Silver Market Turns Volatile: Futures Hit Record High as ETFs Slide Up to 8%
While the MCX December futures surged 1% to touch a fresh high of ₹1,64,660 per kilogram, silver exchange-traded funds (ETFs) simultaneously recorded sharp declines of 6–8%.
Hyderabad: Silver prices displayed remarkable volatility on Thursday, leaving investors uncertain about market trends. While the MCX December futures surged 1% to touch a fresh high of ₹1,64,660 per kilogram, silver exchange-traded funds (ETFs) simultaneously recorded sharp declines of 6–8%.
According to data, silver ETFs managed by HDFC, Motilal Oswal, Mirae Asset, and SBI slipped around 6%, while Aditya Birla, Axis, and Zerodha saw steeper drops of about 7%. Edelweiss silver ETF fell the most, losing nearly 8% in value. The sharp divergence between futures and ETF prices has raised concerns among retail investors, who are struggling to understand why their holdings are falling despite rising silver rates.
Market analysts suggest that the recent drop in ETF values isn’t due to a fall in silver prices but rather a long-overdue correction following inflated valuations in previous sessions. Over the past few weeks, silver ETFs were trading at an unusually high premium compared to their indicative net asset values (iNAVs), and that premium has now started to narrow.
The dislocation stemmed from an acute shortage of LBMA-certified silver bars in India — the only form of physical silver approved for ETF purchases. This scarcity pushed ETF market makers to quote abnormally high prices both on the exchange and through direct institutional deals. As a result, ETF premiums climbed as high as 12–18% above import parity levels, luring retail investors into overvalued trades.
Tejas Shigrekar, Chief Technical Research Analyst at Angel One, cautioned that the inflated premiums and unstable price movements have increased risks for short-term traders. “Such conditions directly affect retail investors’ returns and make trading margins more unpredictable,” he noted.
Amid this turmoil, several leading mutual fund houses have taken defensive action. ICICI Prudential, Kotak, SBI, UTI, and Tata Mutual Fund have all suspended new subscriptions to their silver ETFs, while HDFC Mutual Fund has restricted fresh inflows into its Silver ETF Fund of Fund (FoF). The temporary freeze reflects the industry’s concerns over pricing distortions and liquidity stress.
Analysts are urging investors to remain on the sidelines for now. “It’s advisable to avoid new silver purchases until the market stabilizes,” Mirae Asset said in a client note. “Once premiums normalize, investors can reassess entry opportunities based on their risk appetite and long-term view.”
Despite the current correction, experts believe silver’s broader outlook remains positive. Brokerage house Motilal Oswal forecasts that global silver prices could consolidate around $50–55 per ounce in the near term before potentially rising to $75 by 2026, translating to roughly ₹2,40,000 per kilogram in India.
Even with short-term demand fluctuations, analysts emphasize that tightening global supply and growing industrial demand — especially from renewable energy and electronics sectors — are likely to keep silver a strong long-term investment option.
