Extreme volatility rattles precious metals markets as investors struggle to find a floor
Silver (SLV) prices collapsed on Thursday, erasing a brief two-day rebound and underscoring the fragility of a market still reeling from one of its most violent selloffs on record. Spot silver plunged as much as 18% to below $73 an ounce during Asian trading hours, extending a dramatic reversal that has now wiped out more than a third of the metal’s value since it hit an all-time high just last week.
The scale and speed of the move are extraordinary. Measures of historic volatility have surged to levels not seen since 1980, highlighting how quickly speculative excess has given way to forced selling. After a year-long rally fueled by geopolitical uncertainty, concerns over US monetary independence, and aggressive speculative positioning—particularly from China—the precious metals boom came to an abrupt halt at the end of last week. Silver suffered its largest-ever daily drop on Friday, while gold posted its steepest decline since 2013.
Market participants point to speculation as a central culprit. Heavy inflows from Chinese retail investors and institutional funds pushed metals from copper to silver to record highs, distorting price discovery. That enthusiasm spilled into global markets, where investors piled into leveraged exchange-traded products and call options. When prices began to fall during thin Asian trading, the unwind triggered a cascading selloff that has yet to stabilize.
The fallout has extended beyond silver. Copper slid below $13,000 a ton, while gold dropped sharply in volatile trading. Analysts describe silver as being in a “flow-driven” phase, where price action is dictated more by speculative positioning than by physical supply-and-demand fundamentals.
While silver has always been more volatile than gold due to its smaller market size, recent swings have strained liquidity, trading desks, and risk limits across the financial system. Market veterans warn that prolonged instability risks long-term damage, as investors and industrial users retreat from a market increasingly perceived as speculative rather than functional.
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