53% Silver Fall vs 26% Gold: Should You Switch From Gold FoFs?

Silver has fallen about 53% from its January peak. Gold is down roughly 26%. Yet since gold funds of funds shut their doors to new money, silver funds have become the most tempting door still open.

Walking through it just because it is open could be the costliest move this festive season.

Quick answer

• Gold FoFs and gold-silver FoFs stopped fresh investments after notices on 15 October 2026. Silver ETFs, silver FoFs and gold ETFs remain open.
• Experts quoted by Mint say silver is not a substitute for gold. Switching swaps a 26%-drawdown asset for a 53%-drawdown one.
• If you want gold, you can still buy gold ETFs through a demat account. Check the iNAV first.
• Planners suggest around 10-15% in gold for most portfolios, with silver as an optional 3-5% satellite.

Why gold FoFs closed but silver stayed open

According to distributor platform Creso, 17 AMCs had published notices by the morning of 16 October, including SBI, HDFC, ICICI Prudential, Nippon India, Kotak and Axis. Lump sums, switch-ins and new SIPs into gold FoFs are blocked. Existing SIPs continue and redemptions work.

Why only gold? It comes down to the import bill. Eshaan Lazarus of 021 Trade told Mint that gold imports were about $72 billion in FY2025-26, against $12 billion for silver.

During April-September 2026, gold imports were $19.27 billion and silver imports $2.40 billion. Both were lower year-on-year, partly because the import duty went up from 6% to 15% in May.

The rupee is the other pressure. Moneycontrol notes it has fallen about 7 percent this year, with higher oil prices and foreign selling of Indian shares. Harsh Soni of NYVO Money pointed to Brent crude staying above $105 a barrel.

Soni also explained why silver was spared. Restricting silver would hurt manufacturing demand, not just investment demand. And silver has no cultural buying surge like gold's Dhanteras peak.

The drawdown gap you should not ignore

Here is the number that should make anyone pause before switching.

Silver has fallen about 53% from its January peak compared with about 26% for gold

Source: Harsh Soni, NYVO Money, via Mint

Soni put it bluntly. An investor rotating into silver because a gold door closed is swapping a 26%-drawdown asset for a 53%-drawdown asset. The case for silver did not improve. Only the door changed.

Silver is also an industrial metal. Krishanu Choudhary of Anand Rathi Wealth told The Economic Times that its prices depend on industrial demand and economic activity. That makes it swing harder than gold.

He shared a telling statistic. On five-year rolling returns since 1990, the Nifty 50 had a Sharpe ratio of 0.59, against 0.41 for gold and 0.27 for silver. In plain words, silver gave the least return for each unit of risk taken.

Is silver at least cheap right now?

There is one argument for silver. Harsh Vardhan Dawar of Wealth Cafe explained the gold-silver ratio, which tells you how many ounces of silver buy one ounce of gold.

Above 80, silver is considered cheap. Below 50, it is considered expensive. The ratio is currently at 73, so silver looks only slightly cheaper than gold.

That is a mild signal, not a strong buy call. And money is already rushing in. AMFI data reported by The Economic Times shows silver ETF inflows rose 55.4% month-on-month to ₹1,974.32 crore in September, from ₹1,270.63 crore.

Gold ETFs drew ₹4,450.61 crore in September, up 71 percent from August, according to Moneycontrol. Advisers told ET these flows look tactical, driven by uncertainty and recent returns, rather than a lasting shift.

The hidden cost: ETF premiums

An ETF being open does not mean it is fairly priced. Sachin Kabra of Foliyo.ai told Mint the key risk is the gap between an ETF's traded price and its indicative NAV, or iNAV.

This has happened before. Silver ETFs traded at premiums of 5-10% for five straight sessions in October 2025 amid supply shortages. Back then, silver FoFs also faced subscription limits.

If FoF money now moves to the exchange, gold ETF prices can drift above their real value too. Buying at a premium means you lose that gap when it closes.

Lazarus also warned that some mixed gold-silver FoFs, including HDFC's, are affected because part of their money goes into gold.

What to do now

1. If you have a gold FoF SIP, do nothing. Moneycontrol confirms SIPs registered before the cut-off keep running at the applicable NAV.
2. If you want more gold, use gold ETFs. Harsha Vardhana VM of Atom Financial Services said there is no need to switch, since gold ETFs remain open to anyone with a demat account.
3. Check iNAV before every ETF purchase. It is published on the AMC's website and the exchange.
4. Keep silver small. Vardhana VM suggests silver ETFs as an optional 3-5% allocation for people comfortable with volatility. Soni says only those who can handle drawdowns exceeding 50% should hold it.
5. Stagger purchases. CFP Rajesh Minocha told ET to spread buys over time rather than investing all at once at current prices.
6. Review your total gold. Planners commonly suggest 10–15 percent in gold. Minocha says 5-10% can be enough for many long-term portfolios.

Mistakes to avoid

• Switching to silver only because gold FoFs are closed.
• Chasing September's inflows. ET noted January 2026 saw record gold ETF inflows of ₹24,040 crore when gold was already near ₹1.75 lakh per 10 grams.
• Ignoring costs. Dawar said an ETF is usually cheaper than a FoF for both gold and silver.
• Treating silver as a hedge. Soni says it cannot replace gold's hedging role.

FAQs

Can I still start a silver SIP? Yes, for now. Pure silver ETFs and silver FoFs were not in any notice, according to Creso and Mint. Vardhana VM warned the same curbs could follow if silver inflows swell sharply.

Will my existing gold FoF SIP stop? No. SIPs registered before the cut-off continue, and redemptions are allowed.

Is silver cheaper than gold now? Only slightly. The gold-silver ratio is 73, below the 80 level where silver is considered cheap.

How much gold should I hold? Vardhana VM suggests around 10-15% for most portfolios. Choudhary suggests up to 10%, taken from the debt portion.

This article is for education only and is not investment, tax or legal advice.

Sources

• Mint: Gold FoFs halt fresh investments, but silver mutual funds remain open
• The Economic Times: Gold, silver ETFs see sharp rise in inflows in September
• Moneycontrol: Mutual funds halt investments in gold ETF FoFs: What it means for investors
• Creso: Gold Fund Subscriptions Stopped: AMC Tracker (Oct 2026)