MW 'The bulls are definitely spooked': Has silver's stunning rise this year run out of steam?
By Joy Wiltermuth
Thin holiday trading, higher margin costs and other factors are taking some of the luster off silver's mega-rally in 2025
Silver prices were plunging on Monday, after having surged 140% this year to fresh record highs.
Silver prices were tumbling Monday, raising alarms about the potential for this year's stunning rise in the precious metal to run out of steam.
The most-active silver contract (SI00) (SIH26) was 8.3% lower, near $70.80 an ounce, according to FactSet. The drop comes after its surge of $9.707, or 14.4%, on Friday to $77.196, its biggest daily dollar gain on record and a fresh closing high, according to Dow Jones Market Data.
"The bulls are definitely spooked today," said Jim Wyckoff, senior market analyst at Kitco. While veteran metals traders might not be terribly alarmed by the swoon - given that silver markets historically have been pretty volatile - individuals and speculators "late to the train" of the rally likely will remain leery if the selloff drags on ahead of Thursday's New Year's Day holiday, he said.
"Longs in the past week or two are underwater and just getting out," Wyckoff said by phone. Furthermore, in mature bull markets, you tend to see these kind of extreme price moves and the bulls "running out of gas," he said.
Also read: This hedge-fund veteran who pushed for silver in February now warns of short-term risks
Silver prices have jumped about 140% so far this year, even with Monday's selloff.
The rally has been helped along by voracious demand for precious metals lately, with silver in recent months playing catch-up to the surge in the price of gold (GC00), which has benefited from global central-bank buying.
Read: Silver's climb to $60 an ounce is a make-or-break moment for one of 2025's hottest trades
Silver's swoon
While gold was up 64.5% on the year through Monday, silver has become more of a "speculative Western investor trade" in recent months, said Brien Lundin, editor of the Gold Newsletter.
"A lot of them chose to come in via silver because gold already had run," Lundin said in a phone interview, adding that when speculation takes hold, "naturally you get more wiggles" in the price.
The popular iShares Silver Trust SLV exchange-traded fund was down 8.7% on Monday, while the SPDR Gold Shares GLD was off 4.7%, according to FactSet data.
The rout comes as brokerages have been requiring more margin to facilitate trading in precious metals. "That reduces speculation," Lundin said, adding that margin increases have been tracking the rally in gold and silver this year, but that they also increase hedging costs for end users of the commodity.
Other factors in the selloff likely were thin holiday trading volumes that can trigger extreme price moves, as well as investors looking to get ahead of the selling that typically happens during the first few trading days of a new year. Investors tend to book profits on winning investments during that stretch, while many commodity funds will need to rebalance by reducing their exposure to precious metals after this year's big gains, Lundin said. "Some people try to get ahead of that."
A 'healthy' pullback?
Silver's sharp decline on Monday also could reflect a healthy adjustment in the "market's trajectory, especially after the rapid and unprecedented price extension," Rania Gule, senior market analyst at XS.com, said in emailed comments to MarketWatch.
"I do not believe today's pullback represents a shift in the broader price trend or a fundamental rejection of further higher highs," Gule said. Any sustained downside move or meaningful reversal in silver prices would most likely hinge on "either an easing of supply constraints from China or a decline in the economic and geopolitical uncertainties that originally fueled this trend."
In addition to investors bidding up silver, there has been high demand for metal from the industrial side of the equation, as many major world economies lean into renewable energy and look for dominance in the artificial-intelligence race.
Silver recently was added to the U.S. Interior Department's list of critical minerals, and Tesla Inc. $(TSLA)$ CEO Elon Musk over the weekend expressed concern on social media about China's plan to restrict silver exports at the start of 2026.
"There are some significant supply issues," Lundin at the Gold Newsletter said of industrial demand outstripping supply of mined silver. Yet that's more of a long-term story, he said, adding that the recent spike and fallback in silver prices looked more typical of short covering in futures and options markets.
"I don't think the moves can be attributed to one factor," Lundin said. But when you throw all of the recent factors together, "you have a bearish pressure in the near term after the big rise, but traders also jumping on the bandwagon and forcing the price down."
Stocks also were lower Monday to kick off the final week of the year, with the S&P 500 index SPX off 0.4%, the Dow Jones Industrial Average DJIA 0.5% lower and the Nasdaq Composite Index COMP down 0.6%, according to FactSet.
-Joy Wiltermuth
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(END) Dow Jones Newswires
December 29, 2025 13:56 ET (18:56 GMT)
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