Silver ETFs crash 19% from peak: Should you buy the dip or book profits?
The sparkle is fading fast from silver ETFs. After an electrifying rally that sent domestic silver prices to record highs, the white metal’s sheen has dulled. Silver ETFs have plunged nearly 19% from their October 15 peak as premiums over international prices evaporated. When markets reopen on Thursday evening after the Diwali break, investors may face another round of sell-offs, with global silver prices already tumbling 7.1% on Tuesday amid a stronger dollar and risk aversion across commodities.
The meltdown comes just days after a historic squeeze in the London silver market sent prices past the record set in 1980, during the infamous Hunt brothers’ cornering attempt. Benchmark spot rates had surged above New York futures, triggering physical shipments of the metal to London to relieve tightness. But as the rally overstretched technical indicators, the white metal’s ascent lost momentum, with macro jitters and a resurgent greenback pulling the rug from under prices.
On the MCX, silver slipped ₹327, or 0.22%, to ₹1,50,000 per kg in the Muhurat trading session, and with markets shut through Wednesday morning, the evening trade could see prices reset dramatically lower. Reflecting a shift in sentiment, Aditya Birla Sun Life Silver ETF Fund of Fund said it will resume fresh subscriptions from October 23, after weeks of suspension, as ETFs move from inflated premiums to trading at discounts to global benchmarks in a clear sign of normalization following speculative excess.
The latest slump follows two straight sessions of heavy declines in gold and silver, triggered by US President Donald Trump’s remarks that a meeting with his Chinese counterpart may not happen soon, dashing hopes of an early easing in trade tensions. The rally in precious metals had been built on a cocktail of rate-cut expectations, a weaker dollar, falling bond yields, and central bank buying, compounded by haven demand and a fear of missing out.
Still, analysts warn that the corrective pressure shouldn’t obscure silver’s underlying strength. According to Motilal Oswal, prices may consolidate in the $50–55 per ounce range in the near term, but could climb toward $75 by 2026 and $77 by 2027 on COMEX — levels that translate to around ₹2.4 lakh per kg domestically, assuming a USD-INR rate of 90. Bank of America also maintains a bullish stance, lifting its silver target to $65 per ounce, even as it forecasts an 11% demand drop next year, citing continued structural supply shortfalls.
Motilal Oswal’s long-term outlook underscores that this correction may be a pause in an enduring uptrend. It expects a persistent global supply deficit for the fifth straight year in 2025, driven by robust industrial demand from green technologies such as solar and electric vehicles. That structural tightness, it says, could create a lasting floor for silver prices — setting this rally apart from speculative bursts witnessed in 1980 and 2011.