Silver prices skyrocket, plummet, and fluctuate, with retail investors increasing their holdings against the trend

The extreme fluctuations in silver prices have become the core focus of the precious metal market in recent times. Looking back at the recent trend, silver prices first experienced a sharp rise, soaring from $46.45/ounce on November 11, 2025 to $70.19/ounce in the past three months, an increase of 51.11%. During this period, they once reached a high level, but suffered a historic plunge at the end of January - on January 30, spot silver fell by 27% in a single day, setting a record for the largest single day decline in history. Although the price rebounded afterwards, it was still in a severe fluctuation range. As of February 9, London silver was currently trading at $81.915/ounce, and the trend of mixed rises and falls made it difficult for the market to grasp the pattern. It is reported that the sharp rise and fall in silver prices this time is mainly due to the combination of multiple factors such as the sudden change in Federal Reserve policy expectations, technical overbought pullback, and leverage trampling. The hawkish policy expectations triggered by the nomination of the new Federal Reserve chairman triggered a rebound in the US dollar, coupled with the previous excessive rise in silver prices and the outflow of profit taking stocks, ultimately leading to significant price fluctuations. ​

Against the backdrop of severe fluctuations in silver prices, retail investors have shown strong enthusiasm to enter the market and have increased their investment against the trend. According to Vanda Research data, retail investors have injected a total of $430 million into the world's largest silver ETF (SLV) over the six trading days ending last Thursday (February 5th), demonstrating a firm optimism towards silver assets. Of particular note is that even on January 30th, when silver prices plummeted by 27% in a single day and market panic spread, retail investors still saw a net inflow of over $100 million against the trend, highlighting their pursuit of silver assets. Many investors saw this price drop as a "bargain hunting" opportunity and entered the market to gain profits. From the transaction data of SLV, the daily transaction volume on January 30th reached 510.6877 million, with a turnover of 41.038 billion yuan and a turnover rate of 88.9003%, which intuitively reflects the frenzy of retail investors entering the market and forms a sharp contrast with the wait-and-see attitude of professional institutions. ​

The counter trend increase of retail investors cannot conceal the hidden concerns in the market. The sharp rise and fall of silver prices have caused serious impacts on downstream physical enterprises, and procurement difficulties and cost pressures have become common difficulties in the industry. Silver, as a variety with both financial and industrial attributes, is widely used in downstream fields such as photovoltaics, silver jewelry processing, and electronics. Among them, the photovoltaic industry accounts for 55% of global silver consumption and is one of the core demand areas. For downstream enterprises, the significant fluctuations in silver prices completely disrupt their procurement plans: when silver prices skyrocket, raw material costs rise sharply, enterprise procurement costs double, and profit margins are greatly compressed; When silver prices plummet, upstream suppliers generally hoard and hesitate to sell, fearing that further price drops will lead to losses. They suspend shipments or increase prices, causing downstream enterprises to fall into a dual dilemma of "not being able to buy, not being able to afford", and seriously affecting normal production and operation. ​

Faced with this dilemma, downstream operators have been complaining incessantly, stating that the industry has suffered a heavy blow. Some operators engaged in downstream silver processing have stated that due to the dual impact of silver price fluctuations and procurement difficulties, their profits have been cut by at least 40% -50%, and some small and medium-sized enterprises even face the risk of losses and bankruptcy. Taking the silver jewelry industry as an example, the price of silver in China has skyrocketed from less than 5 yuan per gram at the beginning of 2025 to over 26 yuan currently, with a significant increase in raw material costs. Silver jewelry cannot be adjusted in real time like gold, and frequent price increases will cause consumer resistance. Failure to raise prices will face serious losses, and many merchants are forced to remove pure silver products or even shut down production lines to switch careers. In addition, downstream enterprises in fields such as photovoltaics and electronics are also facing similar difficulties, with unstable raw material supply and cost fluctuations, which not only squeeze corporate profits but also affect the normal development pace of the industry.