Silver’s Sharp Retreat: A Market Correction Amid Structural Shifts

Silber Preis XC0009653103

Following a historic rally, the silver market has experienced a dramatic reversal. The precious metal, after posting its strongest annual performance in decades, plunged in late December, recording its most significant single-day drop in over four years. This correction, driven by exchange policy and technical factors, raises questions about the stability of prices now hovering around $71 to $72 per ounce.

Silver concluded 2025 with an extraordinary gain of more than 150%, marking its best year since 1979. The momentum peaked briefly in late December as prices surged past $84 per ounce. However, the ascent was abruptly halted on December 29, when the metal lost up to 11% intraday. This represents the fiercest daily decline since September 2020.

Recent trading saw silver settle at $70.98 per ounce. While this places the price approximately 13% below its 52-week high of $81.66 (recorded on December 28), it remains over 50% above the November low of $46.90. The market retains considerable momentum but exhibits high volatility, with an annualized 30-day volatility reading near 61%.

Key Technical Metrics:
* Last Price: $70.98
* 30-Day Change: +20.00%
* Distance from 52-Week High: -13.08%
* Distance from 52-Week Low: +51.36%
* 50-Day Moving Average: $60.59 (current price ~17% above)
* 14-Day RSI: 62.0

The Relative Strength Index (RSI) has retreated from clearly overbought territory but continues to signal an elevated market temperature.

Exchange Policy and Technical Overextension Fuel the Sell-Off

A primary catalyst for the downturn was a substantial increase in margin requirements by the CME Group. The exchange raised the margin on silver futures contracts to $25,000. This move forced smaller traders with insufficient capital to liquidate positions, triggering a cascade of selling orders. The impact was magnified by typically thin holiday trading volumes, resulting in an exceptionally swift and severe price drop.

This fundamental trigger intersected with a technically overextended market. For weeks, the 14-day RSI had remained above 70, a classic indicator of overbought conditions. Since mid-December, silver had rallied more than 25%, reaching a significant Fibonacci extension target around $72 per ounce. In this fragile state, the margin shock was sufficient to ignite a powerful counter-move.

China Tightens Grip on Global Supply

As the market digests the correction, a structurally significant change takes effect: China has implemented a new export licensing system for processed silver. Moving forward, an estimated 60 to 70% of the world's traded refined silver will require authorization from Beijing.

The new criteria for exporters are stringent:
* Minimum annual production capacity: 80 tonnes
* Required credit lines: $30 million
* A significant portion of current exporters are unlikely to meet these standards

The consequence is that approximately 121 million ounces of annual silver exports from China now fall under direct state control. Given China's dominance of 60-70% of global silver processing, the policy grants the country substantial influence over the volume and timing of available supply.

This development exacerbates existing concerns about visible inventories, which are already tight:
* COMEX warehouse stocks have declined by roughly 70% since 2020.
* Vault holdings in London and Shanghai are near historical lows.

Persistent Deficit with Limited Near-Term Relief

Even before the new export rules, the silver market was structurally tight. For the fifth consecutive year, global demand is outstripping mine supply. Demand is primarily driven by:
* The solar industry
* Electric vehicles
* Electronics manufacturing
* Defense technology

On the supply side, there are few short-term levers to pull. Approximately 70 to 80% of global silver production occurs as a by-product of mining copper, lead, zinc, and gold. Consequently, output cannot be easily ramped up in direct response to higher silver prices.

New, primary silver mines typically require 10 to 20 years from discovery to production. Therefore, even if high prices stimulate investment, the effect on available supply will be subject to a considerable lag. The existing market deficit is unlikely to disappear quickly.

Technical Outlook: Consolidation in a Higher Range

Following the setback, silver is now oscillating in a range between approximately $71 and $80 per ounce. The price sits comfortably above the 50-day moving average at $60.59, underscoring the broader bullish momentum. With an RSI of 62, the previous overheating has dissipated without the market falling into clearly oversold territory.

From a chart perspective, two levels are particularly relevant:
* Support: A sustained break below the $71 zone could open a path toward $60, where the 50-day moving average converges with a key support area.
* Resistance: If the price stabilizes within the current range, the record high above $84 per ounce could again come into view.

Despite the correction, the medium-term uptrend that began in August 2025 remains intact. In the near term, however, a phase of elevated volatility is likely to dominate, where technical factors and policy decisions—such as China's export controls—will be key price drivers.