Why Does Silver ETF Become Volatile During Uncertain Times? Isn’t It Counterintuitive?

April 17, 2026

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Why Does Silver ETF Become Volatile During Uncertain Times? Isn’t It Counterintuitive?
From late 2025 till at least April 2026, the Silver ETF (and the intrinsic price of Silver) has shown tremendous volatility. If you compare it to its cousin, the Gold ETF, the price swings of the Silver ETF have been wilder and more unpredictable. But wait, people always term Silver the safe haven asset. So why do Silver ETFs go both upward and downward and remain unpredictable during times of geopolitical crisis, rise in industrial demand or after rate cuts? Let’s do some hindsight analysis. 

The Push-Pull Between Safe-Haven Intent and Industrial Intent

On one hand, Silver is a safe-haven asset. During times of financial (and geopolitical) crisis, when people realise that the stock market is going to experience volatility, people flock to gold and silver due to their intrinsic value. During these times, governments decrease interest rates to prevent deflation. As a result, silver and gold look more attractive than bonds and fixed-income assets.

But Silver isn’t just a haven metal. It is an indispensable metal consumed by the solar industry, the electronics sector, the battery industry and more. 

This creates a unique push-pull dynamic during economic downturns. While investors may be buying silver to protect their wealth (pushing prices up), a slowing economy means industries are simultaneously forecasting lower production and buying less of the metal (pulling prices down).

This Push-Pull Situation Resulted in Sharp Volatility In 2025 Through 2026



As you can see from the table, Silver and Silver ETFs experienced a massive rally and an almost similar downward trend one after the other. 

Example:

● In November 2025, Nippon India Silver ETF was trading around Rs 142. The AI-fuelled surge made the ETF price jump to Rs. 351 on January 29, 2026.
● Similarly, Axis Silver ETF surged from Rs. 157 to Rs. 390

And then, immediately after this surge, both the Nippon India Silver ETF and the Axis Silver ETF experienced a drop of 35% and 39%, respectively, because of the high interest rate.

The Nuance: Broken Demand-Supply Scenario

Yes, the AI infrastructure boom was the accelerator of the recent volatility in Silver ETF prices. However, we have to look beyond the immediate reasons to figure out why Silver is intrinsically volatile.

2026 is the sixth consecutive year when the demand for silver is higher than its supply. As per the Silver Institute, global Silver supply is forecast to reach 1.05 billion ounces, while the demand is projected to be 1.117 billion ounces. 

This imbalance in demand and supply is one of the underlying reasons why the price of Silver ETF sometimes surges abnormally.

If the demand is more than the supply, why did we see a drop in silver ETF prices in March and April 2026?

Valid question. The answer to this is 'demand destruction'. High prices of Silver mean industries are forced to decrease their silver consumption. This is kind of a Catch-22 situation. 

The Structural Reason: The Difference Between the Market Cap of Silver and Gold

The direct reason behind Silver being more volatile than Gold is its thinner market cap than that of Gold.

Gold has a global market cap of $32.8 trillion. And Silver has just $4.1 trillion. Because the market capitalization of silver is so much smaller, it takes significantly less money to move its price. 

Think of it like filling a glass of water (silver) vs filling a bucket (gold). When the central banks reduce interest rates, or when industrial demand reaches the peak, the sheer volume of monetary inflows increases the price sharply. Conversely, when that capital exits, the price crashes just as violently. It lacks the deep liquidity that absorbs shocks in larger markets.

In the End… Beware of The Devil’s Metal

Silver is becoming more and more attractive thanks to its industrial value and its safe haven status. However, this dual role, combined with how Silver is tied to world politics (recently, China mandated government licensing for Silver exports), makes the metal extremely unpredictable. As a result, Silver ETFs exhibit the same volatility. Traditional safe-haven theory doesn’t apply to Silver ETFs. There are more variables at play than we discussed above. The old adage – time in the market is better than timing the market – fits perfectly for Silver ETFs. So, invest in Silver ETFs only after consulting a financial advisor and with a longer time horizon view. 

-Marifur Rahaman

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FILED UNDER: Stock Market

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