1 / 11ETF rush drives premium surge | On the National Stock Exchange (NSE), top-traded silver ETFs such as those from SBI Mutual Fund, HDFC MF, and Axis MF are up between 9% and 13%, according to exchange data. Their NAVs, however, suggest valuations should be lower — implying investors are paying between 2% and 10% more than the actual underlying silver value.
2 / 11Even as ETF prices soared, MCX Silver December futures slipped 0.6%, stressing that retail enthusiasm, rather than fundamentals, is fuelling the current rally.
3 / 11Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities, said the surge represents a case of “FOMO” buying. “Silver just hit ₹1.5 lakh per kg — and suddenly, everyone wants a piece of the metal. Investors who ignored silver below ₹1 lakh are now rushing into Silver ETFs, even if it means paying a hefty premium,” Sheth noted in a report.
4 / 11Supply deficit and global tightness | Analysts attribute silver’s sharp rally to tight physical availability and a widening global supply deficit. According to the Silver Institute, total silver demand is projected to exceed supply by 100 million ounces in 2025, marking the fifth consecutive year of deficit. Investment demand remains strong, while industrial use in solar panels and electric vehicles continues to climb.
5 / 11Nomura expects a global shortfall of 142 million ounces this year, with prices potentially staying in the $50–55 per ounce range in the near term. Julius Baer forecasts a range of $52–58, citing expectations of lower real interest rates and sustained industrial demand.
6 / 11Adding to the pressure, a shortage of freely available silver in the London market has tightened supply chains further, pushing ETF providers to face challenges in sourcing the physical metal.
7 / 11Fund houses face inflows, and constraints | Each silver ETF unit is backed by actual silver held by the fund. But as buying intensifies, some fund houses are beginning to face physical constraints. Kotak Mahindra AMC temporarily suspended fresh and additional lump-sum or switch-in investments into its Kotak Silver ETF Fund of Fund, effective October 10, citing supply and valuation pressures.
8 / 11Other silver ETFs from Nippon India, HDFC, UTI, Tata, and Kotak have also hit all-time high NAVs, with some units trading around ₹165 on the NSE.
9 / 11What should investors do? Market experts advise caution. While silver’s long-term fundamentals remain constructive, the current rally appears driven more by sentiment than by fundamentals. Apurva Sheth of SAMCO points out that the current phase mirrors “classic short-term peak behaviour,” where retail investors rush in after large price moves.
10 / 11“Retail enthusiasm tends to peak near tops. The recent disconnect between ETFs and physical silver indicates speculative momentum, not fundamental repricing,” Sheth said. For investors, analysts recommend waiting for premiums to normalise or using systematic investment routes rather than lump-sum buying during volatile phases.
11 / 11Silver’s 2025 rally caps years of underperformance relative to gold. The gold-silver ratio, which measures how many ounces of silver equal one ounce of gold, has narrowed sharply this year, indicating silver’s outperformance. With prices already 72% higher year-to-date, and the cost of production for miners estimated at just $8–26 per ounce, analysts say the metal is now in a technically “overbought” zone.
