New Delhi: Silver exchange-traded funds (ETFs) have emerged as a breakout performer in 2025, mainly due to record inflows of almost ₹8,603 crore as inflows have surpassed those of last year. This year, investors have increasingly preferred the white metal over gold due to its relative affordability, as an alternative to the volatility and unpredictability of the stock market.
According to analysts, some silver ETFs have delivered about 50-55% returns this year, far outpacing gold and equity benchmarks. In fact, most ETFs have given upwards of 25% returns in the past month, especially as silver prices have reached almost $50 an ounce in the international markets.
Fascinated by the high returns, investors of all hues have been pouring money into ETFs for months, even as shortages in domestic markets persist. The Silver ETF units in India are backed with physical silver, and sourcing has become harder as demand has skyrocketed across the globe. These silver ETFs are now trading at a significant premium, especially as investors are paying much more than the actual worth of the underlying metal. Analysts have warned against investing in silver further, as any corrections in the prices can result in unprecedented losses.
On Reddit, users have been noticing the changes in the market, and the unusual behaviour of these instruments driven by investors Fear Of Missing Out (FOMO).
Posts from the indianstockmarket
community on Reddit
“Just saw Indian silver ETFs lately, and what I’ve seen doesn’t make sense at all,” one user named Social Calliper said.
“The premiums vary wildly; some are up 2%, others 8%, and on certain days I’ve seen prices swing as much as 30% above the NAV. That’s not how an ETF is supposed to behave. This isn’t just a minor mismatch it’s a complete disconnect from the underlying metal. Gold ETFS, built on a similar framework, stay fairly steady, but Silver ETFs look like they’re moving to their own rhythm. For anyone buying fresh units, it feels like walking into a trap; you could be paying for a premium that exists purely in thin air,” he explains.
“People buying silver is one thing but paying premium is all together another! Few know that the silver miners aren’t able to match the demand..etf need to back up physical delivery & the actual physical delivery time is exceeding days,” another user replied.
The fund houses too know this, and they are now reacting to protect investor returns. Kotak Mutual Fund has halted further lump-sum investments in its Silver ETF (FoF), citing a sharp premium of domestic prices over imports.
🚨 Investor Update 📣
Lumpsum and switch-in investments in Kotak Silver ETF Fund of Fund are temporarily suspended effective 10th October 2025, to protect investors from entering at elevated domestic silver premiums.SIPs/STPs continue as usual.
Read here:… pic.twitter.com/qV2S2CrxKj
— Kotak Mutual Fund (@KotakMF) October 9, 2025
Other Mutual Fund houses are expected to follow suit. Introduced in 2022, Silver ETFs have been fairly popular as an alternative to stocks, with almost Rs.36,000 crore invested in these funds since their debut in 2022.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Readers should conduct their own research or consult with a qualified financial advisor before making any investment decisions.
