Why did the Nippon India Silver ETF price surge despite falling silver prices?

The Nippon India Silver ETF price surged by 9% on October 9th, 2025, even as the underlying MCX Silver December futures dropped 0.75%, due to a demand-supply mismatch in the silver ETF market.

What are the risks associated with the silver ETF's price disconnect?

The dramatic disconnect between the silver ETF's price and the actual silver price has exposed critical vulnerabilities in this investment, raising concerns over liquidity mismatches and the potential for bigger price swings compared to the underlying asset.

What alternative investment options are advisors recommending for silver investors?

Advisors are now recommending silver funds as an alternative to silver ETFs, as they provide a more closely matched end-of-the-day NAV and better liquidity management, though at a slightly higher cost.

Home / Business and Economy / Silver ETF Surges 9% as Underlying Metal Plunges, Exposing Liquidity Risks

Silver ETF Surges 9% as Underlying Metal Plunges, Exposing Liquidity Risks

9 Oct

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Summary

Silver ETF hits all-time high NAV despite silver futures dropping 0.75%
Demand-supply mismatch in silver ETFs can lead to bigger price swings
Advisors recommend silver funds as alternative to manage liquidity

Silver ETF Surges 9% as Underlying Metal Plunges, Exposing Liquidity Risks

As of October 9th, 2025, investors in the Nippon India Silver ETF received a surprising jolt as the fund's net asset value (NAV) rocketed nearly 9% in just one hour, even as the actual price of silver plummeted. This stunning reversal has exposed a critical vulnerability in one of India's most popular investments of the year, raising questions about liquidity mismatches in a market where thousands of crores of investor money now hangs in the balance.

The Silver BeES ETF hit an all-time high NAV of Rs 165 per unit, gaining over 9%, while the MCX Silver December futures slipped 0.75% to Rs 1,48,738 per kg. This dramatic disconnect has left market participants scrambling for answers. Ideally, ETFs are supposed to closely track the price of the underlying asset, but in this case, the ETF price was driven by demand and supply in the market, rather than the actual silver price.

Advisors are now recommending silver funds as an alternative investment route, as they provide a more closely matched end-of-the-day NAV and better liquidity management, albeit at a slightly higher cost. The mismatch has prompted investors to use such sharp swings in ETFs to their advantage, as prices that deviate significantly from the underlying asset value tend to return to normal levels over time.

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