Silver’s Sudden Plunge Exposes Thin Liquidity And Leverage

Key Points

• Silver whipped from above $83 to the mid-$75s in hours as a squeeze flipped into liquidation.
• Margin rules and a major index-rebalance window (Jan. 9–15) are adding mechanical selling pressure.
• SLV trading stayed heavy, but holdings fell, pointing to profit-taking in metal-backed exposure.

Silver’s latest swing was violent. Prices briefly ran above $83 an ounce, then snapped lower toward $75, roughly a 10% air pocket in a couple of hours. By Thursday morning, spot was near $76.

Reuters put it at $76.08 at 05:39 GMT. Investing.com showed about $76.05, with a roughly $75.51–$79.03 range and a prior close near $78.19.

TradingView prints show a rejection of the highs. The daily session opened at $78.166, hit $79.016, fell to $75.482, and sat near $75.922. The 4-hour bar read O $76.261, H $76.615, L $75.611, C $75.906.

A widely shared TradingView note described the move as a liquidity problem: few sellers into the spike, then bids disappearing once sentiment turned.

CME margin hikes have raised the cost of carrying leverage; strategist Michael Purves said higher margins tend to “take some fluff out of the rally.”

The next mechanical wave is the Bloomberg Commodity Index rebalancing window (Jan. 9–15). J.P. Morgan estimates it could mean about $3.8 billion of silver futures selling, around 13,000 COMEX lots.

Overnight, a firmer dollar and positioning ahead of U.S. labor data reinforced profit-taking. Bernard Sin of MKS PAMP said traders are balancing geopolitics against U.S. macro signals. Kelvin Wong of OANDA highlighted the rebalance as a catalyst for trimming crowded positions.

Dislocated inventories add fuel. London spot has been unusually tight after metal was pulled into U.S. vaults on tariff concerns. Goldman also flagged China’s new export-approval requirements, starting Jan. 1, as another potential source of fragmentation.

In India, MCX silver futures dropped about ₹10,000/kg intraday, sliding from around ₹2,50,605/kg toward ₹2,40,605/kg.

SLV volume hit 93,679,522 shares on Jan. 7 versus a 30-day average of 75,319,044, but holdings fell 18.33 tonnes to 16,099.83 tonnes.

Technicals cooled fast. The 4-hour RSI was near 45.34 with a negative MACD histogram, while the daily RSI held around 61.05. Near-term support sits around $75.5; resistance remains $78–$79.

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