'Silver hasn't vanished; it's being hoarded': Inside Chandni Chowk's Diwali chaos

New Delhi: Traders in Delhi’s Kucha Mahajani say silver supply has tightened ahead of Diwali, with steep cash premiums and delayed deliveries limiting retail availability. 

​​Several dealers alleged hoarding by a section of wholesalers and referred to the cash spread as “black marketing,” claims NewsDrum could not independently verify.

At India’s busiest bullion hub, the premium over the MCX reference rate, typically around Rs 2,000-5,000 in calmer weeks, has jumped to Rs 25,000-35,000 for quick delivery, according to multiple shop owners. 

Buyers willing to pay the premium are getting metal sooner, while others are being asked to book in advance and wait 10-15 days, traders said.

The squeeze has changed buying patterns. Demand for pure bullion bars has risen, while coins, idols, utensils and jewellery, the traditional Diwali basket, have slowed sharply. Several retailers reported festive-category sales at 10-20% of last year’s levels. 

“Every person with money is trying to put it into pure bullion,” said Yogesh Singhal, president of the All Bullion and Jeweller Association, citing stronger inquiries for high-purity bars.

Retailers said higher input costs are also affecting conversions. With spot premiums elevated, the all-in price of finished silver products has increased, narrowing the pool of festive buyers. 

One jeweller said a silver glass that sold for about Rs 4,000 last year is now around Rs 8,000, reducing gifting demand.

Why the premium has spiked

MCX quotes are for exchange-traded contracts. Physical delivery into Chandni Chowk involves freight, financing and making costs. 

When near-term supply tightens or when more buyers seek immediate delivery, a cash premium develops over the screen price. 

Traders said this spread has widened before Dhanteras and alleged that some stock is being withheld to extract higher rates. Importers and refiners named by traders were not immediately available for comment at the time of publishing.

For shop floors geared to festive retail, the timing is adverse. Late deliveries mean fewer sale days, and higher working capital is locked into inventory acquired at elevated spreads. 

Several retailers said footfalls are uneven and that inquiries are skewed toward bulk bullion rather than small-ticket festive items.

Market participants expect some cooling after the festive peak if fresh consignments arrive and speculative demand eases. 

However, retailers cautioned that consumer sentiment could take longer to stabilise if finished-goods prices remain high relative to household budgets.