Silver’s Wild Ride: A Sharp Correction Tests Investor Nerves

Silber Preis XC0009653103

A breathtaking rally that saw silver surge from under $50 in November to a record peak of $94 has been violently interrupted. On Friday, the precious metal experienced a dramatic sell-off, plummeting over six percent in just hours and briefly touching $86. This sudden reversal has left the market grappling with a pivotal question: is this a simple, overdue correction, or the beginning of the end for the bull run?

The foundation for the recent price explosion was laid by a potent mix of structural factors. A chronic supply deficit in the global silver market has been severely exacerbated since January by an export ban from China. This policy has tightened already strained supply chains, creating a significant physical shortage.

This scarcity coincides with record industrial demand. Sectors central to the energy transition, such as solar panel manufacturing and electric vehicle production, are consuming silver at unprecedented rates. Furthermore, investors have increasingly turned to the metal as a traditional hedge against inflation and market uncertainty. The convergence of these forces propelled prices from around $70 to the $94 high in a matter of weeks.

The Trigger: A Shift in U.S. Trade Policy

The catalyst for Friday's sharp decline appears to be political. Market analysts point to the U.S. decision to forgo imposing tariffs on critical minerals. Previously, speculation that such tariffs might be implemented under a potential new administration had added a speculative premium to prices. The official waiver removed that pressure, causing a portion of that speculative froth to evaporate almost instantly. The steep, parabolic nature of the preceding rally also invited widespread profit-taking, which accelerated the downward move.

Market Outlook: Volatility Reigns

Despite the severe pullback, the fundamental picture remains unchanged. The underlying supply shortage persists, and industrial demand shows no signs of weakening. Most observers are interpreting the plunge as a violent but characteristic correction following an extreme price advance. High volatility is expected to continue; the 30-day volatility reading currently stands above 66%.

All eyes are now on whether silver can reclaim the psychologically significant $90 level. On Friday, the metal managed to recover substantially from its intraday lows, closing just shy of $90. The 50-day moving average, however, sits near $70—a stark reminder of how far prices had diverged from their medium-term trend. This gap highlights the extent of the recent speculative frenzy and suggests the market may be in for a period of consolidation as it searches for a new equilibrium.