Spot silver plunged as much as 15%, slipping below $75 an ounce, while spot gold gave back roughly 3%, trading near $4,810 an ounce in early Asian sessions. The move sent ripples through China’s equity market: listed precious‑metals names plunged, several silver and gold producers hit trading limits, and a silver‑linked LOF product resumed trading only to record its fourth consecutive limit‑down.
The sell‑off exposed the structural differences between the two metals. Market participants quoted the chairman of the New York commodity exchange committee, William Puppla, who said the episode was driven largely by speculative, short‑term money. He noted that silver attracts greater short‑term leverage and sentiment trading compared with gold, which is still predominantly treated as a macro hedge and reserve asset.
Chinese mining and metals stocks were hard hit. Companies such as Hunan Gold, Hunan Silver and Sichuan Gold reached daily limit‑down levels, while other resource names fell double digits. The sudden pressure on equities amplified local concern because many domestic investors hold leveraged positions or exposures to retail‑oriented funds that track metal prices.
The immediate market dynamic resembles a classic liquidity squeeze: a crowded long in a high‑beta asset meets a wave of profit‑taking and fast exit of short‑horizon players, producing outsized moves. Silver’s dual role — a precious metal with industrial uses and a vehicle for speculative trading — makes it particularly vulnerable to abrupt sentiment reversals when liquidity thins.
Beyond the technical unwind, the episode matters because it highlights contagion pathways between commodity moves and domestic financial stability. Large moves in precious metals can translate into margin calls, forced selling in equities, and reputational headaches for retail‑facing funds. For miners, a price shock can quickly erode market capitalisation even if their longer‑term fundamentals remain intact.
Looking forward, volatility is likely to persist until speculative flows stabilise and physical demand signals reassert themselves. Silver may find buyers at the lower end of recent trading ranges — as Puppla suggested — but the asset’s historically higher beta to risk sentiment means investors should expect larger swings than in gold. Policy responses are unlikely in the immediate term, but investors and regulators will be watching ETF and fund flows, margin environments and any spillover into broader credit or retail funding channels.