Silver ETF Bloodbath: Up to 20% fall today, 40% in 3 sessions as silver price rout deepens — Time for greed or fear?

Silver rate today: Silver ETFs extended losses for the third straight session as the historic slide in precious metals intensified across domestic and global markets. The sharp correction in bullion prices has spilled over into exchange-traded funds, eroding gains that had built up over an extraordinary rally in the past year.

Among the hardest hit were Kotak Silver ETF and ICICI Prudential Silver ETF, both tumbling 20%. SBI Silver ETF and Axis Silver ETF also declined 20%. HDFC Silver ETF fell 19.5%, while Nippon India Silver ETF dropped 19%. Over the last three trading sessions of extreme volatility, all silver ETFs have lost more than 40%.

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, hit on Thursday (January 30) on firm dollar and as higher CME margins take effect from today. MCX silver price tanked 15% lower circuit of ₹2,25,805 per kg.

Why are silver prices falling today?

Silver ETFs, which had earlier benefited from a massive surge in precious metal prices, have witnessed sharp profit-booking. The correction has been exacerbated by a stronger dollar after U.S. President Donald Trump named former Federal Reserve Governor Kevin Warsh — considered hawkish on rates — as his choice to head the U.S. central bank.

Further pressure came 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. 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 moves typically force traders to cut positions, adding to volatility and downside pressure.

Time for greed or fear?

The sharp fall in silver ETFs mirrors the steep correction seen 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 in a post on X described the crash as a rare market event where risk management can fail, noting that in his 16 years in the markets he had seen a similar dislocation only once before — when crude oil prices turned negative during the Covid-19 pandemic.

Moreover, Sriram B K R, Senior Investment Strategist at Geojit Financial Services, noted 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 high and can sustain only if backed by fresh and lasting fundamental triggers, even as current signals remain mixed.

Sriram further said 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 ETF?

Meanwhile, offering a practical lens for investors navigating this volatility, Siddharth Srivastava added:

“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 efficiency of ETF in tracking the underlying on exchange,” said Siddharth Srivastava, Head - ETF Product & Fund Manager, Mirae Asset Investment Managers (India).

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.