Silver’s wild ride: Volatility intensifies as market struggles to establish a clear floor

• Silver prices have whipsawed this February sharply, driven by thin liquidity and heavy speculative positioning, leaving the market struggling to establish a clear floor.
• A multiyear precious-metals bull run accelerated in January on geopolitical risks, Fed concerns and speculative buying, especially in China, before abruptly reversing late last month.
• Silver suffered its biggest-ever daily drop on Jan. 30 and later fell more than 15% in a single session to a one-month low, while gold saw its steepest decline since 2013.
• Despite the selloff, silver remains up over 130% year-on-year, though it is now trading about 35% below its January record high of $121.64 an ounce.
• Analysts say price action is being driven more by speculative and CTA flows than physical fundamentals, with reduced liquidity amplifying swings and volatility likely to remain elevated.

Silver prices swung violently earlier this February before rebounding, as thin liquidity and heavy speculative positioning fueled extreme volatility in a market struggling to find a floor.

The turbulence comes after a multiyear bull run in precious metals accelerated sharply last January, driven by heightened geopolitical risks, concerns over the Federal Reserve’s independence and a surge in speculative buying, particularly in China.

Investors piled into precious metals through January, building large positions via leveraged exchange-traded products and call options. That rally came to an abrupt halt at the end of last week, when silver suffered its biggest-ever daily drop on Jan. 30 and gold recorded its steepest decline since 2013. Since then, price action across the sector has remained highly unstable.

Silver plunged again on Thursday, sliding to a one-month low as volatility intensified following its parabolic rise. Spot prices fell more than 15% to around $75 an ounce by midday trading in New York, wiping out gains from the prior two sessions. The selloff began during Asian trading hours and accelerated into the New York open, echoing the historic crash seen last Friday.

Despite the recent rout, silver remains up more than 130% over the past year, buoyed by strong industrial demand and investor interest in safe-haven assets. China played a central role in the rally, with a wave of speculative buying pushing prices sharply higher from late 2025. Investors elsewhere also increased exposure to precious metals through January.

That momentum has since reversed. Silver is now trading about 35% below its all-time high of $121.64 an ounce reached last month, underscoring the scale of the correction.

Turbulence driven by speculative positioning

Silver has long been more volatile than gold due to its smaller market size and lower liquidity. However, the scale and speed of recent price swings have stood out. As BrightU.AI‘s Enoch noted, such conditions can lead to more dramatic price movements and higher risk for investors.

“When volatility rises, market makers naturally widen spreads and reduce balance-sheet usage, leaving liquidity weakest precisely when it is needed most,” Ole Hansen, head of commodity strategy at Saxo Bank AS, said. Without a return to more orderly conditions, he warned that “volatility risks feeding on itself.”

Analysts say the turbulence is being driven less by physical supply and demand and more by speculative positioning. Elevated inflows from short-term investors and commodity trading advisors have turned silver into a highly flow-driven market.

“Silver has entered a highly flow-driven phase, with price action dominated by speculative and CTA [Commodity Trading Advisor] positioning rather than physical fundamentals,” said Daria Efanova and Viktoria Kuszak, analysts at Sucden Financial. Despite ongoing structural tightness in the market, silver’s high beta and close links to broader macroeconomic trends leave it vulnerable to sharp pullbacks when prices are elevated, the analysts said. As positioning shifts, both rallies and selloffs risk becoming exaggerated.

“Volatility is likely to remain pronounced, with upside dependent on renewed inflows and downside limited but uneven,” Efanova and Kuszak added.

Precious metals analyst David Morgan says he fully expects the silver price to rise more than the gold as the market collapses. Watch this video.

This video is from the MEGA (Make Earth Great Again) channel on Brighteon.com.

Sources include:

Mining.com 1

Mining.com 2

BrightU.ai

Brighteon.com