Silver Rally: Why ETFs Underperformed Despite Strong Commodity Gains

• Silver showed double-digit gains between January 19-22, driven by industrial demand and supply constraints.
• Investors in silver ETFs experienced significantly lower returns, with some seeing sharp drawdowns despite stable silver prices.
• The discrepancy arose because ETFs traded at high premiums to their Net Asset Value (NAV) during the rally, inflated by rapid buying.
• As buying eased, ETF prices corrected towards NAV, causing losses for investors even as underlying silver remained strong.
• Investors are advised to compare ETF market price with i-NAV, avoid buying at high premiums, and use staggered participation.

Why It Matters: Silver ETFs underperformed due to premiums over NAV, highlighting the importance of market structure for investor returns.