Silver ETF prices crash 20%. Who pulled the plug on multibagger rally?

Indian silver exchange-traded funds (ETFs) crashed up to 20% on Thursday in a dramatic reversal, wiping out their premium to international and physical markets as investors fled amid heightened volatility in precious metals. Nippon India Silver ETF, ICICI Prudential Silver ETF, and Kotak Silver ETF each plummeted 19-20% in morning trade, falling below their indicative net asset values (iNAVs) as what had been an abnormally steep premium evaporated and transformed into a discount.

The violent selloff was largely confined to the ETF market, with physical silver, international spot markets, and even domestic MCX futures showing far more modest declines. Global spot silver held steady at $92.27 an ounce, just days after hitting a record high of $95.87 on Tuesday. MCX March silver futures fell just 2% this morning.

The sharp divergence underscores the extreme volatility that can grip silver ETFs, whose net asset values sometimes trade at abnormally steep premiums or discounts to their indicative NAVs. The funds are known to swing violently in both directions. Yesterday's session saw both gold and silver trading at premium to international prices in both MCX futures as well as ETFs amid rumours that the Union Budget may see a hike in customs duty on precious metals


"Over the last two sessions, MCX silver outperformed COMEX on expectations of an import duty tweak, pushing domestic prices near $107/oz versus ~$94 on COMEX — a rare $13 premium. That move was sentiment-driven rather than purely fundamental. Once it became clear no immediate duty relief was coming, that excess premium started unwinding. ETFs, which reflect both spot prices and investor flows, typically react faster as retail profit-booking accelerates. What we’re seeing is a normalization of an India-specific distortion, not a breakdown in silver’s global trend," Anirudh Garg, Fund Manager, INVasset PMS, said.

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Noting that very high price volatility in both precious metals, Manoj Kumar Jain of Prithvi Finmart has suggested staying away from taking fresh positions in both precious metals in today's session and wait for some stability in the markets.

The retreat from record highs came as the dollar strengthened and risk appetite improved globally, reducing demand for safe-haven assets. Geopolitical tensions that had fueled the rally eased after U.S. President Donald Trump ruled out using military force over Greenland and signalled he would refrain from imposing tariffs on European nations after reaching the outlines of a deal with NATO on Greenland's future.

"Gold and silver prices show heavy profit booking after his comments amid risk aversion in the global financial markets," Jain said, though he noted that "global uncertainty due to U.S. trade tariffs and the western policies of sell America narrative could continue to support safe-haven buying for precious metals."

Despite Thursday's turbulence, Ponmudi R, CEO of Enrich Money, maintains a bullish outlook. "COMEX Silver is trading firm near $92–$93 after recently touching record highs above $95.80," he said. "The rally is driven by a combination of robust industrial demand (solar, EVs, AI, electronics) and safe-haven flows amid tightening global supply."

On Wednesday, silver March futures settled at $92.94 per troy ounce in international markets, down 1.79%, while domestic MCX silver March futures settled at Rs 3,18,492 per kilogram, down 1.60%.

Jain sees support for silver at $84 per troy ounce and gold at $4,555, with resistance levels at $94.60-$96.80 for silver. At MCX, silver has support at Rs 3,14,000- Rs 3,06,000 and resistance at Rs 3,24,000- Rs 3,28,000.

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Ponmudi projects that sustained strength above Rs 3,15,000 keeps the upside bias intact, with breakout targets at Rs 3,35,000- Rs 3,50,000 and beyond, though corrective declines below Rs 3,00,000 could test the Rs 2,90,000- Rs 2,80,000 zone.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)