Whalesbook
Silver ETFs Face Steep Correction
On Thursday, January 22, 2026, a notable sell-off occurred in the Indian silver exchange-traded fund (ETF) market. Several prominent ETFs, including Nippon India Silver ETF, ICICI Prudential Silver ETF, and Kotak Silver ETF, saw their values decline sharply, with drops ranging from 19% to 20% during morning trade. This precipitous fall led these funds to trade below their indicative Net Asset Values (iNAVs), a significant reversal from their earlier positions trading at substantial premiums compared to international and physical silver prices. The sharp divergence in performance was primarily confined to the ETF segment.
Disconnect From Underlying Assets
In contrast to the steep corrections seen in ETFs, the underlying silver markets exhibited far more moderate price movements on the same day. Global spot silver was trading around $92.27 to $94.89 per ounce, having recently approached record highs near $95.87-$95.89 in early January 2026. Domestically, MCX March silver futures experienced a lesser decline, slipping approximately 2% to 4%. This disparity underscores the specific market dynamics and volatility risks associated with ETFs, which can trade at significant premiums or discounts during turbulent periods due to liquidity and investor sentiment factors.
Macroeconomic Drivers of the Sell-Off
Market analysts attributed the broad exit from silver ETFs to a confluence of macroeconomic shifts. An improvement in global risk appetite, coupled with a strengthening U.S. dollar, reduced the demand for precious metals as safe-haven assets. Statements from U.S. President Donald Trump signaling de-escalation in geopolitical tensions, including ruling out military force for Greenland and easing tariff threats against European nations, contributed to this sentiment shift. These factors collectively diminished the urgency for investors to hold defensive assets like silver.
Expert Views and Outlook
Market experts noted the elevated price volatility across precious metals. Manoj Kumar Jain of Prithvi Finmart advised investors to avoid initiating fresh positions and to wait for market stability. Conversely, Ponmudi R, CEO of Enrich Money, maintained a constructive medium-term outlook for COMEX silver, seeing it trade firm near $92-$93. He cited strong underlying industrial demand, particularly from sectors like solar energy, electric vehicles, and electronics, along with tight global supply as key supportive factors. However, he cautioned that near-term swings, especially in ETF prices, could persist given their tendency to deviate from Net Asset Values during volatile phases.
ETF Premium Dynamics
Historically, silver ETFs in India have sometimes traded at elevated premiums due to factors such as anticipated import duty hikes or speculative buying, separate from the underlying silver price movements. The sharp correction on January 22, 2026, saw these premiums evaporate and convert into discounts, highlighting the risks investors face when ETF prices significantly diverge from their intrinsic values, particularly during periods of rapid sentiment shifts.