If you invest in Gold or Silver ETF, you must have often seen that Gold-Silver price falls by 2–3% on MCX or COMEX, but the ETF falls by 10–15% on the same day. This is because ETFs and physical gold-silver are not the same thing. The real price of ETF is determined by NAV i.e. Net Asset Value, but its trading in the stock market depends on demand-supply. As soon as there is fear or uncertainty in the market, there is rapid selling in ETFs because they are the most liquid, due to which the ETF starts trading at a discount below NAV. The second big reason is futures contracts. Most silver ETFs do not hold physical silver, but instead invest in COMEX futures. Repeated rollovers result in rollover losses, which are more visible in Silver. There may be volatility in the short term, but due to industrial demand and supply tightening, the long-term outlook of Silver is still positive.
Gold–Silver ETF Crash Explained | Why does a 2% decline, ETF fall 15%? | Paisa Live | Gold-Silver ETF Crash Explained | Why does a 2% drop in gold/silver lead to a 15% fall in the ETF?
