Rapidly rising gold prices have made it more acceptable for Indian families to offer gifts of silver rather than gold at their daughters’ weddings. “Only poorest among the poor in India could have thought of buying silver jewelry for the marriage of their daughters some years back,” writes CommodityOnline. A number of factors are driving up demand for silver in India, though, and here are a handful of reasons why silver’s price rise might outpace gold’s in 2011:

1) The high cost of gold. At $1,430 per ounce, the cost of gold jewelry is moving out of reach for low-income Indians. “Silver has emerged as a fashion statement as many people find difficult and unrealistic to buy gold jewelry at these high prices,” John Luckose, the owner of a small gold and silver shop in Kochi, tells CommodityOnline.

2) Fresh investment demand. Year-over-year food inflation is running rampant in India. The rate, as measured by wholesale prices, topped 10 percent (10.05 percent) for the week ended March 12, according to The Economic Times. Inflation is also finding its way into prices for non-food items with manufactured goods inflation at 6.1 percent last month. As prices climb, silver coins and bars present an attractive, low-cost means of protecting assets.

3) The wrong sort of attention. Wearing flashy gold jewelry in India could be enough to get you mugged. “People fear wearing gold jewelry these days as high gold price has led to several incidents of gold jewelry snatching on streets,” Luckose says. “Many customers coming to us say that they feel comfortable wearing silver jewelry.”

4) Some boats rise faster than others. India is the world’s largest consumer of gold. It accounted for around 24 percent of world gold consumption, according to the World Gold Council and the Bombay Bullion Association, and demand for gold as an investment soared 73 percent last year. That sounds like a lot until you compare it to last year’s growth in demand for silver in India. Silver imports climbed more than six times 2009 levels in the first six months of 2010, according to commodities brokerage Karvy Comtrade. If that trend stays intact in 2011, silver’s price rise will likely dwarf gains in the price of gold.

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