Precious metals markets were thrown into fresh turmoil as silver prices tumbled sharply, erasing recent gains and extending a dramatic correction that has gripped traders after months of speculative, momentum-driven price action.
Spot silver dropped as much as 16% during Thursday trading, reversing a brief recovery and highlighting how fragile sentiment remains after the metal’s extraordinary rally earlier this year.
Futures contracts in New York also sank heavily, while gold prices fell more modestly, underscoring how silver’s thinner liquidity has amplified both gains and losses compared with its more stable counterpart.
Silver had surged around 146% in 2025 before collapsing nearly 30% last week, with analysts now pointing to heavy leverage, options activity, and speculative positioning as the key forces behind the violent swings.
Speculation Rather Than Demand Driving Volatility
“You’d seen a lot of speculator positions build up … I don’t think it’s been fully flushed out,” said Sunil Garg, managing director of Lighthouse Canton.
Market observers note that the metal’s industrial demand profile remains intact, supported by use in electronics, solar technology, and catalysts, yet prices have clearly moved far beyond what fundamentals alone would justify.
Garg added that investors should remain patient while excess speculative positioning is forced out of the system through margin calls and tighter exchange requirements following last week’s sell-off.
“The margin requirements being raised by various metals exchanges around the world … that’s just something that’s going to kill off some of the speculation,” said Garg.
The CME Group and other exchanges increased margin thresholds after the recent crash, making leveraged positions significantly more expensive to maintain for traders who had been chasing momentum.
Dealer Hedging And Stop-Losses Intensified The Drop
“As prices fell, dealer hedging flipped from buying into strength to selling into weakness, investor stop-outs were triggered, and losses cascaded through the system,” Goldman Sachs said in a note on Wednesday.
Analysts believe silver’s correction exceeded gold’s due to tight liquidity conditions in London’s physical market, which exaggerated price swings as traders rushed to exit positions simultaneously.
Goldman also observed that the timing of the largest moves occurred while Chinese futures markets were closed, suggesting that Western trading flows were primarily responsible for both the build-up and the rapid unwind.
This pattern has led some market watchers to draw parallels between silver’s recent trajectory and the meme-stock episodes seen during previous years, where retail enthusiasm overwhelmed traditional valuation logic.
Comparisons With Meme Stock Behavior Grow
The comparison to meme-style trading has become increasingly common as silver’s price action resembled the frenzied buying seen in equities like GameStop during 2021’s retail-driven surge.
The metal’s rapid ascent captured public imagination, creating a wave of momentum trading that pushed prices well beyond sustainable levels before equally dramatic reversals took hold.
Steve Sosnick, chief strategist at Interactive Brokers, noted that the moves exceeded typical speculative bursts seen in other asset classes, suggesting a rare convergence of retail interest and leveraged institutional flows.
With volatility still elevated, analysts believe silver may remain unstable until speculative interest fades and prices begin to reconnect with underlying industrial demand fundamentals.
