The precious metals market has been rollercoastering these past two days. Silver experienced a crash last night, with a nearly 9% decline, but tonight it instantly reversed and surged 8%, with COMEX silver shifting from deep correction to a strong rebound. The spot market is also highly volatile, with London silver rising over 6% in the short term, the main contract of Shanghai silver soaring 5%, and even gold following the upward trend, with London gold up 1.5%. This intense short-term volatility raises a question: is this still trading? It more resembles a high-risk game of capital playing psychological warfare.

The chain of events is actually quite clear. The day before yesterday, the margin requirements for precious metals were raised, causing the market to plummet. Silver was pushed to the floor, falling over 7%, and spot silver plunged more than 9%, forcing many longs to cut losses mid-session. But by today’s open, the story reversed. Bottom-fishing funds suddenly flooded in, pulling the price back from its lowest point. Some joked that this isn’t market behavior, but rather capital playing mind games with retail investors.

Institutional analysis shows a divided outlook. The bullish camp points out that silver may break through its historical highs, with a supply-demand gap exceeding 100 million ounces; the bearish camp warns that silver could fall to even lower levels. Huadong Futures’ reminder is more direct: currently, silver’s volatility has surpassed gold’s, and when the gold-silver ratio drops below 65, it’s time to sound the alarm. Behind the increased volatility in precious metals, it reflects a decline in market participation.

This is the key—year-end liquidity is tight, and market liquidity is insufficient. A single large order from major players can significantly impact the trend. Although the World Silver Association emphasizes the supply gap, UBS’s words hit harder: the reason for the fierce market now is, frankly, the low number of traders, making prices easier to push. Conversely, once the market sentiment shifts, the decline can be just as rapid.

Retail investors need to be cautious: high volatility often comes with high risk. Going all-in to bottom-fish sounds tempting, but in a market with limited liquidity, it’s like bungee jumping without a safety belt. The gold-silver ratio, margin levels, market participation—these are the real factors influencing the trend. The trading logic of precious metals has evolved from fundamentals to a capital game. New investors entering the market should understand this.