Silver’s parabolic surge to record suddenly reverses

Silver won the gold medal, but now looks to be falling off the podium.

Gold’s non-redheaded stepchild surged to a record high of $84 per troy ounce on Sunday evening, before reversing violently to trade nearly 10% lower than where it ended Friday.

The iShares Silver Trust is by far the most discussed instrument on Reddit’s r/WallStreetBets subreddit over the past 12 hours, with references to its ticker, SLV, more than quadrupling those of the SPDR Gold Shares ETF, Nvidia, and Tesla combined over the past 12 hours, as of 10 a.m. ET.

Even with today’s tumble, silver is still trading about 30% above its 50-day moving average, and has more than doubled year to date.

However, commodities are starting the week off on a rough note amid this silver reversal as well as hopes of progress on Russia-Ukraine peace talks. The Chicago Mercantile Exchange has also raised the margin requirements for positions in silver futures (as well as a host of other metals contracts) on Friday, effective today. Higher margin requirements can crimp speculative appetite by forcing weaker hands out of their positions.

All this retail chatter about silver has been reflected in flows: JPMorgan strategist Arun Jain noted that on December 26 — typically a very sleepy session — retail inflows into commodity ETFs were north of $223 million, or in the 99.6th percentile relative to their one-year average. That came on the heels of a 95th percentile inflow on Tuesday, the last full trading day before the holidays. Retail’s penchant to ride momentum in metals has been a big boon to their performance this year.

But just because it looks like a meme stock move that’s passed its best-before date doesn’t mean there’s no (good) fundamental story to help explain the prior surge.

The silver linings, for bulls, are that this drop comes on the heels of an eye-popping run and that indicators of physical demand still look robust.

Physical silver products (such as coins and bars) typically command a premium to the spot price quoted in markets, and right now those premiums are unusually large: upward of $10 for American Silver Eagle Coins, with silver bars are being marketed for “as low as $8.99 per bar over spot” on APMEX.

Silver futures in Shanghai are trading in backwardation (that is, a downward sloping curve). The willingness to pay up more for silver now versus later is generally considered to be a bullish signal in the commodities space. China also announced that it’s rolling over export restrictions on silver in the new year, prompting Tesla CEO Elon Musk to tweet, “This is not good.” In London, spot silver is also trading above the forwards, sending a similar message about the strength of near-term demand relative to supply.

Black Snow Capital founder Alexander Campell, formerly head of commodities at Bridgewater, has been bullish on silver in light of its industrial uses (particularly in solar panels) as an energy-hungry AI boom looks to devour more and more power.

“The case for silver is that the economics of solar panels (inelastic demand as the silver is/was ~10% of the price of the panel) meets inelastic supply (remember 75% of production comes as a by product to other metals), not staring at tea leaves or lines on a chart,” he posted in a recent message on X. “These are the kind of things that drive short term price movements.”

Nevertheless, given the extreme nature of this run-up followed by the subsequent sharp reversal, there are some who are willing to say the party’s likely over.

“Tax-related (delayed) selling and Bloomberg Commodity Index rebalancing could be negatives for silver in the first two weeks of January 2026,” wrote Brent Donnelly, president of Spectra Markets, who said he’s short silver as of Friday, before going on to allude to Radiohead. “The silver chart looks like a massive Sunday night blowoff top similar to the one oil made after Russia went into Ukraine. Sunday night blowoffs are special. I wish I was special.”