Why are Silver ETFs rising? Top reasons and what investors should do

Silver ETF news: In a surprise for investors, several Silver Exchange Traded Funds (ETFs) surged between 6-9% during the trading hours on Thursday, October 9, 2025.

According to data on the NSE at the time of writing, Tata Silver ETF was up 8.51%, UTI Silver ETF 6.9%, SBI Silver ETF at 6.6%, Kotak Silver ETF at 6.45% and HDFC Silver ETF at 5.44%. Earlier in the day, Nippon India Silver ETF had spiked as much as 9% within an hour.

Silver ETF prices jumped even as the actual price of silver tumbled on Thursday, leaving investors wondering about the anomaly. At the time of writing, the MCX Silver December Futures was down 0.75%.

Just a day before the surge in ETFs, silver hit an all-time high of over ₹1.5 lakh. The silver futures on Wednesday touched a high of ₹1,50,282/kg before settling at ₹1,49,855 with a gain of 2.79%.

What is behind the surge?

Exchange-traded funds are designed to mirror the price of their underlying assets. However, their prices can be affected by demand and supply imbalances in the market.

The demand-supply dynamics can trigger a sharp surge in an ETF's price compared to its underlying asset, especially in a situation where investors are ready to pay a premium. This typically happens when investors anticipate that the price of the underlying asset is going to rise soon due to high demand. Or, when there is more demand than supply.

In a high-demand situation, an anomaly may also arise if the market makers of an ETF are unable to manage the surge in volumes so that buyers can get the right price.

What should investors do?

Amid the anomaly in prices of Silver ETFs and their underlying asset, investors should ideally exercise caution and avoid falling prey to FOMO (fear of missing out).

As with any asset, one should invest in a silver ETF only if it aligns with their overall asset allocation strategy.

One should remember that heavy buying of Silver ETFs can trigger a sudden price surge. However, the opposite, or a sharp decline, can also occur if demand dips.

For instance, silver has seen up to 90% drawdowns in the past.

In a recent report, DSP Mutual Fund suggested booking some profit from silver.

"Silver still has room to close in on its theoretical midpoint at $64. Taking some profits off from now (at $47) to close to low end of $53 is advisable. Ancillary exposures like gold miners no longer warrant an overweight and should be reduced to normalized weights or gradually phased out," the report said.

The white metal has surged nearly 70% in 2025 due to booming industrial demand, US FED cuts and a global supply deficit.

While silver price may see further support in future due to these reasons, Tata Mutual Fund also suggested investors to be mindful of short-term volatility.

"Silver is a developing growth story, and the trend is highly depended on broad recovery in industrial demand. Investors should be mindful of short-term volatility and macro headwinds," Tata Mutual Fund said.