Silver down over 50% from peak: What to know before buying this Dhanteras

Silver prices have fallen sharply from their January 2026 record highs, raising questions about whether the correction offers an opportunity for investors or whether further volatility lies ahead.

With Dhanteras approaching, investors considering silver exchange-traded funds (ETFs) need to assess their existing exposure, investment horizon and ability to withstand further losses.

On the MCX, silver futures for December 4 delivery were trading at ₹1.96 lakh per kg, up 0.39% on October 26. The metal had touched a high of ₹3.79 lakh per kg on January 29 before falling to ₹1.94 lakh on October 23.

Internationally, silver declined more than 53% from nearly $117 per ounce on January 28 to just above $54 on October 23.

The correction reflects profit-booking, changing expectations around US interest rates, movements in the dollar and bond yields, and uncertainty over industrial demand. Silver’s industrial applications, including solar energy and electronics, make it sensitive to changes in economic activity as well as investment sentiment.

Silver outlook: What investors should expect

Near term: Silver could remain volatile, and the steep decline does not necessarily mean prices have bottomed out.

Nirpendra Yadav, senior research analyst at Bonanza, said investors should avoid aggressive buying and look for signs of price stabilisation.

Medium term: The direction of the dollar, US monetary policy, bond yields and global manufacturing activity will be important. Lower bond yields and improving investment demand could support a recovery, while weaker industrial demand could limit gains.

Long term: Silver could benefit from structural demand linked to electrification, solar energy and electronics. However, technological changes, substitution and slower economic growth remain risks.

Yadav said investors could consider gradual accumulation rather than attempting to predict the market bottom.

Silver ETFs: Should investors buy more or reduce exposure?

Silver ETFs attracted ₹1,974.32 crore in net inflows in September, up around 55% from ₹1,270.63 crore in August, according to AMFI data. However, the increase in inflows does not guarantee a recovery in silver prices.

Niharika Tripathi, head of products and research at Wealthy.in, a wealth management platform for mutual fund distributors, said investors should assess whether their current silver holdings remain appropriate for their portfolio rather than focus only on the price at which they bought.

If silver accounts for more than the intended portfolio allocation, investors could consider trimming their holdings or directing fresh investments towards other asset classes. Those whose allocation remains within their plan may choose to hold, while additional purchases should be gradual and consistent with their investment strategy.

Tripathi cautioned against averaging down simply to reduce the average purchase price, as this increases exposure to silver without necessarily improving the portfolio’s risk profile.

Before buying a silver ETF, investors should also compare its market price with its indicative net asset value (iNAV), check trading volumes and bid-ask spreads, and consider limit orders. During volatile periods, an ETF may trade at a premium or discount to the value of its underlying holdings.

Should investors use Dhanteras money to buy silver ETFs?

Tripathi said the festive occasion and the price correction should not, by themselves, determine an investment decision. Investors without an existing silver allocation could consider starting with a small amount and staggering purchases over several months, provided silver fits their overall financial plan.

Those who already have substantial exposure through gold, jewellery or silver ETFs may be better served by strengthening their emergency fund or investments earmarked for specific financial goals.

Silver ETFs may be unsuitable for money needed within one to two years because prices could take longer to recover. For near-term goals such as school fees, a wedding or a house down payment, instruments such as fixed deposits or suitable short-duration debt funds may offer greater predictability.

What investors should keep in mind

A fall of more than 50% from the international peak does not automatically make silver cheap. Before investing around Dhanteras, investors should consider their allocation, time horizon and capacity to absorb further losses rather than assume a recovery is imminent.