Silver ETF surge: Domestic prices hit record highs; festive demand and global inflows drive 53% rally in 2025
India’s silver market has witnessed unprecedented momentum this year, with domestic prices soaring 53 per cent so far in 2025, significantly outperforming gold, which has risen nearly 49 per cent, according to market observers. The surge has also triggered a spike in investment inflows into silver exchange-traded funds (ETFs), reportedly tripling those into gold ETFs, Axis Mutual Fund told ET.The fund house highlighted that global demand for silver-backed ETFs has been strong, with total additions reaching about 95 million ounces in the first half of 2025 alone — exceeding the entire inflows of 2024 — pushing total global holdings to a record ~1.13 billion ounces, valued at over $40 billion by mid-2025.“Investment inflows into silver have soared globally, with silver-backed ETFs and other investment products seeing record additions,” the fund said.Analysts said silver ETFs are attracting attention as investors both build allocations and chase returns. Suranjana Borthakur, Head of Distribution & Strategic Alliances, Mirae Asset Investment Managers (India), told ET, “Passive ETFs have also seen growth, with gold ETFs maintaining momentum and other ETFs rising from about Rs 1,500 crore last month to more than Rs 8,000 crore now. Silver ETFs are catching attention too, as some investors are building allocations while others are chasing returns. We see interest in gold and silver continuing to persist unless there is a sharp correction.”In 2025 so far, silver ETFs have delivered strong returns. Axis Silver ETF recorded the highest return at around 86.67 per cent, followed closely by Mirae Asset Silver ETF at 86.63 per cent, while Tata Silver ETF posted a comparatively lower return of 68.44 per cent, according to an ET report.Kartik Jain, MD & CEO, Shriram AMC, noted that the data underscores the growing role of precious metals in portfolio diversification. “Balancing traditional equity and debt hybrid strategies along with strategic allocation to metals can strengthen portfolios against economic uncertainties while tapping avenues for long-term growth,” he said.Domestic silver has also been trading at significant premiums over international prices. Axis Mutual Fund reported that the Indian premium surged from nearly 0.5 per cent in early September to 5.7 per cent on October 9, with intraday spikes up to 12 per cent. The sharp rise has been attributed to robust physical demand ahead of the festive season, including Dhanteras and Diwali, alongside global supply constraints.India’s silver imports nearly doubled in September compared with the same month last year as bullion dealers and jewellers sought to secure inventory amid record-high prices. Retail investors are increasingly turning to silver ETFs and fund-of-funds (FoFs), driving up net asset values (NAVs) and creating challenges in fair valuation, especially when ETF units trade above spot market prices.In response, Kotak Mutual Fund announced on October 10 that it has temporarily suspended lumpsum and switch-in subscriptions in its silver ETF FoF to manage excess demand.Axis Mutual Fund cautioned that the local price premium could narrow once domestic supply catches up. “If and when India’s silver supply normalises, the premium embedded in ETF/FoF NAVs could reduce even if international prices remain flat. However, silver is increasingly seen as a strategic allocation for medium- to long-term investment, and short-term price distortions should not deter investors with a multi-year horizon,” the fund added.(Disclaimer: Recommendations and views on the stock market and other asset classes given by experts are their own. These opinions do not represent the views of The Times of India)
