Silver prices have plunged amid extreme market turbulence, sparking debate over the potential floor for this volatile commodity.
The white metal suffered a sharp reversal this week, erasing a brief two-day gain after a historic crash. Spot prices dropped nearly 20 per cent to under $71 per ounce in Thursday’s Asian session, marking a retreat of over a third from last week’s record high. Volatility measures have soared past 100 per cent, levels unseen since 1980.
This turmoil caps a stellar 2025 rally, driven by Chinese speculation, geopolitical strains, and U.S. Federal Reserve independence fears. Chinese retail and institutional buying propelled silver and copper to peaks last month, with the mainland’s key silver fund hitting massive premiums that prompted risk warnings and subscription freezes.
Global investors piled in during January via leveraged ETFs and call options. Friday’s Asian dip triggered margin calls and cascading sales, sustaining wild swings into this week. Copper fell 2 per cent below $13,000 per tonne, while gold shed 4.1 per cent.
“Speculation, particularly in China, is wreaking havoc on the price discovery process for bullion,” said Ross Norman, Metals Daily chief executive. Volatility in precious metals has become self-sustaining, removed from real market drivers.
“Silver has entered a highly flow-driven phase, with price action dominated by speculative and CTA positioning rather than physical fundamentals,” noted Sucden Financial’s Daria Efanova and Viktoria Kuszak. Despite supply tightness from solar and EV demand, its macro sensitivity fuels steep corrections. “Volatility is likely to remain pronounced, with upside dependent on renewed inflows and downside limited but uneven,” they added.
Silver’s smaller market amplifies swings beyond gold’s, worsened by thin liquidity and derivatives leverage. Banks hesitate on trades amid risk, with higher prices straining credit limits and magnifying futures impacts.
Norman warns this frenzy erodes the sector long-term. As participants flee a market that “feels more like a casino than a marketplace,” he said, “before long the bullion trading landscape looks utterly desolate like a moon-scape.”
Spot silver lingers near $77-78 per ounce in early February, up 145 per cent yearly despite recent dips, with forecasts targeting $113-128 ahead.