India is experiencing a significant premium in silver trading compared to global prices due to the rising demand from investors. There is a big shortage of physical silver in the Indian markets.
One of the most telling developments in the silver market is the price distortion. Supply of physical silver is struggling to keep pace while the demand is creating distortions in the spot and future prices.
December 2025 MCX silver futures are quoted at Rs 1,58,848 — Rs 12,054 below the spot price — highlighting a significant squeeze in available physical supply. The spot price for 1 kg silver was quoted higher at Rs 1,70,902 on October 13. Reportedly, in some cities, silver is being sold at much higher prices.
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 $51.77, while the silver price in India is Rs 1,54,600.
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.