falls, hence the relative volatility of the smaller market metal.  However volatility can be an investor’s best friend if the timing is right.

Here’s a couple of wise investors looking at this play right now:

If you can’t read that wonderful chart showing silver compressing into a imminent breakout, here it is in better res: