The first clue that something had snapped in the silver market wasn’t a headline, it was the screens. Charts that had been rising in a neat, smug line through January suddenly dropped off a cliff. In the space of a night, the metal that had just been flirting with US$120 an ounce was 30 per cent cheaper and a lot of retail traders were staring at their apps in disbelief.
Gold wobbled too, dipping sharply after setting fresh all‑time highs at the end of January before clawing its way back and briefly trading above US$5,000 an ounce this week. Silver, true to form, behaved like gold’s more unhinged sibling – overshooting on the way up, then overshooting again on the way down, before finding a shaky footing around US$70.
For anyone who had been told, repeatedly, that precious metals only move serenely upwards in times of trouble, the last fortnight has been a jarring education.
Silver Price Slump And The ‘Huge Overnight Attack’
Strip away the drama and one explanation for the pullback in both metals is embarrassingly simple: too many speculators all trying to leave the party at once.
Joe Cavatoni of the World Gold Council puts it cleanly. The run‑up, he argues, was driven in large part by short‑term players ‘pushing the price higher — speculative in nature’. When they decided they’d made enough, they didn’t agonise over macro fundamentals; they ‘pulled back and [took] money off the table’.
‘That’s why I think we’re seeing a correction in the price,’ he said. ‘I don’t think that we have an issue with, fundamentally, what’s going on in the gold market.’
In other words, the gold price didn’t crack because central banks stopped buying or jewellery demand collapsed. It cracked because the fast money did what it always does at nose‑bleed levels: it cashed out.
On silver, though, the story gets darker. Gary Savage, who writes the Smart Money Tracker newsletter, agrees that sentiment had become absurdly bullish – ‘we ran out of buyers’ – and that a correction was inevitable. But he also alleges that big banks seized the moment and ‘coordinated a huge overnight attack’ that knocked silver down by ‘almost 30 percent, or maybe it was 30 percent, almost overnight’.
The alleged aim, he says, was brutally self‑interested: to smash the silver price long enough to close out large short positions before those contracts had to stand for physical delivery at about US$120 an ounce. Smack the price, shrink the liability.
Add to that the appearance of a made‑for‑television antagonist and the silver price narrative starts to sound almost too on‑the‑nose. Bloomberg analysis of exchange data shows billionaire Chinese trader Bian Ximing has built the largest net short position on the Shanghai Futures Exchange – roughly US$300 million bet against silver – after he began ‘ramping up silver shorts’ in the last week of January, having quietly shifted away from long positions in November.
Bian is already known for aggressive moves in gold and copper. For silver bulls who see manipulation everywhere, his timing is less a coincidence and more a confirmation of every suspicion they already held.
Beyond The Silver Price Shock: Fed Politics And Old Bull Markets
Hovering behind the screens and conspiracy theories is a more conventional force: central bank politics.
Some analysts argue that President Donald Trump’s decision to nominate former Fed governor Kevin Warsh as US Federal Reserve chair on 30 January added downward pressure on both gold and silver. Warsh has a hawkish reputation – a man traditionally associated with higher interest rates – and markets initially questioned whether he would indulge Trump’s constant haranguing for cheaper money.
Higher‑for‑longer rates are supposed to be bad news for non‑yielding assets such as precious metals, so you can see why traders flinched. But that narrative hasn’t exactly aged well. Within days, Trump was publicly insisting Warsh ‘wouldn’t have gotten the job’ if he had walked in promising to raise rates. Whatever his past speeches, no one seriously believes the new chair has been hired to ignore the White House‘s wishes.
Set against that political theatre, the deeper question is whether this violent correction marks the end of the bull market, or just another ugly squiggle within it. On that point, the professionals are surprisingly relaxed.
Adrian Day of Adrian Day Asset Management has been almost annoyingly consistent. Speaking on 25 January, before the worst of the recent slide, he warned that a sharp pullback was not just possible but almost inevitable.
‘A pullback is always in the cards,’ he said, pointing back to the 1974‑75 period, when gold dropped almost 50 per cent mid‑bull, and to 2006, when the metal slid around 30 per cent halfway through another long uptrend. Those episodes are rarely front and centre in gold folklore, but they happened.
‘So a pullback at some point is always not just a possibility, but it’s almost a certainty,’ he argued. ‘But if we rephrase the question to, “Is this a top?” You know, absolutely not. In my view, we are absolutely nowhere near a top.’
You can dismiss that as talking his own book, but the historical pattern is hard to argue with: savage corrections inside bigger bull markets are normal. What matters is whether the fundamental reasons people bought gold and silver in the first place – inflation fears, distrust of central banks, geopolitical jitters – have magically vanished. They have not.
What has shifted, at least for some retail investors, is confidence. If you piled into silver because social media told you it was ‘going to the moon’, a 30 per cent overnight drop feels like betrayal. If you bought metals because you had a clear, boring reason to own them, that same drop is still painful – but it is less of an existential shock and more of a stress‑test.
That may be the only genuinely useful lesson in this whole silver price drama. Markets will always be full of Bian Ximings, alleged ‘overnight attacks’ and Fed soap operas. The only part individual investors can really control is the bit that happens before the chart moves: knowing why you own what you own, and whether you actually have the stomach to hold it when the line goes vertical – in either direction.