Silver ETFs back to fair value after Dhanteras, Diwali — Is this the next entry point?

After weeks of feverish buying, India’s silver exchange-traded funds (ETFs) have finally cooled, ending a stretch that saw them trading at significant premiums to their net asset values (NAVs). The correction, triggered by easing global silver prices and stabilizing supply conditions, has brought ETF valuations back in sync with fundamentals — offering investors a more rational entry point into the metal.

Between October 9 and 14, silver ETFs traded at 5–10% premiums as global silver prices surged past $40 an ounce, extending their rally to $50 per ounce by mid-October. The sharp divergence from NAVs reflected a global shortage of physical silver, forcing several asset management companies (AMCs) — including Kotak, SBI, UTI, Groww, Tata, ICICI Prudential, Aditya Birla Sun Life, and HDFC Mutual Fund — to temporarily halt new inflows into their Silver ETF Fund-of-Funds (FoFs).

However, the rally reversed late last week after easing trade tensions dampened safe-haven demand. On October 17, silver prices dropped more than 6% in the US, while in India, they fell 7%, from Rs 1,71,275 per kg to Rs 1,60,100 per kg, according to the India Bullion and Jewellers Association (IBJA).

By October 20, the market had normalized. Nippon India Silver ETF closed at Rs 160.6, about 0.7% below its NAV, while most other schemes traded at discounts of up to 3%. Silver ETF prices are now about 10% off their 52-week highs from October 14, while spot silver remains only 2% below record levels.

The pullback coincides with a broader alignment in global prices. In London, silver dropped from $54.45/oz to $50.89/oz between October 17 and 18 before recovering to $52/oz by October 20. On the Multi Commodity Exchange (MCX), silver prices fell from Rs 1,70,695 to Rs 1,59,615 per kg — a 6.5% decline. As of Tuesday, silver was trading at Rs 1,67,370 per kg in Delhi.

Silver ETFs in last one week

Rank    Silver ETF Name    1-Week Return (%)
1    360 ONE Silver ETF    -6.93%
2    Aditya Birla Sun Life Silver ETF    -7.08%
3    Axis Silver ETF    -7.06%
4    DSP Silver ETF    -7.02%
5    Edelweiss Silver ETF    -7.05%
6    Groww Silver ETF    -7.04%
7    HDFC Silver ETF    -7.05%
8    Aditya Birla Sun Life Silver ETF FoF – Direct Plan    -9.61%
9    Axis Silver FoF – Direct Plan    -11.38%
10    DSP Silver ETF FoF – Direct Plan    -10.71%

Most silver ETFs saw sharp declines over the past week, with core ETFs falling around –7%, while fund-of-fund (FoF) variants posted steeper drops between –9% and –11%.

ETFs at fair value

The drop has also eased strain on India’s ETF market. With premiums shrinking, market makers created new ETF units, restoring liquidity and correcting price distortions. HDFC Mutual Fund has since resumed full subscription access to its Silver ETF FoF, indicating market normalization.

“In other words, ETFs are finally trading at fair value or even at a discount — a key signal that demand has moderated,” said analysts tracking commodity ETFs.

The Motilal Oswal Financial Services (MOFSL) report titled “Silver 2030 – The Unprecedented Rise” forecasts a steady medium-term uptrend. It expects silver prices to consolidate between $50–$55 per ounce, with potential peaks of $75 in 2026 and $77 in 2027 on COMEX.

“On the domestic front, silver prices could reach Rs 2,40,000 per kg by end-2026 and Rs 2,46,000 by 2027, assuming USDINR levels near 90–92,” the report added.

Long-term outlook

While the current correction has tempered speculative enthusiasm, analysts believe the long-term story remains intact. Silver’s dual role — as both a safe-haven investment and a strategic industrial metal — continues to support demand.

Silver is vital to solar manufacturing, electronics, and defence, with nearly 60% of its global demand tied to industrial uses. As renewable energy expansion accelerates and physical availability improves, the market is expected to stabilize before resuming its upward trajectory.

For long-term investors, the disappearance of ETF premiums may present a healthier, more grounded opportunity to accumulate exposure — marking a reset rather than a retreat in silver’s remarkable 2025 rally.