Silver ETFs are trading at a premium as investors rush to gain exposure to the metal’s rally. Here’s why this is happening, what it means for the market, and how smart investors can plan their next move.
Silver ETFs Surging with Premiums
On the NSE, leading ETFs such as SBI Silver, HDFC Silver, and Axis Silver are up 10–15%, trading well above their net asset values
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Silver is on a tear. It has breached the $50-mark for the first time on October 9, spurred by high demand. Domestic prices hit Rs 1.63 lakh for a kg, drawing a wave of new investors.
Why Prices Are Trading at a Premium
Those who stayed away from the white metal are now rushing into silver exchange traded funds (ETFs), even if it means paying a hefty premium over indicative net asset values (NAVs).
“On the NSE, leading ETFs like SBI Silver, HDFC Silver, and Axis Silver are up 10–15 percent (9th October closing), trading well above their net asset values. Ironically, while ETFs have been soaring, MCX silver December futures slipped 0.6 percent, indicating that sentiment-driven retail enthusiasm, not fundamentals, is fuelling the chase,” Apurva Sheth, head of market perspectives & research at SAMCO Securities said.
Decoding the Premium and Next Move for Investors
This is a textbook case of FOMO buying. Investors are piling into silver ETFs because they don’t want to miss out, even though the underlying spot market is showing signs of short-term overheating, he said.
During strong rallies in silver prices, when physical silver supply becomes tight and market makers find it difficult to get enough metal, Silver ETFs often start trading at a premium. This premium shows a temporary mismatch between demand and supply, and it doesn’t always mean that silver is overvalued for the long term.
Recently, the rising demand made Kotak Mutual Fund take a protective step. On October 9, the fund house temporarily stopped lump-sum investments in its Kotak Silver ETF Fund of Fund. The reason? There were “sharp spot premiums over import parity prices”, making new purchases less efficient for investors.
Nilesh Shah, Managing Director of Kotak AMC, said it was a wise decision to protect investors’ interests, as buying at such high premiums was not ideal. However, he clarified that SIPs and redemptions are continuing as usual, so existing investors won’t be affected.
Kotak MF also confirmed that the main Kotak Silver ETF is still open for trading and will resume fresh subscriptions once the premiums return to normal levels. The fund house maintained its positive long-term view on silver, highlighting the metal’s key role in the global clean energy transition and its strength as a safe investment during market uncertainty.
Investors Rush to Silver ETFs
Investment expert Sheth advised investors to stay calm and wait. He said,
“When ETFs are trading at a premium, it’s not the best time to buy. Wait for prices to cool down or for NAVs to match the market again. The long-term outlook for silver is strong, but timing your entry is very important.”