Silver ETFs Trade at Substantial Discounts Amid Volatility

Strategic Insights -

The sharp correction in silver prices recently has led to significant discounts in exchange traded funds (ETFs) units on domestic bourses. As of Thursday, Silver BEES ETF was trading at Rs 142, a 2.3% decline from its previous price, and a 21% drop from its all-time peak of Rs 180. ICICI Prudential Silver ETF, another leading ETF, was down 1.6% at Rs 149, a 21% loss from its October 14 peak at Rs 188. This shift from premiums to discounts is attributed to the end of shortages in the spot market and investors' shift towards riskier assets like stocks.

Key Takeaways:

  • Silver ETFs trade at substantial discounts, with Silver BEES ETF down 21% from its all-time peak.
  • ICICI Prudential Silver ETF is also down 21% from its October 14 peak.
  • ETFs trade at discounts of around 10%, down from premiums of 12-15% last week.
  • Fund managers attribute the shift to the end of shortages in the spot market and investors' move towards riskier assets.
  • Market players expect prices to stabilize soon, but opt for cautious investment strategies.

Statistics:

  • Silver BEES ETF traded at Rs 142 on Thursday, a 2.3% decline from its previous price.
  • ICICI Prudential Silver ETF traded at Rs 149 on Thursday, a 1.6% decline from its previous price.
  • ETFs traded at discounts of 10% from their net asset values (NAVs).
  • Prices of gold and silver stabilized at $4,050/ounce and $48/ounce, respectively, after a sharp correction in the last two sessions.
  • Seasonal demand in India eased, putting pressure on physical markets.

Sources:

https://timesofindia.indiatimes.com/markets/stock-markets/sensex-nifty-nifty-50/february-2020/india-business-sensex-nifty-february-2020-bse-nse-market-happenings-around-the-globe-stock-markets-world-live-updates/articleshow/74326121.cms

https://economictimes.indiatimes.com/markets/experts/rahul-kalantri-of-mehta-equities/articleshow/74286181.cms