In-depth Analysis of Silver Market Volatility Amplification and Precious Metals Investment Strategies

According to the latest market data [0], silver experienced a historic rise in 2025, with an annual increase of

(from $29.31 to $70.60), far exceeding gold’s 64.37% gain. However, this surge is accompanied by extremely high volatility:

• Current 20-day volatility: 5.06%
  (historical average is only 2.81%) [0]
• Recent high: $82.67
  , 17% above current price
• Gold-silver ratio: 61.49
  (long-term average is 73.09), at a historical low

Technical chart analysis [0] shows that silver continued to rise by 46.94% from November to December 2025, but volatility increased significantly, indicating the market has entered a highly unstable state.

Daniel Ghali, Senior Commodities Strategist at TD Securities, stated in his latest research report [1,2]:

“It is expected that about 13% of open interest in the COMEX silver market will be sold off in the next two weeks, which may lead to a dramatic repricing decline in silver prices.”

The core logic of this warning is:

• Post-holiday liquidity decline
  : Market participants decrease after year-end holidays, leading to liquidity exhaustion
• Crowded long positions
  : A large number of speculative long positions are concentrated in a few contracts
• Stampede risk
  : Simultaneous liquidation of 13% of open interest will trigger a chain reaction

The Wall Street Journal report confirms [3] that silver has seen its

, and the sell-off in the metal market is “putting the brakes on this year’s hottest trade.”

---

Risk Factor	Impact Level	Key Data
Concentrated Contract Liquidation	⚠️ Extremely High	13% open interest to be sold off [1,2]
Post-holiday Liquidity Decline	⚠️ Extremely High	Post-holiday trading volume decline
Volatility Surge	⚠️ High	Current 20-day volatility:5.06% [0]
Profit-taking Pressure	⚠️ High	Annual increase of140.88% [0]

1. Reduce Position Risk Exposure
   • It is recommended to
     reduce silver positions by 30-50%
     from current levels
   • Avoid using leverage to prevent forced liquidation
   • Keep sufficient cash (40-50% recommended) to seize buying opportunities after potential crashes

2. Option Protection Strategy
   • Investors holding silver ETFs/physical silver may consider buying
     put options
     for hedging
   • Strike price is recommended to be set in the $65-68 range (8-12% below current price of $74.06)
   • Choose contracts with a term of 2-4 weeks to cover the peak liquidation period

3. Stay Away from Short-term Contracts
   • Avoid holding expiring futures contracts
   • If futures must be held, choose contracts with more distant months (over 3 months)

Despite short-term correction pressure, silver’s

remain strong:

[4,5,6]

• Supply-demand imbalance
  : Global silver inventory is at a 10-year low, with continuous supply shortages for five consecutive years
• Rigid industrial demand
  : Demand from solar photovoltaic, electronics, and medical fields continues to expand
• Shift in investment demand
  : Silver has shifted from a safe-haven tool to a momentum trading asset, changing investor structure
• De-dollarization trend
  : U.S. federal debt reaches 115% of GDP, and the U.S. dollar depreciated by about 10% in 2025

1. Batch Buying on Dips
   • Start building positions if silver falls to the $60-65 range (about -15% to -20%)
   • Adopt the
     pyramid buying method
     : Buy more as prices drop
   • Target price ranges:
     • First batch: $65-68 range
     • Second batch: $58-62 range
     • Third batch: $52-55 range

2. Focus on Gold-Silver Ratio Repair
   • Current gold-silver ratio of 61.49 is far below the historical average of73.09 [0]
   • If silver corrects more than gold and the ratio rebounds to above 70, consider a pair trade of going long silver and short gold

3. Choose Low-Volatility Tools
   • Prioritize
     physical silver
     or
     silver ETFs
     (e.g., SLV)
   • Avoid leveraged ETFs (e.g., AGQ), as their volatility amplification effect may lead to huge losses in turbulent markets

According to market analysis [4,5,6]:

• Interest rate cut cycle
  : The Federal Reserve continues to cut interest rates, reducing the holding cost of precious metals
• Geopolitical uncertainty
  : Global trade tensions intensify safe-haven demand
• Shift from central bank gold purchases to investor demand
  : Strong investor demand has become the dominant force driving gold prices

Asset Class	Recommended Allocation Ratio	Core Reason
Gold	60-70%	Lower volatility (1.27% vs silver’s2.32%) [0], strong safe-haven attribute
Silver	30-40%	Supported by industrial demand, high upside elasticity
Precious Metal Mining Stocks	0-20% (optional)	Gold mining stocks outperformed gold prices in2025, but need to be alert to corporate operational risks [4]

---

• Position Control
  : Silver allocation should not exceed5-10% of the total portfolio
• Tool Selection
  : Only hold physical silver or highly liquid silver ETFs
• Operation Strategy
  :
  • Temporarily
    wait and see until the end of January
    to wait for the end of the contract liquidation wave
  • If prices fall below $60, slightly build positions of 3-5%
  • Set a -15% stop-loss and strictly implement it

• Position Control
  : Silver allocation of10-15%
• Tool Selection
  :70% silver ETFs +30% call options (limit downside risk)
• Operation Strategy
  :
  • Immediately reduce current silver positions to 50%
  • Buy 50% of the remaining positions in the $65-68 range
  • Adopt the
    collar strategy
    : Hold ETFs while buying put options + selling call options

• Position Control
  : Silver allocation can reach 20-30%
• Tool Selection
  : Combination of futures, options, and ETFs
• Operation Strategy
  :
  • Short-term short
    : Use high volatility to establish short positions in the $74-76 range (target $65)
  • Medium-term long
    : Establish long positions in the $58-62 range (target $75-80)
  • Option Strategy
    : Buy a straddle combination to bet on large two-way fluctuations

---

##4. Key Risk Monitoring Indicators

Indicators to closely monitor in the next two weeks:

Monitoring Indicator	Importance	Observation Points
COMEX Open Interest	🔴 Critical	Whether it continues to decline by more than13%
Intraday Trading Volume	🔴 Critical	Whether it is below 50% of the average level
Volatility Index (VIX)	🟡 Important	If it exceeds30, indicating market panic
Gold-Silver Ratio	🟡 Important	Rebound to 65-70 range for entry
U.S. Dollar Index	🟢 Reference	Stronger dollar puts pressure on silver
Stock Market Performance	🟢 Reference	Sharp decline may trigger silver sell-off

---

##5. Conclusion and Action Recommendations

The silver market is in a

, and the 13% concentrated contract liquidation warned by TD Securities may trigger a . However, silver’s and provide support for the medium to long term.

✅

:

1. Reduce silver positions to50% or lower
2. Review leverage ratio in holdings
3. Buy put option protection for remaining positions

✅

:

1. Monitor changes in COMEX open interest
2. Start batch building positions if prices fall to $65-68
3. If liquidity is completely exhausted (daily volume below 50% of average), exit completely

⚠️

:

• Full positions in silver during the contract liquidation period
• Using leverage above 2x during high volatility
• Chasing ups and downs to capture short-term fluctuations

Despite short-term adjustment pressure, silver, as a “dual-attribute” asset (financial + industrial), still has

under the 2026 interest rate cut cycle and de-dollarization trend. It is recommended that investors view this correction as a rather than a reason for panic selling.

---

[0] Gilin Data API - Silver, gold price and technical analysis data

[1] Yahoo Finance - “Cardano’s ADA pops7%, bitcoin, ether show steady gains”
https://finance.yahoo.com/news/cardanos-ada-pops-7-bitcoin-034920670.html

[2] Yahoo Finance - “Gold and Silver Open2026 With Gains Following Huge”
https://finance.yahoo.com/news/gold-silver-open-2026-gains-040226353.html

[3] Wall Street Journal - “Silver Posts Biggest One-Day Decline in Nearly Five Years”
https://www.wsj.com/finance/stocks/global-stocks-markets-dow-news-12-29-2025-fb2f6ec3

[4] Yahoo Finance Hong Kong - “Gold, silver, platinum, palladium, cobalt prices surge collectively! Which metal is the next investment opportunity?”
https://hk.finance.yahoo.com/news/黃金-白銀-鉑-鈀-鈷價格集體瘋漲-204003433.html

[5] Yahoo Finance Hong Kong - “Can gold and silver gains cross the year? Interest rate cuts and de-dollarization are all in place; experts warn bull market enters high volatility zone”
https://hk.finance.yahoo.com/news/金銀漲勢能跨年嗎-降息-去美元化全到位-專家警告牛市進入高波動區-020435901.html

[6] Yahoo Finance Hong Kong - “Gold and silver prices both fall but do not change record performance in2025”
https://hk.finance.yahoo.com/news/黃金和白銀價格雙雙下挫-但不改2025年全年創紀錄表現-073627723.html