Stunning Collapse in the Silver Market: Small Investors Sweating Bullets

Historic Loss in the Silver Market

The silver market is going through a tough test with the recent fluctuations. Developments reminiscent of the 'meme stock' frenzy during the Covid-19 period have disappointed investors. The white metal, which surpassed 120 dollars per ounce reaching a historic peak, lost more than 30% of its value in just three days. This sharp decline has put significant pressure on individual investors.

Trump's Statements and Speculative Movements

The trigger for the collapse was the announcement of U.S. President Donald Trump nominating Kevin Warsh for the Fed chairmanship. Following this news, both silver and gold saw a 16% value drop. However, the main adverse situation in the market lies in the reversal of the speculative frenzy experienced in recent weeks. The figures indicate that Asian individual investors made a record investment of 1 billion dollars in silver ETFs in January.

Increased Demand for Physical Silver

During this process, the demand for silver was not only reflected on stock market screens. In January, the intense demand for physical silver caused mints to struggle with coin production. Refineries had to work overtime to meet demands ranging from jewelry to cutlery, and even dental fillings.

Losses and Analyses Shared on Social Media

Inexperienced investors trading with high leverage faced serious difficulties. The leveraged silver fund named AGQ experienced a 60% drop in value on Friday. The number of investors sharing their losses on social media platforms increased twentyfold daily. The seriousness of the situation is highlighted by a single Reddit user's statement, "I lost my entire annual salary in my whole portfolio."

Expectations of Corrections in the Markets

Analysts point out that the volatility in the silver market stems from its less liquid structure compared to gold. Kirill Kirilenko states that silver could be described as "steroid-infused gold" from the perspective of investors. Many experts consider the drop to be merely a correction, emphasizing that it presents long-term buying opportunities. Sébastien Le Page indicates that the bull run is still ongoing.