Emkay Wealth Management has released a bullish forecast for silver, projecting a significant price increase over the next year. The firm's analysis points to a combination of factors driving this potential surge in the precious metal's value.

Current Market Situation

• Silver prices have surged nearly 90%, trading around $49.00 per ounce globally near record highs.
• Emkay Wealth Management expects prices to reach $60.00 per ounce over the next year, representing a potential 22.45% rise.
• The surge is driven by robust industrial demand and a 20% supply deficit.

ETF Market Dynamics

• Silver ETFs in India are trading at 5-10% premiums over their net asset value due to severe shortage of LBMA-certified silver bars among market makers.
• Trading volumes in silver ETFs have significantly increased:
  • Daily average: Rs 77.53 crore
  • Daily average through September: Rs 211.76 crore
  • September alone: Rs 642.00 crore
• The Mirae Asset Silver ETF closed at Rs 156.52 compared to a NAV of Rs 149.11.

Fund House Actions

Several fund houses including Kotak, UTI, and SBI have suspended fresh subscriptions in their silver ETF funds from October 13 to protect investor interests.

Investor Warnings

Analysts warn that investors could face mark-to-market losses if premiums normalize while silver prices remain flat.

Key Predictions and Drivers

• Price Target: $60.00 per ounce
• Expected Increase: 22.45% over the next year
• Primary Drivers:
  1. Growing industrial demand
  2. Persistent supply deficit of around 20%
  3. Increased institutional investor interest
  4. Central bank preference for precious metals over the US dollar

Precious Metals Performance

Gold has shown remarkable performance, delivering a 61.82% year-to-date return, outpacing both equities and bonds. This strong showing in the precious metals market aligns with Emkay's positive outlook for silver.

Economic Outlook

Emkay Wealth Management also provided insights into India's economic future:

Global Challenges

The report highlights several global economic challenges that could impact markets:

1. Trade Tensions: Ongoing issues affecting global commerce
2. Tariffs:
   • India facing up to 50% tariffs on US exports
   • US auto industry affected by tariffs on Mexico and Canada
3. Geopolitical Conflicts: Ongoing situations in Ukraine and the Middle East

Despite these challenges, the International Monetary Fund (IMF) anticipates only a moderate impact on global growth.

Investor Implications

The forecast suggests a potentially favorable environment for silver investments, driven by both industrial demand and investor interest. However, investors should consider the broader economic context, including global trade tensions and geopolitical risks, when making investment decisions.

As always, it's advisable to consult with a financial advisor and consider one's risk tolerance before making any significant investment changes based on market forecasts.

Silver prices have surged above $50 per ounce, reaching the highest levels since 2011. This dramatic increase has led to significant developments in the silver market, particularly affecting ETFs and mutual funds in India.

Price Surge and Market Dynamics

Silver peaked at $51.24 per ounce before settling at $49.98, surpassing previous highs from the 2011 commodity boom and the 1980 Hunt brothers squeeze. Nilesh Shah of Kotak Mahindra AMC attributed the rise to increased industrial demand from the solar energy sector and Saudi Arabian banks purchasing Silver ETFs.

ETF Performance and Supply Constraints

Domestic silver ETFs in India have experienced significant single-day gains, with increases ranging from 6% to 14% during a recent trading session. This surge comes as silver prices jumped 5% to reach ₹1.59 lakh per kg.

However, the market is facing unusual challenges. Market makers are struggling to deliver sufficient physical silver to fund houses for the creation of new ETF units, leading to temporary supply constraints and price distortions.

Physical Silver Shortage in India

India is currently grappling with a significant physical silver shortage, characterized by:

• Bulk delivery delays of 7-12 days
• Premiums rising to ₹5,000-7,000 per kilogram

The shortage is attributed to several factors:

• Increased industrial demand
• Central bank buying from countries like Saudi Arabia and Russia
• Growing investor interest in silver

Kotak Mutual Fund's Response

In response to these market conditions, Kotak Mutual Fund has temporarily suspended lump sum and switch-in investments in its Silver ETF Fund. The fund cited acute scarcity in India's physical silver market, with shortages expected to persist through October 2025.

Silver Performance and ETF Returns

The silver market has shown remarkable strength:

Current Market Status

As of the latest data:

• Silver futures on Comex: $49.14 per ounce
• Crucial resistance zone: $50-51 per ounce

Traders are closely monitoring these levels as they may indicate potential future price movements.

Implications for Investors

The high demand for silver ETFs coupled with the physical supply shortage presents a unique market dynamic. Investors should be aware of the potential volatility and liquidity issues that may arise in the short term due to these supply constraints.

While the surge in silver prices and ETF performance may seem attractive, it's important for investors to consider the underlying factors driving these movements and assess the sustainability of this trend in their investment decisions.