Why the suspension happened?
Domestic silver prices are currently trading at a steep premium compared to international rates due to a shortage in India’s physical silver market.
According to MCX Spot Price and LBMA data, the premium has widened from 0.5% in early September to 5.7% on October 9, with intraday peaks reaching 12%.
Keeping in mind the high spot premium for Silver over the import parity price, Kotak MF is suspending lump sum subscription in Kotak Silver ETF Fund of Fund. ( Refer to the attached addendum for details )
SIPs and redemptions will continue as before in the regular course of… https://t.co/gbiNLWI3my pic.twitter.com/wjeQNwWHOa— Nilesh Shah (@NileshShah68) October 9, 2025
Entering at such elevated premiums could expose new investors to temporary overpricing.
What investors need to know?
SIP and STP investments are unaffected and will continue as usual. Existing plans remain active.
The selling premium remains modest at around 3%, indicating investors looking to exit are not facing significant losses.
The fund plans to resume lumpsum and switch-in subscriptions once domestic premiums normalize.
Takeaway for investors
This measure is aimed at protecting investors from entering the market at inflated prices. Long-term investors with diversified portfolios need not panic, while new investors may consider waiting until the premium stabilises.
Spreading investments over time, for example via SIPs, can help manage short-term price distortions.
Outlook
The domestic supply shortage is expected to persist through the end of October 2025. While premiums may remain elevated temporarily, silver continues to be viewed as a potential hedge and part of a diversified portfolio over the long term.
