• Spot silver prices plunged over 26.5% in a single session, marking its worst daily performance on record, after surging past $113/oz earlier in the week amid speculative frenzy and structural demand pressures.
  • The crash followed a 54-56% January gain, the strongest monthly performance ever, driven by profit-taking as prices retreated from record highs, erasing much of those gains but leaving silver up over 42-50% for the month.
  • A US dollar rebound from four-year lows pressured prices, while anticipation of a hawkish Fed Chair replacement for Jerome Powell unsettled markets, with industrial demand from solar and AI sectors creating structural deficits but broad commodity selling adding downside.

Silver’s dramatic reversal from its recent highs has sent shockwaves through the precious metals market, with spot prices tumbling more than 26.5% in a single session—the worst daily performance on record. This plunge comes after a speculative frenzy pushed silver past $113 per ounce earlier in the week, only to see it pull back sharply to around $77-99/oz levels. According to people familiar with the matter, the sell-off was triggered by aggressive profit-taking as prices retreated from record highs, amplified by a rebound in the US dollar from four-year lows that made silver costlier for non-USD buyers.

ETFs dropped up to 14% amid the selling, reflecting a broader unwind in leveraged positions. The drop erased much of January’s gains, which had seen silver post a 54-56% monthly increase—the strongest ever—fueled by a prior rally from safe-haven buying, industrial demand, and a physical squeeze that drained 26% of COMEX inventories in one week. Despite the crash, silver remains up over 42-50% for the month, a testament to the intense volatility that has characterized this market. “It’s a classic case of speculative inflows detaching prices from physical fundamentals,” one trader noted, speaking on condition of anonymity due to the sensitivity of the situation.

Market participants are now grappling with the fallout, as the plunge highlights the fragility of silver’s recent surge. Industrial demand from sectors like solar, electronics, and AI/nuclear power has created structural deficits, with HSBC projecting a shortfall of 1.2 million ounces this year. However, broad commodity selling in copper and nickel added to the downside pressure, underscoring how silver’s smaller market size versus gold—which fell 5%—can amplify moves. Efforts to stabilize prices have hit a snag, with COMEX halting some silver coin sales due to the rally and LBMA lease rates spiking from the physical squeeze.

Political and economic factors are also in play. Anticipation of a hawkish Fed Chair replacement for Jerome Powell, whose term ends in May 2026, has unsettled markets that were expecting looser policy. With the Fed holding rates steady and delaying cuts to June, uncertainty is mounting. Meanwhile, fears of US tariffs or quotas on silver as a critical mineral have spiked COMEX stockpiles to over 16,000 tonnes by mid-2025, adding another layer of complexity. Without a deal to ease these tensions, the volatility could persist, analysts warn.

Human touches emerge from the chaos: retail “meme traders” who fueled the surge are now facing significant losses, while industrial users, such as solar manufacturers, may benefit from lower prices in the short term. Attempts to reach major silver ETFs for comment were unsuccessful, but sources indicate heavy outflows as investors reassess their positions. Viral commentary has likened the gold and silver volatility to 2008 crisis levels, though this episode ties to unique 2026 factors like AI-driven nuclear demand and tariff scares, unlike pure speculative bubbles of the past.

Looking ahead, the short-term outlook remains precarious. Prices may test key support levels around $50/oz, as warned by JPMorgan, or $99.77 amid dollar strength and Fed uncertainty. Sudden falls are possible if the speculative unwind accelerates, with analysts like Kolanovic predicting a 50% crash as this leveraged macro play corrects. Upcoming US PPI data and the Fed Chair announcement will be critical to watch. In the long term, bulls cite widening deficits and industrial needs for a recovery, while bears see the mania reverting to “normal” levels. For now, the market holds its breath, waiting to see if this is a buying dip or the end of a historic rally.

Correction: An earlier version of this article misstated the percentage gain for silver in January; it has been updated to reflect the 54-56% range.