Growing distrust among traders over delivery of spot deals

Due to the lack of proper price discovery for silver across the world, a deal for the delivery of 900 kg of silver between the Government of India company "Security Printing and Minting Corporation of India Limited" (SPMCIL), Hyderabad, and a Mumbai-based bullion firm named "Augmont  Enterprise Limited" has run into trouble, creating a huge  flutter in the Mumbai bullion market.

A silver bullion dealer from Mumbai said that silver traders across the country—including Mumbai, Rajkot, Jaipur, Agra, Delhi, and Ahmedabad—have landed in serious difficulty. He said that, if a government company creates such issues in silver delivery, then what will happen to the deals of small traders who rely only on a “letter of trust” and whose spot deal deliveries are already jeopardized ?

Referring to the details of the deal on December 17, 2025, enquiries were made with leading bullion dealers from the city of Melbourne (Australia) on the status of 'spot deal deliveries' in the local market. 

They reveal that deliveries of silver from the (Australian) silver mining companies are not happening on time. Because of this, after accepting money from the investors, they are forced to enter into deals on the condition of delivery after 15 to 20 days.

The Mumbai-based silver dealer then countered that if deliveries by a government company itself get stalled in this manner, what will happen to India’s ETF, mutual fund, silver futures, and spot-market “kabala” (non-transferable specific delivery) paper transactions?

A senior official of a leading bank, involved in ETF management, said that, so far there has been no major problem with spot silver delivery in India. "However, to protect ETF transactions entered into at recently high prices, we may be compelled to hedge at lease rates with Western countries," he said preferring anonymity.

The powerful Indian Bullion and Jewellers Association (IBJA), Secretary  Surendra Mehta admitted there is a price recovery problem in Mumbai, but it is also true that in the local markets, spot silver is currently being offered at a discount of Rs 8,000 to Rs 10,000 per kilo. "There is also little likelihood of any immediate solution to such discounts and premiums", he averred.

When you consider discounts and premiums of USD 8 to 10 per ounce (31.10347 grams) being quoted between China, Japan, the US, and Europe, how can Indian bullion dealers take the price risk of spot transactions?

A source close to Augmont Enterprise, said that, on December 17 the government mint company in Hyderabad had announced an auction of refined silver with purity ranging from .995 to .998.5 touch (carat). Augmont deposited the initial earnest money deposit of Rs 1.16 lakh on December 16 and paid the remaining security deposit amount on December 18. On December 19, the auction for 900 kg of silver was approved in the name of Augmont Enterprise. The final balance payment was to be made by December 27.

However, even before that, on December 22, the auction deal was cancelled. Between the initial auction date and the date of cancellation, silver prices increased by Rs 36,000 to Rs 40,000 per kilo. Over the last 52 weeks alone, global spot silver prices had risen by 194 percent.

Another market  player said that an amount of Rs.18-20 crore is at stake in this deal. Now, on behalf of its member Augmont Enterprise, the IBJA has requested the Prime Minister’s Office (PMO) intervention (on January 9, 2026), to resolve the imbroglio.

(The writer is a bullion market expert. Views personal.)