While gold might be losing shine due to falling prices, silver had dimmed last year itself. Demand and imports into India fell 80 per cent in 2012. The fall in demand has a direct reflection on import, though India produces sizable silver, unlike gold where the country is totally import-dependent. The fall in demand for silver is attributed to a fall in investment. In 2012, India's silver demand for investment was just 300 tonnes, against 1,549 tonnes in 2011, according to Thomson Reuters GFMS, which compiles the data. India's total demand for silver was 3,234 tonnes in 2012 against 4,437 tonnes in 2011. The import was 1,900 tonnes, against 4,087 tonnes in 2012. Silver prices peaked in April 2011, at a global $48.4 an ounce. It has been falling since then. Sudheesh Nambiath, India analyst for GFMS, said: "There was a decent investment interest for silver bars in India through 2011 but a similar trend failed to follow through in 2012. Customs duty at six per cent and lack of price direction kept investors away.
The 12 per cent rally in September after months of lacklustre returns was an opportunity for many to take away profits and even offload their stocks. "The trend is unlikely to be reversed soon, as prices might fall further. Last month, the bottom was $22.48 an ounce. Sudheesh of GFMS said, "While $22 is (a) strong support (level), there is always the risk of shortlived downward spikes if we get another tremor in the financial markets." In the medium term, he says, "there is high probability that the price will test $30". India has been producing silver as a byproduct of refining zinc and copper. In recent years, Hindustan Zinc Ltd (HZL) has emerged as the largest silver refiner. In 2012-13, it produced 408 tonnes and taking into account production by other metal refiners, total production is estimated at a little over 500 tonnes. HZL's sizable production has helped India improve its rank in the global map. In 2011, India was 17th among global silver producers, with 7.5 million ounces. It was 13th in 2012, with production of 12.7 million ounces, according to Thomson Reuters GFMS. Akhilesh Joshi, chief executive officer of HZL, said: "We are aiming to produce 500 tonnes by 2014. Our total reserve and resource as on March 31 was 348 million tonnes, containing 910 million ounces of silver (28,300 tonnes) and our mine life continues to remain over 25 years."