Silver has stolen the spotlight once again. The white metal recently crossed the $50-an-ounce mark for the first time on October 9, briefly touching $51.30 before retreating slightly. In India, silver prices hit an all-time high of ₹1.63 lakh per kg, marking a staggering 72% rise since January 2025.
This massive surge has drawn retail investors in droves toward silver exchange-traded funds (ETFs), pushing ETF prices far above their indicative net asset values (NAVs).
ETF Prices Soar Amid Retail Rush
According to data from the National Stock Exchange (NSE), leading silver ETFs from SBI Mutual Fund, HDFC MF, and Axis MF have jumped between 9% and 13% significantly higher than their NAVs. Analysts suggest that investors are now paying 2–10% premiums over the actual underlying value of silver, reflecting heightened demand and speculative enthusiasm.
However, despite the ETF surge, MCX Silver December futures slipped 0.6%, indicating that retail sentiment rather than fundamentals is driving the current rally.
‘FOMO’ Buying Takes Over
Market expert Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, described the trend as “FOMO-driven”.
“Silver just hit ₹1.5 lakh per kg, and suddenly everyone wants a piece of it. Investors who ignored silver below ₹1 lakh are now rushing into Silver ETFs, even at hefty premiums,” Sheth stated.
Supply Deficit Tightens Global Market
The Silver Institute projects that global silver demand will exceed supply by 100 million ounces in 2025, marking the fifth consecutive year of shortage. Industrial demand for solar panels, electric vehicles, and electronics continues to soar, keeping investment interest high.
Analysts at Nomura estimate a global shortfall of 142 million ounces, with silver prices expected to stay in the $50–55 per ounce range in the near term. Julius Baer predicts a slightly higher range of $52–58, supported by lower real interest rates and sustained industrial demand.
Adding to the pressure, a shortage of freely available silver in the London market has further constrained supply chains, making it harder for ETF providers to source the physical metal.
Fund Houses Struggle with Inflows
With each silver ETF unit backed by physical holdings, several fund houses are now facing supply constraints.
Kotak Mahindra AMC temporarily halted fresh and additional lump-sum or switch-in investments into its Kotak Silver ETF Fund of Fund from October 10, citing valuation pressures.
Other ETFs from Nippon India, HDFC, UTI, Tata, and Kotak have also touched record-high NAVs, with some trading near ₹165 per unit on the NSE.
Should Investors Buy Now?
Experts advise caution. While silver’s long-term fundamentals remain strong, the current rally appears sentiment-driven. Apurva Sheth warns that this phase resembles a “short-term peak”, where retail investors rush in after large price moves often leading to corrections.
For now, investors may be better off waiting for a price correction or considering systematic investing instead of chasing short-term gains.
