Is it a bear market retreat or a bull market pullback? Silver collapsed by 8.7% after hitting a record high, marking the largest single-day drop in US dollars since 1980.

After hitting a historic high, the price of silver plunged sharply on Monday of this week, sparking concerns in the market about whether there is "not enough momentum" for this amazing rally this year. According to Dow Jones market data, the most active silver futures contract closed at $70.46 per ounce on Monday, plunging 8.7% in a single day, marking the largest single-day dollar decline since January 22, 1980. At the same time, the price of gold fell by over 4%, reaching $4330. Just the day before, silver had just set a new record high closing price and achieved the largest single-day dollar increase ever. Kitco's senior market analyst Jim Wyckoff said, "Bulls were obviously scared by today's market." He pointed out that although the silver market has always been volatile, veteran metal traders may not panic, but retail investors and speculative funds that entered the market recently may be more cautious before the New Year holidays. "Longs who entered the market in the past one or two weeks are already losing money and can only choose to exit with a stop loss." In a mature bull market, such dramatic price swings often indicate a decline in bullish momentum. Since the beginning of this year, the overall demand for precious metals has been strong, especially with the continuous buying of gold by central banks worldwide, pushing the price of gold higher. Gold futures have risen by approximately 65% since the beginning of the year, while the increase in silver prices has been more than double. Brien Lundin, editor of a precious metals financial magazine, pointed out that in recent months, silver has evolved more into a "speculative trade dominated by Western investors." "Many investors believe that gold has risen too much, so they turn to silver to participate in the market, and once speculative elements increase, prices will naturally show more intense fluctuations." Market participants generally believe that this rapid decline is closely related to the exchange's increase in margin requirements. Last Friday, the Chicago Mercantile Exchange (CME), one of the world's largest commodity trading platforms, announced an increase in margin requirements for precious metals such as gold and silver, requiring traders to invest more capital to guard against default risks during drastic price fluctuations. Lundin stated that the increase in margin requirements directly suppresses speculative trading, while also raising the hedging costs for industrial customers. In addition, light trading before the holidays has exacerbated price fluctuations, and many investors are trying to avoid the common profit-taking and commodity fund rebalancing pressures at the beginning of the new year, which together intensified the selling. Although the short-term pullback was severe, some analysts believe that this does not necessarily mean a reversal of the trend. Rania Gule, a senior market analyst at XS.com, pointed out that this decline appears more like a "healthy correction" after a rapid and unprecedented rise, rather than a fundamental denial of the longer-term bullish logic. She believes that silver may only show sustained reversal when Chinese supply constraints significantly ease or when the economic and geopolitical uncertainties that drive precious metals higher significantly decrease. From a fundamental perspective, silver is not only an investment asset, but also an important industrial metal. Against the backdrop of strong demand in new energy, artificial intelligence, and other fields, the U.S. Department of the Interior has included silver on a list of critical minerals. However, Lundin also warns that the recent sharp rise and fall of silver seem to be a mix of short squeeze and profit-taking in the futures and options markets. "It is difficult to attribute to just one factor, but after a significant increase, the downward pressure in the short term is indeed greater." It is worth noting that the overall sentiment of risk assets is also cooling down. Major U.S. stock indices all fell on Monday, with the Nasdaq dropping by 0.5% and Bitcoin falling by over 0.7%.