Silver exchange-traded funds (ETFs) in India have witnessed an unusual surge in trading activity and prices, driven not by global cues but by a sharp domestic supply squeeze, according to a recent research note by Mirae Asset.
Investor interest in silver ETFs has accelerated sharply over the past year. Average daily trading volumes, which stood at just Rs 77.5 crore in calendar year 2024, have climbed to over ₹211 crore so far in 2025. September alone saw volumes spike to nearly Rs 642 crore a day, while net inflows into silver ETFs touched around Rs 5,700 crore in the three months ended August, highlighting growing retail participation in the precious metal.
However, the rally took an unusual turn on October 9, when silver ETFs on Indian exchanges jumped sharply despite relatively stable international silver prices. Mirae Asset attributed this divergence to an acute shortage of LBMA-certified silver bars — the only form permitted by regulators for ETF procurement. Commodity traders acting as market makers reportedly had low or negligible inventory, with limited visibility on near-term replenishment.
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This supply constraint led to a sharp escalation in domestic premiums. As demand surged, market makers quoted significantly higher prices both on exchanges and for off-market purchases by ETF schemes. As a result, silver ETFs traded 5–10% above their previous day’s net asset value (NAV). Mirae Asset Silver ETF, for instance, closed at Rs 156.52 on October 9, compared with a last declared NAV of Rs 149.11 on October 8.
While global silver prices rose by about 1.4% over the same period, domestic premiums jumped multi-fold, inflating ETF NAVs by over 3%. MCX spot prices, which typically anchor domestic silver pricing, were distorted by the supply crunch, leading to higher acquisition costs for ETFs.
Mirae Asset cautioned investors against fresh purchases at current levels, warning that elevated premiums could expose buyers to mark-to-market losses if premiums normalize while silver prices remain stable. The fund house advised investors to stay on the sidelines in the near term and reassess once premiums cool.
That said, the outlook for silver as a commodity remains constructive over the long term, supported by strong fundamentals. In the short term, however, the sharp run-up raises the possibility of consolidation, the report noted.