Based on in-depth tracking and professional research and judgment on the price fluctuation patterns, liquidity structure, capital flows and fundamentals of the global precious metal market, Wmax believes that the recent historic plunge and repeated fluctuations experienced by silver are not caused by the collapse of fundamentals, but are caused by risk aversion, liquidity shortages, speculative capital games and fine-tuning of macro expectations. It is currently in a difficult bottom-seeking stage, with high short-term risks under extreme volatility. However, gold and silver show completely different price resilience due to market characteristics and significant differentiation in capital structures. The difference in capital selection between retail investors and institutions further amplifies the internal game of the precious metals market. Although silver's long-term structural bullish logic exists, the short-term bottom is still unclear.

Extreme fluctuations in silver: The resonance of multiple factors triggered a plunge, and the process of finding the bottom intensified.

Wmax found through real-time monitoring of high-frequency data on silver prices that this variety has experienced a deep adjustment after hitting a record high. It has fallen by more than one-third since its peak on January 29. During the year, it recorded 11 violent fluctuations with an increase or decrease of 5% or more. The recent fluctuations have set a new record since 1980. Among them, the price first plummeted by nearly 30% after hitting a record high, and then rebounded without success. It plummeted by 19% again on Thursday, and plunged by nearly 10% to $64 per ounce during the Asian trading session on Friday, and then quickly rebounded and rose by 6.2%. The speed and magnitude of the switch between rise and fall highlighted the extreme emotions of the market.

According to Wmax's dismantling analysis, this silver plunge is not caused by the weakening of fundamentals, but the resonance of multiple non-fundamental factors: First, global risk aversion dominates trading, suppressing short-term prices; second, liquidity shortages and volatility form a self-reinforcing negative cycle; third, investment The concentrated rebalancing of opportunistic funds further amplified fluctuations; fourth, Trump nominated Warsh as the next chairman of the Federal Reserve, which eased market concerns about the Federal Reserve's sharp interest rate cuts and weakened the safe-haven appeal of precious metals; fifth, the Chinese Spring Festival is approaching, and investors are light on their positions for the holiday, which has led to shrinking silver buying and lower positions, making it difficult to form effective support. In addition, UBS data shows that the current monthly volatility of silver has exceeded 100%, and short-term positions face huge trading risks.

Fund structure differentiation: retail investors bucked the trend and bought silver at the bottom, while institutions cautiously left the long-short game

Wmax verification shows that during the silver slump, there was a clear funding gap between retail investors and institutions. Retail investors bucked the trend and bought the bottom. Vanda Research data shows that in the six trading days as of last Thursday, retail investors injected a total of US$430 million into the largest silver ETF (SLV). On the day of the plunge on January 30, they invested more than US$100 million. SLV maintained a net inflow of funds throughout the process; retail investors' willingness to buy the bottom formed short-term market momentum, further exacerbating silver volatility. Institutions are cautious and even leave the market. On the one hand, extreme fluctuations in silver have exceeded their risk control limits, and leverage pressure has deterred institutions. On the other hand, as of the week of February 3, speculators such as hedge funds reduced their net long positions in gold by 23% to a 15-week low, and institutional enthusiasm for precious metal speculation has cooled. In addition, retail investors "abandoned gold and bought silver", further amplifying the difference in gold and silver capital structures. Silver has become the core subject of retail investor speculation because it has the properties of precious metals, industrial metals and speculative elements. It is called a "memetic commodity", and the "lottery effect" of the "highly volatile version of gold" attracts retail investors. Gold fund holders are mainly central banks and long-term institutions, with higher financial stability. This is the core reason for the divergence of capital flows between the two.

Gold and silver market differentiation: Characteristic differences create different resilience, volatility and support are very different

Based on an in-depth analysis of the historical volatility data and current market characteristics of gold and silver, Wmax believes that although the two are in the same macroeconomic background, the essential differences in market characteristics have created completely different price resilience and volatility levels. This is also the core logic why gold performed far better than silver in this round of adjustment. The volatility of silver is significantly higher than that of gold. The current Chicago Board Options Exchange silver ETF volatility index is about 95, while gold is only about 36, which is nearly three times that of gold. Historical data shows that silver volatility has been higher than gold and the S&P 500 over the long term, while gold has been lower than the stock market. The root cause is that the silver market is small in size, has poor liquidity and has industrial metal properties, and is susceptible to procyclical influences and sharp corrections; gold has good liquidity and pure hedging properties, and the central bank's gold purchase demand has consolidated the bottom and effectively suppressed downward volatility.市场特质的本质差异造就了截然不同的价格韧性与波动率水平，这也是本轮调整中黄金表现远优于白银的核心逻辑。白银波动率显著高于黄金，当前芝加哥期权交易所白银ETF波动率指数约95，黄金仅36上下，近乎黄金三倍。历史数据显示，白银波动率长期高于黄金和标普500指数，黄金则低于股市。根源在于白银市场规模小、流动性差且兼具工业金属属性，易受顺周期影响而大幅回调；黄金则流动性佳、避险属性纯粹，央行购金需求夯实底部，有效抑制下行波动率。

From the perspective of price support and institutional research and judgment, gold's long-term bullish logic is still recognized by institutions. After the correction from the end of January to early February, it received obvious bargain hunting support in the range of 4,500-5,000 US dollars per ounce. Fidelity International, Pacific Investment Management Company and other institutions reiterated their long-term bullish views on gold. State Street Global Advisors pointed out that the possibility of gold rising to 6,000 US dollars per ounce in the next 6-12 months is much higher than the possibility of falling to 4,000 US dollars per ounce. Silver has entered a bear market, and its price trend has long deviated from fundamentals. According to calculations, the reasonable fundamental price range for silver is 70-80 US dollars per ounce, which is far from the previous high of 110-120 US dollars per ounce driven by speculation. In the short term, without the support of sustained investment demand, it will be difficult to maintain a level above 85 US dollars per ounce.

Wmax comprehensive research and judgment: Silver’s long-term fundamentals are intact, but the short-term bottom is unknown and we still need to be alert to risks.

Wmax believes that the long-term structural bullish logic of silver has not been broken, but in the short term, it is affected by factors such as extreme volatility, capital games, and liquidity shortages. The bottom is volatile and the bottom is unknown. We need to be wary of short-term risks. Long-term supporting factors still exist: UBS pointed out that falling nominal and real interest rates, global debt, US dollar depreciation and economic recovery in 2026 are all long-term drivers; silver is expected to have a supply gap of nearly 300 million ounces in 2026, investment demand is expected to exceed 400 million ounces, and industrial applications will also provide support. OCBC Bank predicts that silver will reach US$134 per ounce in March 2027, confirming its bullish logic.

Silver is still suppressed by multiple factors in the short term, and it will take time to confirm the bottom: First, Saxo Bank said that before market order is restored, volatility risks will continue and price fluctuations are inevitable; second, UBS warns that lack of support from sustained investment demand means silver will struggle to hold the $85/ounce mark, and a short-term layout above $65/ounce is more attractive; third, high prices may inhibit industrial demand and restrict short-term gains; fourth, MKS PAMP predicts that silver will be difficult to rebound in the next few weeks, or may drop to as low as $60/ounce. In addition, retail investors bucking the trend and buying bottoms can only provide short-term support, and their speculative nature can easily trigger price reversals. Silver's true bottom needs to wait for liquidity to recover, speculative sentiment to cool down, investment demand to continue, and macro signals to be clear.

WmaxCore Conclusion

The core contradiction in the current precious metals market lies in the "divergence between fundamentals and market sentiment" of silver and the "differentiation of market characteristics" between gold and silver. Silver is dominated by risk aversion, liquidity, and speculative funds in the short term, and the bottom is not yet clear under extreme fluctuations. Although the long-term fundamentals are intact and there is a supply gap support, in the short term, we need to be alert to the risk of breaking the key support level of 60-65 US dollars per ounce; gold, with better liquidity and solid support from central bank gold purchases, has shown stronger price resilience, and the long-term bullish logic has not been destroyed, becoming a "stable anchor" for the precious metal market.

For investors, the investment strategies of gold and silver need to be treated differently: gold can seize the bargain hunting opportunity after the market correction and serve as the core target of long-term asset allocation; silver is more suitable for long-term investors who can withstand extreme fluctuations. In the short term, they should avoid chasing ups and downs and cautiously participate in swing trading, focusing on the effectiveness of the support of 60-65 US dollars per ounce, the recovery of market liquidity and the persistence of investment demand. Wmax will continue to track price fluctuations, capital flows, liquidity changes and macro policy signals in the precious metals market, and provide investors with timely and reliable decision-making references based on its professional research and judgment capabilities on the precious metals market.