The balloon lands: Silver's hot-air premiums collapse as ETF frenzy cools

After soaring above NAVs, ETFs correct as supply and demand finally reconcile

The recent rush into silver exchange-traded funds (ETFs) has cooled over the past two trading sessions, ending a streak that had driven their prices well above their net asset value (NAV).

 

Silver ETFs had traded at premiums of 5–10 per cent for five straight sessions starting October 9, after global silver prices crossed the $40-per-ounce mark. The gap, caused by a global shortage of physical silver, led several fund houses to temporarily stop taking new inflows into their silver fund-of-funds.

 

That strain now seems to be easing. On Friday, silver ETF prices broadly aligned with their indicative NAVs. Nippon India