Silver ETFs soar up to 10% to record highs as precious metal's March futures cross Rs 3.2 lakh/kg: Should you buy now?

Silver ETFs surge

• Silver ETFs reach record highs as prices surge due to US-EU geopolitical tensions.
• Experts warn new investors of high volatility and suggest staggered investments
• Short-term holders advised to take partial profits; long-term holders may stay invested

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Silver exchange traded funds (ETFs) continued to mirror the sharp surge in silver prices and hit fresh lifetime highs on January 20. Experts have commented on whether this is the right time for investors to buy ETFs or it is better to wait.

Silver prices hit fresh lifetime highs today, as tensions between US and EU simmered over President Donald Trump’s constant threats to annex Greenland. Silver futures with March expiry gained around 6 percent to hit a fresh all time high of Rs 3,27,998 per kilogram.

The future contracts with May and July expiries meanwhile jumped around 6 percent and 7 percent to hit fresh lifetime highs of Rs 3,36,940 per kilogram and Rs 3,49,066 per kilogram, respectively.

Spot silver hit a fresh record high of $94.72.

Why are silver prices rising?

Geopolitical tensions have surged recently after Trump imposed new tariffs on eight European nations over his push to acquire Greenland. Trump imposed 10 percent tariffs on imports from European countries, starting February 1. The tariffs would increase to 25 percent on June 1 and continue until a deal is reached for the US to acquire Greenland.

Trump on Monday did not rule out the potential use of military force. European leaders have rejected Trump's demands, while some nations also warned of retaliatory economic measures against the US.

"Trump's 'disruptive' policy approach to international affairs and desire to see lower interest rates suit precious metals very well, ⁠as reflected by gold and silver's rampant run," Reuters quoted Tim Waterer, KCM Trade's chief ‍market analyst, as saying.

Silver ETFs:

Groww Silver ETF jumped around 10 percent to hit a fresh 52-week high of Rs 317.53 apiece. Tata Silver ETF gained around 8 percent, while Edelweiss Silver ETF, HDFC Silver ETF and SBI Silver ETF gained more than 7 percent each.

Mirae Asset Silver ETF, ICICI Pru Silver ETF and UTI Silver ETF jumped around 6 percent each, while DSP Silver ETF, Axis Silver ETF, Zerodha Silver ETF, Motilal Oswal Silver ETF and Nippon Silver ETF (Silverbees) surged more than 5 percent each.

Aditya Birla Silver ETF and Kotak Silver ETF gained more than 4 percent.

Should you buy silver ETFs at these levels?

For those looking at fresh investment, the main risk right now is valuation and sentiment, said Ross Maxwell, Global Strategy Operations Lead at VT Markets. He added that silver is far more volatile than gold, and sharp rallies are often followed by equally sharp corrections once speculative interest cools.

"Entering at current highs could expose new investors to near-term drawdowns if prices consolidate or retrace sharply. A better approach for those who still want exposure is to use dollar cost averaging strategies, entering in small, staggered allocations that average out entry costs and reduce timing risk," he said.

For investors planning to exit their positions, Maxwell said that if silver was added as a tactical hedge or short-term trade, then this is a sensible area to book at least partial profits. "Locking in gains and rebalancing back to target asset allocation helps protect against sudden reversals, which are common in precious metals," he said.

However, investors with a longer-term view who believe in structural drivers like industrial demand and tight supply may choose to continue holding a core position, the expert added. "This is not an ideal price for large fresh investments, and partial profit-taking for current holders is a rational risk-management move rather than a full exit," he explained.

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