Due to the increased demand from investors, silver prices in India are significantly higher than those in other countries. In the Indian marketplaces, physical silver is severely lacking. The price distortion is one of the most revealing trends in the silver market. The demand is distorting both the spot and future prices of actual silver, while the supply is finding it difficult to keep up.
There is a notable shortage of physical supply, as evidenced by the December 2025 MCX silver futures quote of Rs 1,58,848 — Rs 12,054 less than the market price. On October 13, the spot price for 1 kg of silver was reported to be higher at Rs 1,70,902. In various cities, the price of silver is reportedly being sold at much elevated rates.
The premium in India’s silver market has increased to between 5% and 10% over the global prices, after accounting for import duties and taxes, leading to the suspension of new subscriptions for physically backed exchange-traded funds. Additionally, silver ETFs are trading at a significantly higher premium compared to their net asset values.
Internationally, silver is priced at approximately $51.77, whereas in India, the silver price stands at Rs 1,54,600. The $30 billion silver market, despite having a relatively small yearly turnover, can have a considerable impact on prices owing to minor fluctuations in demand.
The unusual market dynamics indicate a strong need for physical metal and difficulties in obtaining it, thereby reinforcing a bullish sentiment.
Silver demand has exceeded supply for four consecutive years, diminishing the surplus that existed during the prior five years. Supply is finding it difficult to keep pace, with 70% of silver being a by-product of other metal mining.
In 2025, silver is outperforming gold. Up to this point, the price of silver has surged by more than 80%, while gold has increased by 55%. The price of silver has climbed by 66% year-over-year, driven by geopolitical uncertainties, escalating government debt, and the perception among investors that silver is undervalued relative to gold.
The demand for physical silver is leading to a decrease in paper supply, and if these market distortions persist, a sustained break above $50 for silver is quite plausible.
Nevertheless, the volatility of silver could rise further, and investors should be cautious when considering investments at current price levels. An increase in the fresh supply of silver could trigger a price correction.
