Summary of this article
Amid a decline in silver prices and the resumption of investment in Silver ETF FoFs, know which strategies investors can deploy to make the most of their investment in the white metal
Investor interest in silver exchange-traded funds (ETFs) and silver ETF fund of funds (FoFs) has been high. The rise in investor interest was sparked by a recent rally in the price of the precious metal. As silver prices touched a new record high on October 17, 2025, most mutual fund houses halted investments in silver ETF FoFs. However, as the price corrected, mutual fund houses have re-started investment in silver ETF FoFs.
Following a stabilisation in silver prices, most mutual fund houses resumed investments in their silver ETF FoFs schemes. The fund houses said that the temporary pause on fresh investments was a response to market volatility and a surge in silver prices, which caused silver ETF units to trade at a significant premium to their underlying asset value. Notably, Kotak Mutual Fund, Axis Mutual Fund, Tata Mutual Fund and HDFC Mutual Fund resumed the investment between October 20 and October 24.
Why Was Investment In Silver ETF FoFs Halted
The suspension of investments in silver ETF FoFs in October 2025 was undertaken by asset management companies (AMCs) in order to protect mutual fund investors against the sharp surge in domestic silver prices and ETF valuations trading at unusually high premiums over their actual value. Several mutual fund houses also cited that the demand supply gap for silver caused the commodity to trade at a premium in the domestic market ranging between 5 per cent and 12 per cent compared to the price in the international market. This in turn increased the net asset value (NAV) of ETFs, creating a situation wherein new investors would invest in the scheme at overvalued levels.
Silver Prices Decline From Their Record High
In the sessions following the record high prices, silver prices have witnessed declines on the multi commodity exchange (MCX), too. As of October 28, Silver Futures with December 5 expiry have declined over 17 per cent from the record high. Notably, Silver Futures closed at Rs 1,41,281 per kg down by Rs 2086 or 1.46 per cent on October 28.
What Should Investors Do
The price of silver declined after the rally in October 2025 following profit-booking by investors, easing of global supply shortages, moderation in festive demand, strengthening of the dollar, and a slight reduction in safe haven asset demand. Amid the decline in silver prices from the record highs and the recent resumption of investment in silver ETF FoFs, Santosh Meena, head of research at Swastika Investmart told Outlook Money that a fresh entry into silver ETF FoFs is advisable as the outlook for silver remains bullish.
“Yes, a fresh entry is advisable. The overall market outlook for silver remains fundamentally bullish, supported by both industrial demand and its role as a hedge against inflation and geopolitical risk. The recent healthy market correction presents a compelling buying opportunity for investors,” Meena said.
Meena added that amid the decline in prices and the bullish outlook, existing investors should not panic and instead maintain their current holdings. He added that the recent price pullback offers an opportunity to add to their position and lower their average cost to maximise returns.
“Existing investors should maintain their current holdings. Given the strong long-term outlook and the recent price pullback, this is an excellent time for a strategic deployment. Investors are advised to add to their position on this recent correction to effectively lower their average cost and maximise potential returns as the market resumes its upward trend,” Meena said.
However, Meena advised investors to look at their existing allocations to silver before making fresh investments. He added that while a 5 per cent allocation to precious metals has been considered ideal, investors can consider an allocation of as much as 10-15 per cent of their overall portfolio to precious metals amid supply constraints and robust industrial demand for silver.
“Historically, a 5 per cent allocation was standard for precious metals as a traditional portfolio hedge. However, given the current confluence of supply constraints, strong industrial demand (especially in solar and electronics), a higher allocation is warranted. We recommend investors consider a strategic allocation ranging from 10-15 per cent of their overall portfolio,” Meena said.
Meena projected that silver has the potential to double its current value over the next 2-3 years. He added that the metal can also reclaim its recent high in the span of the next three to six months.
“The near-term and long-term outlook for silver remains decidedly bullish. While some investors express concern regarding silver's historical volatility—notably the multi-year correction after hitting highs around the $50 per ounce mark in the past—we believe the current breakout is fundamentally different and sustainable. Based on these fundamentals, we believe silver has the potential to double its current value over the next 2-3 years. We anticipate silver can reclaim its recent highs over the next 3 to 6 months,” Meena said.
