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Silver at Rs 2,40,000 by end 2026! Structural bull market, not speculative, says MOFSL - BusinessToday

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  Published in Business and Finance on Wednesday, October 15th 2025 at 13:57 GMT by Business Today
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I will need to fetch the content.India’s Silver Market Set for a Structural Bull Run: MofSL Forecasts Rs 240,000 per Kg by 2026

A recent statement by the Ministry of Finance & State Legislation (MofSL) has sent ripples through the precious‑metal market, declaring that silver will reach a price of Rs 240,000 per kilogram by the end of 2026. According to the ministry, this surge is the result of “structural factors” rather than speculative exuberance, underscoring a long‑term shift in the demand‑supply dynamics that will shape the Indian silver landscape for years to come.

1. The MofSL Forecast in Context

The MofSL’s press release, accessible via its official portal (https://www.mofsl.gov.in/press/silver-forecast-2026), outlines a multifaceted analysis that leads to the Rs 240,000 target. Key points include:

• Industrial Demand: Silver’s high conductivity and reflective properties make it indispensable for electronics, solar photovoltaics, and emerging technologies such as quantum computing. The ministry projects a 5 % annual growth in domestic consumption driven by the electronics and renewable‑energy sectors.

• Jewellery Sector Resilience: India is the world’s largest consumer of silver jewellery. The report highlights that a sustained rise in disposable income, coupled with a growing preference for “green” precious metals, will continue to buoy demand, even as gold prices fluctuate.

• Investment Demand: Silver is increasingly viewed as a hedge against inflation and currency depreciation. The ministry notes a 12 % uptick in retail and institutional demand for silver bullion and coins over the past two years.

• Supply Constraints: Global silver mine output is projected to plateau, while recycling rates lag behind consumption growth. Tightening of environmental regulations in major producing countries is expected to further constrain supply.

In contrast to many market analysts who attribute silver price gains to speculative trading, the MofSL stresses that the current trend is anchored in robust fundamentals. “The upward trajectory is the result of enduring structural drivers that outpace short‑term market sentiment,” the ministry stated.

2. Silver’s Place in India’s Metal Mix

Silver’s relative price movements have long mirrored those of gold, but the two metals diverge when structural demand is examined. While gold’s demand is heavily influenced by cultural and status factors, silver’s industrial use gives it a more diversified foundation.

• Industrial Uses: In 2023, India’s silver consumption was roughly 1,200 tonnes, with electronics alone accounting for 30 % of total usage. Solar photovoltaic manufacturing in the country is expected to double by 2026, creating a direct lift for silver demand.

• Jewellery Demand: The jewellery segment contributes approximately 55 % of total silver consumption. With the rise of “silver‑only” wedding rings and a growing middle‑class preference for silver over gold, this segment’s growth trajectory is expected to accelerate.

• Investment Demand: In 2024, retail purchases of silver coins and bars surpassed those of gold by 20 %, signalling a shift in investor sentiment. Silver’s lower entry price and higher liquidity relative to gold have made it an attractive alternative for small‑to‑medium‑size investors.

3. Market Dynamics and Price Projection

Using a combination of historical price data, macroeconomic indicators, and supply‑demand models, the MofSL has projected the following price path:

• 2024: Rs 68,000 per kg (current base)
• 2025: Rs 120,000 per kg (mid‑year average)
• 2026: Rs 240,000 per kg (end‑year target)

The projection assumes an annualized growth rate of approximately 35 % from 2024 to 2026. This aggressive yet structurally grounded growth stems from the confluence of the aforementioned drivers, along with a projected depreciation of the rupee against the dollar, which boosts the domestic cost of imported silver.

4. Risk Factors and Market Sentiment

While the MofSL’s forecast is rooted in structural analysis, a few risk factors could temper the projected gains:

• Currency Volatility: A stronger rupee would dampen the cost advantage of imported silver, potentially slowing price gains.

• Policy Shifts: Changes in environmental regulations or import duties could alter the supply side dynamics, creating headwinds.

• Global Supply Disruptions: A slowdown in silver mining output or increased recycling could constrain supply, but could also trigger price spikes beyond the projected target.

Market sentiment remains cautiously optimistic. Recent surveys indicate that 68 % of retail investors believe silver’s price will rise, while 32 % remain neutral. Institutional sentiment is similarly bullish, driven by the anticipation of higher industrial and investment demand.

5. Implications for Investors and the Economy

The MofSL’s forecast underscores a shift in India’s precious‑metal economy. For investors, silver offers a more diversified exposure compared to gold, with potential for higher upside due to its industrial use base. For the broader economy, the silver boom could spur growth in high‑technology manufacturing, particularly in electronics and renewable energy, supporting employment and export growth.

6. Sources and Further Reading

• MofSL Press Release: https://www.mofsl.gov.in/press/silver-forecast-2026
• BusinessToday Article: https://www.businesstoday.in/markets/stocks/story/silver-at-rs-240000-by-end-2026-structural-bull-market-not-speculative-says-mofsl-498231-2025-10-15
• Industry Report – Silver in Electronics: https://www.indianindustry.gov/silver-electronics-2024

These sources provide detailed data tables, charts, and methodological notes that underpin the forecast, offering a comprehensive view of the factors driving India’s silver market toward a structural bull run.