Silver ETFs Extend Losses for Third Straight Session Amid Historic Metals Slide
Silver exchange-traded funds (ETFs) extended their losses for the third consecutive trading session as the historic slide in precious metals intensified across both domestic and global markets. The sharp correction in bullion prices has spilled over into exchange-traded funds, significantly eroding gains that had built up over an extraordinary rally throughout the past year.
Major Silver ETFs Witness Steep Declines
Among the hardest hit funds were Kotak Silver ETF and ICICI Prudential Silver ETF, both tumbling approximately 20% during this period. SBI Silver ETF and Axis Silver ETF also registered declines of around 20%, while HDFC Silver ETF fell 19.5% and Nippon India Silver ETF dropped 19%. Over the last three trading sessions characterized by extreme volatility, all silver ETFs have collectively lost more than 40% of their value.
MCX Silver Rate Crashes 15% on Monday
MCX Silver rate today crashed 15% on Monday, February 2, following a steep correction over the previous two sessions. The white metal has now fallen more than 46% or ₹1.94 lakh from its record high of ₹4,20,000 per kilogram, which was hit on Thursday, January 30. This decline occurred amid a firming US dollar and as higher CME margin requirements took effect. MCX silver price hit the 15% lower circuit, settling at ₹2,25,805 per kg.
Key Factors Driving the Silver Price Fall
Silver ETFs, which had earlier benefited from a massive surge in precious metal prices, have witnessed sharp profit-booking by investors. The correction has been exacerbated by a stronger US dollar following US President Donald Trump's announcement naming former Federal Reserve Governor Kevin Warsh—considered hawkish on interest rates—as his choice to head the US central bank.
Further downward pressure emerged after CME Group announced higher margin requirements on metal futures over the weekend, with the revised norms set to take effect after market close on Monday. Specifically, COMEX gold futures margins were raised from 6% to 8%, while margins for COMEX 5,000-ounce silver futures were increased from 11% to 15%. Such regulatory moves typically force traders to reduce their positions, adding to market volatility and intensifying downside pressure.
Market Perspectives: Time for Greed or Fear?
The sharp fall in silver ETFs mirrors the steep correction observed in international bullion markets on January 30, which has now fully reflected in domestic ETF prices. After an extraordinary rally over the past year, the recent slide indicates that prices had run far ahead of near-term fundamentals, triggering aggressive profit-booking once global cues turned adverse.
Zerodha founder and Chief Executive Officer Nithin Kamath described the crash as a rare market event where risk management can fail. In a post on X, he noted that in his 16 years in the markets, he had witnessed a similar dislocation only once before—when crude oil prices turned negative during the Covid-19 pandemic.
Sriram B K R, Senior Investment Strategist at Geojit Financial Services, observed that the weakness in gold and silver ETFs is largely a spillover from the sharp correction in global bullion prices on January 30, as reflected in LBMA benchmarks. He pointed out that despite the correction, price levels remain elevated and can sustain only if backed by fresh and lasting fundamental triggers, even as current signals remain mixed.
Sriram further commented that ongoing global tensions and uncertainty may continue to provide underlying support to gold. “Both asset classes appear due for a price consolidation, though timing such a move is extremely difficult. We continue to advise investors not to chase rallies and instead remain disciplined with asset allocation. Investors should exercise caution at these levels.”
How to Choose Silver ETFs Amid Volatility
Offering a practical lens for investors navigating this heightened volatility, Siddharth Srivastava, Head of ETF Product & Fund Manager at Mirae Asset Investment Managers (India), provided key selection criteria:
“In selecting Silver ETFs, primary importance should be given to liquidity on the exchange and a lower expense ratio. Additional filters may include tracking error and the efficiency of the ETF in tracking the underlying asset on the exchange.”
Disclaimer: The views and recommendations mentioned above are those of individual analysts or broking companies, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.
