SilverBees up by 6% but Silverm Nov Fut is down by 0.5%

[Harshit_Varshney]

Today I noticed that SilverBees is up by 6% (160 Rs) , as I write this post and was up by 8% 1 hour back. While all the time Silverm Nov. Future is trading at around 149k (-0.5%) only. Can someone provide me reason / insight on this ?

[Meher_Smaran]

What is an ETF and how does it work?

Edelweiss is set to launch a debt ETF that will only hold bonds issued by public sector undertaking (PSUs). Before I explain more about the ETFs, a few basics. What is an ETF? An ETF or exchange traded fund is a mutual fund that trades on the exchange just like a stock. Most ETFs are passive ETFs and they replicate an index. For example, a Nifty 50 ETF holds the shares in it But the key difference is how ETF units are created. When you invest in mutual funds, the AMC collects orders till 2 PM…

This thread by Bhuvan explains the intricacies involved in ETFs.

ETF buyers are scooping up ETFs at whatever price available, thanks to the ultra-bullish move in Silver (its underlying)

It would be prudent on our part to check the iNAV and make sure we don’t buy at too much premium from its underlying NAV, as there is a premium of 10-15% in many ETFs

[Akash_Shah]

@Harshit_Varshney

Can someone provide me reason / insight on this ?

Typically in such cases market maker would come in play. In general they would buy the underlying → exchange it with AMC to get more ETF unit and sell those units in market till ETF price come close to iNAV and such premium vanishes.

In this case, I read somewhere that market makers are having trouble sourcing physical silver and hence they are unable to narrow down the difference.
Plus unrealistic FOMO in investor to buy this ETF is causing such divergent moves.

Hopefully this won’t last long and market maker would eventually coverup the difference.