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Informist, Friday, Sept. 12, 2025

By J. Navya Sruthi

MUMBAI – Inflows into silver exchange-traded funds fell for the second month in a row in August as investors booked profits, analysts said. They expect inflows into silver ETFs to continue, but relatively lower than those into gold ETFs due to high volatility in silver prices despite higher returns. Inflows into gold ETFs in August were at a 7-month high due to global uncertainties.   

"Usually when there is a sharp rally in the commodities market, investors tend to book profits and they become a little cautious around the record high level, which is the case with silver prices now," Deveya Gaglani, senior research analyst, commodities, at Axis Securities, said. Also, institutions may be shifting some part of their allocation to gold ETF from silver as the latter is more volatile than gold, causing low inflows into silver ETFs, he added.

After breaching the INR 116,000 per kilogram level on the Multi Commodity Exchange of India in July, silver prices were range-bound with an upward bias till mid-August. On Aug. 29, silver prices on the MCX rose to a record high of INR 120,900 per kg, supported by the geopolitical tensions. The rally in silver prices continued into September, with prices hitting a new all-time high. 

"Despite silver's strong performance this year, investor attention in the exchange-traded fund space continues to be overwhelmingly skewed towards gold as people are still not as comfortable with silver as an ETF commodity," Rajkumar Subramanian, director, head product & family office at PL Capital, said. "Silver shines brighter, but Gold ETFs still dominate investor flows," he added. 

The net inflows into 16 silver exchange-traded funds fell to INR 17.60 billion in August from INR 19.04 billion in July, according to data released by the Association of Mutual Funds in India on Wednesday. Net inflows into 21 gold exchange-traded funds rose to a seven-month high of INR 21.90 billion in August from INR 12.56 billion in July, the data showed. 

"There is some amount of volatility around the globe and there is a definite global uncertainty there. So, that's the reason why we are seeing (inflows) growth in respect of these two commodities, gold and silver," said Venkat Chalasani, chief executive of the association. Asked if inflows would continue in gold and silver, Chalasani said it is a wait-and-watch situation.

"Silver right now is poised to rally higher and prices are expected to rise 20% more from the current level," Gaglani said. "This will take COMEX silver prices to the all-time high, which was seen in 2011." He expects silver prices in the domestic market to rise to INR 150,000 per kg or INR 160,000 per kg in one year. "The rupee is (also) not performing that much. So if the rupee also depreciates, it will benefit the precious metal."

While analysts remain bullish on silver, citing a persistent demand-supply imbalance and industrial demand, volatility in silver prices is likely to limit inflows into silver ETFs, analysts said. "But for aggressive investors who can withstand the swings, the long-term returns are likely to be better," Subramanian said.

The assets under management in silver ETFs rose nearly 15% on month and a whopping 173% on year to INR 262.94 billion in August due to positive mark-to-market, Chalasani said. The assets under management of gold ETF rose over 7% on month and nearly 94% on year to INR 724.96 billion as of Aug. 31.

The number of folios in gold ETF rose to 8.03 million as of Aug. 31 from 7.9 million a month ago. The folios in silver ETF rose over 1.1 million from 1.0 million a month earlier. During August, the number of silver ETFs rose to 16 from 15 in July, with Motilal Oswal launching a new scheme.  

TOP FUNDS, RETURNS 

Edelweiss Gold and Silver ETFs Fund of Funds – Direct Plan gave the highest monthly return of 4.87% in August. Motilal Oswal Gold and Silver ETFs Fund of Fund – Direct Plan, Axis Gold ETF, Groww Gold ETF Fund of Funds – Direct Plan, Motilal Oswal Gold ETF, and SBI Gold ETF were among the top 10 in terms of returns, as per data from Value Research. On the other hand, Tata Gold ETF gave the lowest return of 3.03%, data from Value Research showed.

Tata Silver ETF gave the highest monthly return of 7.18% in August. UTI Silver ETF, Axis Silver ETF, SBI Silver ETF, 360 ONE Silver ETF, and ICICI Prudential Silver ETF were among the top 10 in terms of returns, as per data from Value Research. Groww Silver ETF Fund of Funds – Direct Plan gave the lowest return of 5.59% in August, the data showed.

Gold contracts traded on MCX gave a return of nearly 6% in August, compared with nearly 1% in July. On the other hand, silver on the MCX gave a return of over 9% in August compared with 3.8% in July.  End

Edited by Saji George Titus

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