Silver ETFs Soar as Prices Hit All-Time Highs

Silver is back in the spotlight. On October 9, the white metal breached the $50-an-ounce mark for the first time, touching $51.30 before easing slightly. In India, domestic silver prices jumped to ₹1.63 lakh per kg, marking a massive 72% surge since January 2025.

The sharp rally has drawn a flood of new investors into silver exchange-traded funds (ETFs). However, as the rush intensifies, these ETFs are now trading at steep premiums compared to their indicative net asset values (NAVs) — signaling overheated demand in the market.

ETF Rush Pushes Premiums Higher

On the National Stock Exchange (NSE), leading silver ETFs from SBI Mutual Fund, HDFC Mutual Fund, and Axis Mutual Fund have jumped between 9% and 13%, according to exchange data.

However, the NAVs indicate lower valuations, which means investors are paying 2% to 10% above the actual silver value. This widening gap suggests that FOMO (fear of missing out) is driving many investors to chase the rally, even at inflated prices.

“Investors who ignored silver below ₹1 lakh are now rushing into Silver ETFs, even if it means paying a hefty premium,” said Apurva Sheth, Head of Market Perspectives & Research at SAMCO Securities.

Sheth added that this rush represents a typical late-cycle investment pattern, where momentum buyers enter when prices are already near their peaks.

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Global Supply Deficit Fuels Silver’s Rally

The sharp rise in silver prices isn’t just about investor enthusiasm. Analysts point to tight physical availability and a widening global supply deficit as key drivers behind the surge.

According to data from the Silver Institute, total silver demand is expected to exceed supply by 100 million ounces in 2025, marking the fifth straight year of deficit.

Industrial demand has remained strong, especially from sectors like solar panels, electric vehicles, and electronics manufacturing. These uses continue to outpace global mining and recycling output, tightening supply further.

“Industrial and investment demand are both rising, creating a perfect storm for silver,” said one analyst, noting that long-term fundamentals remain supportive, but short-term volatility may increase due to speculative flows.

Should Investors Chase the Rally?

While silver’s rally looks impressive, experts caution against chasing prices at elevated levels. Silver ETFs trading at premiums to NAV indicate excessive enthusiasm rather than underlying value.

Analysts advise that new investors should wait for premiums to normalize before entering. Overpaying now could mean lower returns if prices stabilize or correct in the coming months.

That said, silver’s long-term outlook remains strong, supported by its growing role in renewable energy, electronics, and EV sectors. Investors with a longer investment horizon might still benefit from systematic exposure rather than lump-sum entries during sharp rallies.

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