Silver prices are trading sharply lower as of writing, following an extraordinary collapse that erased weeks of gains in just two sessions. The metal dropped more than 30%, sliding below $80 after reaching record highs earlier in the week. Gold also declined by double digits, reflecting broad stress across precious metals markets before both metals retraced back a little before close. Margin Hikes Trigger a Historic Liquidation The immediate catalyst came from repeated margin increases by the CME, which raised the cost of holding leveraged silver positions. Traders holding futures contracts faced urgent margin calls, prompting widespread liquidation. Selling intensified as prices broke key technical levels, accelerating losses across the market. The scale of the move placed the silver sell-off among the steepest daily declines seen in more than four decades. While margin changes often cool overheated markets, the speed of this drop surprised many participants. Prices moved far faster than changes in physical demand or supply conditions. That imbalance raised fresh questions across trading desks. What exactly drove such extreme volatility within hours? Focus Returns to Five Banks With a History of Manipulation As prices collapsed, attention shifted to U.S. futures data showing a sharp reduction in silver short positions held by major banks. Market observers pointed to COMEX reports indicating that U.S. banks had held roughly 17,838 silver futures shorts in early December, representing about 89.19 million ounces. Silver later declined toward levels where those positions appeared to unwind. The scrutiny revived memories of confirmed manipulation cases involving five global banks. JPMorgan paid $920 million in 2020 after admitting to spoofing precious metals markets. Scotiabank, HSBC, Deutsche Bank, and Morgan Stanley also faced penalties between 2016 and 2023 for similar conduct. Regulators documented years of price rigging, false order placement, and benchmark manipulation during that period. Source: X Although no new charges relate to the current crash, the coincidence of timing reignited debate. Investors remain sensitive to silver’s history, particularly during periods of extreme price movement. That legacy continues to influence confidence in Western futures markets. Federal Reserve Shift Pressures Precious Metals Policy developments added further strain. U.S. President Donald Trump nominated Kevin Warsh as the next chair of the Federal Reserve, reshaping expectations around interest rates. Warsh, a former Fed governor, has openly criticized prolonged accommodative policy. His nomination strengthened the U.S. dollar and reduced appetite for non-yielding assets such as silver and gold. As rate expectations adjusted, capital rotated away from precious metals. That shift coincided with margin-driven selling, compounding downward pressure. The timing amplified volatility across commodities and currency markets. Geopolitics Add Volatility, Not Support Geopolitical risks also remained elevated. Trump confirmed ongoing talks with Iran while signaling military readiness in the region. U.S. naval movements and uncertainty around potential strikes added short-term risk. At the same time, renewed focus on Greenland highlighted strategic competition over critical resources. Such tensions often support silver as a safe-haven asset. This time, liquidation overwhelmed that effect. Physical demand indicators, particularly in Asian markets, showed firmer pricing compared to Western futures, highlighting a growing disconnect. Technical Levels and Market Outlook From a technical standpoint, silver remains within a broader long-term structure despite the crash. Chart patterns suggest potential stabilization between $50 and $70 if selling persists. A sustained break below that zone could signal a deeper reversal. For now, volatility continues to dominate price action. Source: TradingView Via X Silver markets now sit at the intersection of regulatory memory, monetary policy shifts, and geopolitical uncertainty. The coming weeks may determine whether this collapse marks a temporary reset or a more lasting change in market structure. What happens next? Strategists now expect choppy trading to persist as markets digest policy uncertainty and recalibrate positioning. Technical analysts point to potential support zones well below recent highs, suggesting further downside remains possible before stability returns. Still, longer-term drivers such as central bank buying, constrained mine supply, and industrial demand linked to energy and electronics continue to underpin broader interest. The key question remains whether silver finds equilibrium after the shock or faces another leg lower before the next trend emerges.
