India is experiencing a premium in silver trading compared to global prices due to rising investor demand and a shortage of physical silver. This is causing price distortion in spot and future prices, indicating a significant market imbalance.
On October 15, MCX Spot price for Silver is Rs 1,75,364 for 1 kilogram of silver. However, the December 2025 MCX silver futures trade at Rs 1,62,150, which is Rs 13,214 less than the market price. Silver is reportedly being sold at a significantly higher price in several cities.
There is almost 8% difference between Spot and Futures market price of Silver. This indicates that there is a severe shortage of physical supplies.
The premium in the Indian silver market has risen to 5-10% over global prices after adding import duties and taxes, causing physically backed exchange-traded funds to suspend new subscriptions. Silver ETFs are also being traded at a much higher premium than their NAVs.
In the international markets, silver trades around $52.90, while the silver price in India is Rs 1,59,680.
The $30 billion silver market, with a small annual turnover, can significantly affect prices despite slight demand fluctuations.
The rare market structure indicates strong demand for physical metal and challenges in sourcing it, thereby reinforcing the bullish bias.
Silver demand has outpaced supply for four years, reducing the surplus from the previous five. Supply is struggling to keep pace, with 70% of silver being a by-product of mining other metals.
Silver is racing ahead of gold in 2025. So far, the silver price has jumped up by over 80%, while gold is up by 55%.
The silver price has risen 66% YoY due to geopolitical tensions, rising government debt, and investor perception of silver as undervalued compared to gold.
Physical demand for silver is causing paper supply to decline, and if distortions persist, silver’s break and sustained above $50 is highly realistic.
However, Silver’s volatility may increase further, and investors should exercise caution when investing at current prices. A boost in the fresh supply of silver could cause a price adjustment.