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Silver ETFs: The past few weeks have been among the most dramatic periods for precious metals in recent memory. A strong, conviction-led rally in gold and silver turned speculative — particularly in silver — before abruptly reversing into a sharp selloff that erased gains and exposed fragile liquidity conditions. Silver ETFs mirrored this volatility.

Silver prices on MCX rebounded 6% in intra-day deals today, extending gains from the previous session as value buying emerged after a steep correction that had dragged prices down more than 46% from peak levels within three sessions. Gold too continued its recovery.

MCX silver jumped 6% to an intraday high of ₹2,84,094 per kg, while MCX gold rose 3% to ₹1,58,420 per 10 gram. In ETF space, silver ETFs rallied up to 9% intraday, with SBI Silver ETF, Zerodha Silver ETF, Nippon India Silver ETF, and Kotak Silver ETF gaining over 8% each.

This recovery followed the India–US trade announcement by US President Donald Trump, which improved market sentiment. However, investors continue to track broader factors such as geopolitical tensions, currency movements, and expectations around US Federal Reserve leadership.

Let's start with the basic one -

A Silver ETF is an exchange-traded fund that tracks the price of physical silver. It allows investors to gain exposure without storing or insuring the metal. Units trade like shares and reflect silver prices minus a small expense ratio.

Siddharth Srivastava, Head - ETF Product & Fund Manager, Mirae Asset Investment Managers (India) explains: “In selecting Silver ETFs, primary importance should be given to liquidity on the exchange and a lower expense ratio. Additional filters may include tracking error and efficiency of ETF in tracking the underlying on exchange.”

Srivastava cautioned that comparing short-term returns often misguides investors into reactive decisions rather than focusing on long-term portfolio fitment and asset class behaviour.

He further explained that silver is historically more volatile than gold due to its smaller asset base and higher speculative participation, which can amplify corrections when positions unwind.

Srivastava added that sharp corrections should neither be treated as automatic buying opportunities nor panic triggers without proper due diligence and understanding of portfolio context.

The sharp fall in silver was not only sentiment-driven but also caused by forced liquidations due to rising collateral requirements after margin hikes.

NS Ramaswamy, Head of Commodity & CRM at Ventura, said, “Silver is likely to remain around $72 to $78 and a breakout above $80 will decisively identify a recovery. The damage caused to Silver was majorly on account of higher collateral requirements on hiking the margins forcing traders to liquidate their positions accelerating the price drop.”

He added that over the longer term, higher prices could reshape supply-demand fundamentals and address the eroding deficit that had earlier fuelled silver’s rally.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.

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