The bloodbath followed silver’s historic breach of the $80-per-ounce mark in international markets, only to tumble below $75 as profit-takers rushed for the exits and geopolitical tensions showed signs of easing. With spot silver trading around mid-$70s after touching $83.62/oz earlier in the session, the collapse has exposed the fragility of a rally that had delivered a staggering 181% year-to-date gain to outshine even gold.
1) Peace Talk Progress Kills Safe-Haven Demand
The immediate trigger for today’s crash came from seemingly productive discussions between US President Donald Trump and Ukrainian President Volodymyr Zelensky regarding a potential peace deal. Trump declared on Sunday that he and Zelenskiy were “getting a lot closer, maybe very close” to an agreement to end the war in Ukraine. The easing geopolitical tensions slashed safe-haven demand across the entire bullion complex, sparking sharp profit-booking.Also Read | Silver price crashes Rs 21,000 in an hour as overheated rally cools after breaching Rs 2.5 lakh/kg
2) 200-DMA Warning
BTIG analyst Jonathan Krinsky issued a stark warning: “Precious metals have gone parabolic. There is no other way to put it. Parabolas only end one way, with an equal and opposite downside reaction. They do not correct through time.”
The technical picture is flashing red. Silver prices were trading 89% above their 200-day moving average (DMA), a level that historically precedes significant declines. “Outside of the ‘Hunt Brothers’ squeeze in 1979, even Silver has been 60% above its 200 DMA; it has been meaningfully lower 20, 30 and 40 days later,” Krinsky noted, adding that the 174% year-to-date gain has “likely priced in much of that good news.”Manish Banthia, CIO Fixed Income at ICICI Prudential Mutual Fund, warned that “history suggests that such spectacular rises in silver rarely end gently.”
“In 1979-80, silver surged from $6 to $49 an ounce before collapsing by more than 90%. In 2011, prices peaked near $48 and then fell by over 75% in subsequent years. In each case, silver had already multiplied several times before the decline began. Since the pandemic lows, prices have risen more than sixfold. Over the past year alone, they have almost tripled,” he said.
Past cycles suggest that once momentum breaks, silver can fall sharply—often by 50% or more.
3) Friday’s 10% Surge: A Classic Blowoff Top
Silver’s over 10% gain on Friday—one of the largest single-day gains ever—may have marked the peak. Krinsky recalled that “the last time it gained 10% in a multi-month high was in 1987. It marked the peak and fell 25% over the next few weeks.”
Friday also saw the SLV silver ETF trade $9.6 billion in notional dollar volume—the second-highest in its history behind May 2011, just after the final peak. “That is evidence of a blowoff,” Krinsky said.
4) Record Weekly Gain Signals Exhaustion
Last week’s 18% gain marked the largest weekly advance in 45+ years. The four preceding weeks saw gains of 12.95%, 3.26%, 6.42%, and 8.39%, with only three down weeks since mid-August. Technical indicators are screaming overheated: the monthly RSI hit 91, only surpassed during the final peak of the Hunt Brothers squeeze.
5) CME Margin Hike Adds Selling Pressure
The Chicago Mercantile Exchange raised the initial margin requirement for the March 2026 silver futures contract to approximately $25,000, up from $20,000 earlier this month, with effect from today. The move forces traders to post more collateral, triggering additional liquidation.
6) Dollar Strength and Risk Rotation
Justin Khoo, Senior Market Analyst – APAC at VT Markets, explained that “this selling pressure was compounded by a slight uptick in the US dollar and yields, reducing the appeal of non-yielding commodities.”
Additionally, improved risk appetite in broader markets led funds to rotate back into equities, with traders squaring positions ahead of year-end.
What’s Next?
Despite the carnage, Jigar Trivedi, Senior Research Analyst at Reliance Securities, maintains that “overall the trend is positive yet volatile” with Rs 2.4 lakh as near-term support for silver.
However, BTIG’s Krinsky suspects “a pullback to the 50 DMA (55.40) is highly likely in the coming 1-2 months. That would represent a -25-30% pullback depending on the timing.”
For now, silver’s extraordinary rally, fueled by its designation as a critical US mineral, supply constraints and low inventories amid rising industrial and investment demand, has hit the pause button whether this is a healthy correction or the start of a 50%+ collapse that history suggests remains to be seen.
(Disclaimer: The recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times.)
