A premium too far

Kotak Mutual Fund did something unfashionable for a bull market: it told investors to hold their chequebooks. On October 10, it paused lumpsum and switch-in subscriptions to its Kotak Silver ETF Fund of Fund (FoF). Systematic investment plans and redemptions continue; the underlying Kotak Silver ETF, being listed, keeps trading. The halt is not a loss of faith in silver. It is a refusal to buy at bad prices. The culprit is a wedge that has opened between India’s domestic spot price of silver and its import-parity level (the global price translated into rupees and adjusted for duties and costs). Through September, that premium crept from 0