Kotak Mahindra Asset Management Company's suspension of lump-sum subscriptions in its silver exchange-traded fund-of-funds is "purely temporary" and likely to be lifted within the next couple of weeks as supply improves after the Hindu festival of Diwali, said Satish Dondapati, fund manager at the firm.
The fund house announced it was halting new lump-sum investments after market hours on Thursday, as domestic silver prices surged to record highs, trading at steep premiums over international levels due to a shortage of physical silver. Spot silver , reflecting the global price, hit $51.22 per ounce, surpassing $51 for the first time.
"We've spoken to bullion dealers and jewellers who expect silver supply to ease by Diwali (on October 21). September 2025 imports have nearly doubled compared to previous months, so once that metal hits the market, prices should normalise," Dondapati said.
Silver prices have nearly doubled in 2025, climbing from about $29 per ounce at the end of 2024, as geopolitical tensions and expectations of U.S. rate cuts spurred demand for safe-haven assets.
"Many investors don't realise they're paying inflated prices," Dondapati said.
"When supply normalises, premiums disappear and those investors who are investing in silver ETFs right now could take a quick loss."
Silver ETFs have drawn 86.03 billion rupees ($969 million) in inflows during the first eight months of 2025, surpassing last year's total.
Dondapati highlighted three drivers behind the demand surge: silver's relative affordability as gold trades above $4,000 per ounce, booming industrial use in EVs, batteries, solar panels, and data centers, and renewed interest from central banks and institutional investors.
($1 = 88.5930 Indian rupees)
