Silver ETFs Crash 24% While Futures Dip 4%: Understanding the Discrepancy

• Silver ETFs tumbled up to 24% on January 22, significantly more than the 4% decline in MCX silver futures.
• The sharper fall in ETFs is attributed to the unwinding of a speculative premium on Indian silver prices, which had built up due to Budget expectations.
• Indian silver prices on MCX were trading at an unusually wide premium of $13 per ounce over COMEX prices, driven by sentiment rather than physical tightness.
• ETFs, priced off domestic spot benchmarks and influenced by investor flows, reacted faster to this 'premium collapse' as retail investors booked profits.
• Analysts suggest this is a normalization of an India-specific price distortion, not a bearish signal for silver as an asset class, and advise staggered investments.

Why It Matters: Silver ETFs crashed due to unwinding of speculative premium on Indian silver, not a bearish signal for the metal.