Why Silver ETFs Crashed Up to 24% While MCX Silver Futures Fell Only 4%

Silver exchange-traded funds (ETFs) witnessed a sharp sell-off of up to 24% on January 22, 2026, shocking retail investors across India. This steep fall came despite silver futures on the Multi Commodity Exchange (MCX) declining only about 4% during the same session.

So why did silver ETFs fall so much more than silver prices themselves? Experts say the answer lies in a speculative premium that built up in Indian silver prices ahead of the Union Budget — and then suddenly collapsed.

Let’s break it down in simple terms.

📉 Snapshot: What Happened in the Market?

The biggest hit was seen in ETFs like Tata Silver ETF, which dropped nearly 24% intraday before recovering part of the losses.

❓ Why Did Silver ETFs Fall More Than Silver Prices?

1️⃣ Speculative Premium in Indian Silver Collapsed

According to market experts, Indian silver prices had surged well above global prices in anticipation of possible import duty relief in the Budget.

• At peak levels, Indian silver was trading near $107 per ounce
• Global COMEX silver was around $94 per ounce
• This created an unusually wide $13 premium

Once it became clear that no immediate import duty relief was announced, this premium started unwinding rapidly.

2️⃣ ETFs React Faster Than Futures

Silver ETFs are linked to:

• Domestic spot prices
• Investor inflows and outflows
• Arbitrage opportunities

When retail investors rushed to book profits, ETF units faced heavy selling pressure, leading to a sharper and faster correction compared to MCX futures.

3️⃣ Not a Global Silver Crash

Experts stressed that:

• There was no collapse in global silver fundamentals
• The fall was India-specific
• It reflected price rationalisation, not panic selling

In simple words, ETF prices moved back closer to the true market value of silver.

📊 Why Silver’s Long-Term Story Is Still Strong

Despite short-term volatility, analysts remain positive on silver’s fundamentals:

✔ Rising industrial demand from solar panels and EVs
✔ Growing use in AI and data centre infrastructure
✔ Supply constraints and structural deficits
✔ Safe-haven appeal during geopolitical uncertainty

💡 What Should Silver ETF Investors Do Now?

✔ Expert Advice

• Avoid lump-sum investments during volatile phases
• Use staggered or systematic buying to manage timing risk
• Conservative investors can allocate 5–10% of portfolio to precious metals

“Rather than deploying capital all at once, spreading purchases over weeks or months helps capture dips while reducing downside risk,” experts say.

🔍 How to Check If a Silver ETF Is Expensive or Cheap

Follow these simple steps:

1. Check the daily NAV on the AMC website or NSE/BSE
2. Compare it with the current market price
3. If market price > NAV → ETF is at a premium
4. If market price < NAV → ETF is at a discount

👉 Fair NAV is calculated using MCX silver closing prices minus expenses and updated daily.

⚠️ Key Takeaway for Investors

This sharp fall in silver ETFs is not a bearish signal for silver as an asset class. Instead, it reflects the unwinding of a short-term, sentiment-driven price distortion in the Indian market.

Volatility may continue, but long-term investors should focus on fundamentals, disciplined allocation, and gradual investing.