Despite silver prices nearly erasing all the remarkable gains achieved earlier this year, retail investors continued to channel close to $500 million into silver over the past week.
As prices tumbled, retail investors injected $430 million into the largest silver exchange-traded fund, SLV, over the six trading days ending last Thursday. Data analysis from Vanda Research indicates that on January 30 alone, they invested over $100 million—the same day silver prices plummeted by 27%, marking the largest single-day decline on record.
"People are drawn to the appeal of this asset," stated Rhona O'Connell, an analyst at StoneX. She noted that the "historic sell-off" in silver has instead enhanced its attractiveness, with some investors viewing it as an opportunity to buy at lower prices.
Silver prices fell to as low as $64 per ounce last Friday—nearly halving from the peak of $121 seen in late January—before rebounding to $78. "Market sentiment has been extremely fervent, and this self-fulfilling momentum has taken over," O'Connell added. "It is reinforcing itself."
Last year, driven by the unpredictable policies of U.S. President Trump, precious metals embarked on a record-breaking rally—starting with the tariff blitz last April and continuing through crises involving Greenland, Iran, and Federal Reserve independence this year. This initially led investors to treat precious metals as a "safe haven," before increasingly viewing them as speculative assets.
Silver started 2025 priced below $30 per ounce and had surged more than fourfold before the recent decline. Gold also doubled from around $2,600 per ounce at the beginning of 2025 to a peak of nearly $5,600 last month, before falling below $5,000.
Both rallies reversed on January 30, following Trump's selection of Kevin Warsh as his next Fed Chair—a move that eased market concerns about the Federal Reserve yielding to the President's demands for significant interest rate cuts and reduced the appeal of safe-haven assets.
During their rapid ascent, both precious metals garnered increasing attention from speculative and retail traders—particularly silver, which is essentially "a more volatile version of gold," according to Rushabh Amin, a portfolio manager at Allspring Global Investments.
He added that silver has developed a "lottery effect," with its "waves of meme-stock-like surges and declines" continuing to resonate as the metal experiences sharp fluctuations. Silver fell 6% last Monday, rebounded 7% on Tuesday, and then plunged nearly 20% on Thursday. On Friday, it dropped as much as 10% in early trading before recovering to close up 9.5%.
Such extreme volatility has deterred many institutional investors, who must operate within risk control limits and face margin calls if leveraged bets turn against them. However, retail traders have largely remained undeterred.
Data from Vanda Research suggests that while many retail investors have cooled on gold—withdrawing funds from the metal's largest ETF since last week's peak—they have consistently provided net inflows to SLV throughout the sell-off. Despite the ETF's overall significant price decline, retail activity never turned to net selling.
In the week ending February 3, hedge funds and other large speculators reduced their net long positions in gold by 23% to 93,438 contracts. Data released by the U.S. government last Friday indicated this is the lowest level in 15 weeks.
"That's why I call silver Icarus," said StoneX's O'Connell, referring to the figure from Greek mythology who fell after flying too close to the sun. "Silver flew too high, and the rest of us got burned."
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