Recently, the gold and silver markets have experienced a rapid plunge. The white metal market was the most dramatic, with London silver dropping from a high of $83.97/oz to $74.215, a single-day decline of 5.23%, and the entire fluctuation range soaring to 12.3%. The domestic Shanghai silver was even more exaggerated, opening with a gain of over 10%, but by the close, it only had a slight increase of 0.51%. Gold was not spared either, with London gold falling below the $4,500 mark, closing down 0.73%, and domestic gold T+D following suit with a 1.4% decline.

What exactly is behind this wave of sharp decline? Several factors are stacking and colliding—first, the recent rally in silver and gold was too aggressive. Silver surged over 160% year-to-date, and gold also increased by 70%. Those who should have taken profits have already done so, and profit-taking selling has been frantic. Highly leveraged funds have been forcibly liquidated, leading to increasingly fierce selling pressure, which naturally drives prices down. Second, exchanges have been acting frequently; whenever margin requirements for futures are raised, funds immediately rush to exit. Plus, geopolitical tensions have eased somewhat, causing a sudden cooling of safe-haven demand, and buying interest has vanished. Lastly, don’t forget that silver’s market size is relatively small, so any large capital inflow or outflow can amplify the market movements significantly.

How should we view this situation now? Short-term volatility will definitely remain intense, so those looking to chase high prices at the top should be very cautious. However, from a medium- to long-term perspective, the supply and demand gap for silver still exists, and gold’s role as a safe-haven asset has not changed. This round of decline is most likely just a short-term correction, and it could even be a good opportunity to gradually build positions.