"Silver Rhapsody" enters a high volatility chapter? Silver quickly plunges after hitting a historical high of $84, dropping more than 3%.

The trading price of the most crazy precious metal of the year - silver, continues to climb to record highs. For the first time in history, it broke the $80 per ounce barrier on Monday, reaching as high as $84 per ounce, continuing the latest round of historic end-of-year trading frenzy. However, silver spot prices dropped sharply after reaching a historical high of $84 per ounce earlier on Monday, highlighting the profit-taking trend of speculative funds. This also indicates that with the RSI indicator reaching a technical retracement point, silver volatility may become more intense. Currently, the silver spot daily trading price quickly reversed from a 6% increase to a 3% decrease, trading at $76 per ounce. Short-term gold prices also quickly dropped due to the decline in silver prices, falling below the $4500 mark and dropping about $50 from the daily high. This white metal has seen six consecutive days of gains, with a cumulative increase of about a quarter since 1950 - the largest six-day gain on record. The recent rally has been supported by speculative fund inflows and a supply mismatch still present in the major global commodities trading Hub Group, Inc. Class A after a short-term short squeeze in October. Gold, silver, and platinum group metals have shown significant strength this year, mainly due to large-scale buying by global central banks (mainly gold purchases), continued large-scale inflows of funds into global precious metals exchange-traded funds (ETFs), and strong support from the Federal Reserve's recent three consecutive interest rate cuts. Generally, lower borrowing costs are very favorable for non-yielding commodities like these, and traders are betting that the Fed will cut rates 2-3 more times by 2026. As shown in the graph above, silver has been increasingly wild this year, with an astonishing 165% increase in the year and further outperforming gold - silver has risen more than 25% in the past six trading days. "There is no doubt that we are witnessing a generational bubble in the silver market," said market analyst Tony Sycamore from IG Australia. Technical indicators suggest that the silver rally may be too aggressive and too fast. The metal's 14-day Relative Strength Index (RSI) reading is close to 80, far above the "overbought" threshold of 70. Various reasons are cited for why silver has unexpectedly outperformed gold, but the core logic lies in the escalating US-Venezuela GEO Group Inc political conflict, supply shortages, and liquidity threats. Firstly, the silver market has a small supply. Both inventory and liquidity are relatively tight, and liquidity could quickly evaporate; the London gold market has around $700 billion in gold reserves that can be lent in times of liquidity shortage, while silver does not have similar reserves. The historical supply shortage occurred last October. A weakening US dollar is also a core driving factor behind the continued record highs of gold, silver, and other precious metals. The Bloomberg Dollar Spot Index - a key indicator of the strength of the dollar, has fallen significantly by over 10% this year, and in the past week - fell by almost 1%, the largest weekly decline since June. A weak dollar is generally very favorable for the trends of gold and silver. Surpassing Apple Inc., Microsoft Corporation! Silver ranks among the top three in global asset market value Latest statistics show that silver has become the third most valuable asset globally, only behind gold and NVIDIA Corporation (NVDA.US) in total market value, leaving tech giants like Apple Inc. (AAPL.US), Alphabet Inc. Class C (GOOGL.US), and Microsoft Corporation (MSFT.US) behind. CompaniesMarketCap statistics show that the market value of silver has reached as high as $4.485 trillion; the total market value of gold assets is at the top with $31.719 trillion, with chip giant NVIDIA Corporation following closely at $4.638 trillion, with market value reaching as high as $5 trillion at one point this year. With silver continuing to hit record highs recently, on December 27th, Musk expressed concerns about the emotional impact, stating that it is not good for global industrial development. Musk made the latest comments on the social media platform X. In response to the hot discussions about the explosive growth in silver trading prices due to "severe global supply shortages," Musk commented, "This is not good. Silver is needed in many industrial processes." Statistics show that the global silver market has been in a structural deficit for five consecutive years, with physical inventory rapidly depleting, and inventory levels at major exchanges significantly decreasing. The market is facing a real-time supply squeeze, driven not only by safe-haven sentiment but also by rising demand. In 2025, statistics show that global silver demand reached 1.24 billion ounces, while the supply was only 1.01 billion ounces, indicating a supply gap of 100-250 million ounces. This supply-demand situation is described as a "structural deficit" with no signs of quick repair. The core reason for this situation lies in the rigidity of global mine supply. Silver mining is mostly a byproduct of copper and zinc mining, and new mines usually take more than 10 years to develop, with declining ore quality. At the same time, the increase in recyclable materials cannot fill this gap, making the supply side appear weak in the face of soaring demand. More concerning signals come from the drastic drop in inventory data. Since 2020, silver inventories at COMEX (New York Commodities Exchange) have fallen by 70%, and silver inventories at the London Metal Exchange (LME) warehouses have dropped by 40%. At the current demand rate, available silver inventory in some regions can only sustain for 30 to 45 days. Silver breaking $100 is not a dream? In summary, the core logic behind the recent sharp rise in silver prices is: "Expectations of a macro-level decrease in the Federal Reserve's benchmark interest rate + structurally tight supply + strengthening industrial growth narrative + momentum funds / speculative forces / FOMO (fear of missing out) sentiment" pushing silver prices into an unparalleled "precious metal acceleration phase". The revaluation of the industrial demand narrative can be seen as a novel logic behind the recent surge in silver prices, as pointed out by the World Silver Council in its latest research report: the booming process of AI data center construction, the trend towards electrification/new energy (including photovoltaics), the global shift towards electric vehicles, and the continuous supply-demand gap, have made silver not just following gold anymore; the World Silver Council states that the industry growth rates of 17% in the solar industry, 13% in the electric vehicle industry, and the explosive expansion of global AI data centers together constitute the three pillars of silver demand growth. The World Silver Council predicts in this report that these industries will continue to drive the demand for silver in the industrial sector until 2030. The council emphasizes that the global data center IT power capacity has grown from 0.93 gigawatts in 2000 to nearly 50 gigawatts by 2025, a 53-fold increase. This exponential growth means the need for larger-scale servers, switches, and cooling systems globally, all of which depend on silver as a core component. The World Silver Council highlights that silver's large-scale penetration and application in data centers are based on three key features: the highest electrical conductivity ensures minimal energy loss in server power transmission, crucial for data centers requiring 99.999% uptime; excellent thermal conductivity helps equipment maintain safe temperature ranges, reducing cooling energy consumption (cooling systems account for 7-30% of data center total energy consumption); high corrosion resistance protects components in high electrical load and temperature fluctuation environments. For some seasoned commodity analysts and traders, the recent sharp rise in silver prices lays an important foundation for silver to break through the $100 mark, but they generally believe that silver "hitting/impacting $100 per ounce" is an "extreme bullish target." Philippe Gijsels, a senior strategist at BNP Paribas, believes that with the momentum from the Federal Reserve's rate cuts and the strong market's enthusiasm, the upward trend of silver prices will continue until 2026, and he predicts that gold will hit $100 an ounce by the end of 2026. Keith Neumeyer, CEO of First Majestic, has publicly expressed his long-term view on silver prices reaching three digits (above $100 per ounce) multiple times this year. Paul Williams, Managing Director at Solomon Global, states that silver's dual attributes as an industrial metal and value store continue to attract global fund inflows, and the supporting factors for a long-term bull market remain strong. Williams previously predicted silver would break $50 in October and expects it to surpass $100 by the end of 2026.