A painful truth: The sudden rise in silver is driven by an industrial crisis, not a safe haven reserve

Dear friends, you have witnessed history! Last night, the traditional safe-haven asset silver staged a spectacle that embarrasses the crypto world — with its price dropping from its all-time high of $83 per ounce, down more than $6 in half an hour, with daily volatility reaching $9, similar to end-of-the-world celebrations for meme coins. When silver also begins to play with the "market driven by momentum," we can only ask: is this a blessing for wealth, or a prelude to a crisis?
1. The terrifying night of December 29: a liquidity massacre
According to real-time market prices on December 29, the spot silver price surged sharply by over 5%, holding steadily above $83 per ounce, surpassing Google’s value to become the fourth-largest global asset, with some experts even declaring that "silver will surpass Nvidia to become the second-largest global asset." However, the celebrations lasted less than 4 hours, as the price suddenly plummeted, falling below $75, with a daily volatility of $9, and closing around $80.
This is not just simple profit-taking. End-of-year low liquidity amplified the impact of each order, but the deeper issue is that the futures market faces a potential liquidity crisis. Renowned financial writer John Robino warned that the sudden spike on Friday triggered many short positions to be liquidated, stating: "Many large positions are facing margin calls of huge amounts, some of which will not be able to withstand it." Even more terrifying, physical silver prices in Shanghai reached $90, with a huge gap of $10 compared to futures prices on COMEX, but arbitrage cannot close the gap — because there isn’t enough physical silver stock in paper exchanges.
2. 57% of retail investors believe a bubble is coming
A Keiko survey shows that more than half 57% of retail investors believe silver will surpass $100 next year. This madness reminds us of the collective FOMO before Dogecoin hit $0.7 in 2021. But the cold reality is:
• Fund premium bubble: The price of the silver fund in the secondary market sometimes exceeded 57%, and fund companies issued risk warnings, implementing temporary measures such as halting trading and limiting daily purchases to 500 yuan. This means you buy silver at nearly 60% above its true value, and when the switch occurs, you face "net value decline + premium proximity" simultaneously.
• Analysts expect a decline: Keiko predicts silver could fall to around $42 by year-end, roughly halving from its peak. UBS warned that risks after reaching the short-term top are significantly increasing.
• Divergence from gold logic: Gold is expected to rise by 65% in 2025, while silver follows the upward trend but with much higher volatility. When gold relies on central bank purchases of 310 tons in Q3 2025, it remains stable, but the sudden surge in silver is often driven by speculation and lacks sustainable support.
Robino frankly said: "We are at the heart of a major event, and it will become bigger" — but this "big event" could be a price collapse.
3. Musk’s warning: this is not an investment, but an industrial disaster
Elon Musk issued an urgent call: "The sudden rise in silver will affect many industrial processes." This is not an exaggeration; it’s a supply chain collapse happening right now.
The industrial nature of silver is shifting from an "additional element" to a "death omen":
• Demand for new energy: each Samsung solid-state battery vehicle needs 1 kg of silver, and if it can charge 600 miles in 9 minutes, the wealthy will buy it insanely. Major tech companies like Tesla and Apple are moving from "just-in-time stock" to "hysterical reserves."
• Major companies are turning to direct purchases: Robino revealed that tech giants are considering buying silver mines directly to secure supply, saying: "Even Musk could buy an entire silver mine with part of his wealth." This is no longer an investment but a race for strategic resources.
• Supply chain disruption: when manufacturing giants hoard physical stock, smaller players won’t be able to get anything. Robino warned: "The silver market faces the risk of 'unobtainium' — you’re willing to pay a high price, but the stock in exchanges disappears completely."
This fundamentally differs from Bitcoin: Bitcoin doesn’t require manufacturing, and its decline is just a number in the ledger; but a rise in silver could kill the real economy and ultimately lead to an excessive price surge.
4. The three reasons for crypto market volatility
Why do "crypto-like" fluctuations appear in traditional assets? There are three main factors:
1. Liquidity killing at year-end
During the "Devil’s Week" from Christmas to New Year, Wall Street traders take their collective vacations, and order books are very thin, allowing small funds to cause large volatility. This explains why a $9 fluctuation occurs in traditional markets but not in crypto markets.
2. The "partial reserve" trick in the futures market
Robino said that paper silver exchanges are essentially "partial reserve banks" — holding small amounts of physical silver and selling much larger futures contracts. When everyone demands physical delivery, the exchange can only declare bankruptcy and pay cash, saying: "Go home." This situation reminds us of the 2022 nickel market events on LME, where the exchange canceled contracts, and short positions survived by a miracle.
3. The final confrontation between retail investors and institutions
57% of retail investors expect prices to exceed $100, but short positions may be held by commercial banks that cannot withstand it. When arbitrage between price and stock becomes impossible, and delivery is impossible, the risk of default could trigger a chain of bankruptcies. Robino predicted: "One major bank might release disastrous news on Monday."
5. Digital silver vs. physical silver: who prefers financing?
When "digital silver" BTC and "physical silver" become two topics, who prefers financing?
The harsh answer: in the short term, institutions will abandon both; but in the long term, silver has industrial support, while Bitcoin does not.
With expectations of a 6% decline in Bitcoin and a 30% rise in Ethereum in 2025, silver, despite its violent volatility, remains linked to industrial value. But the commonality is that neither is a safe-haven asset:
• Bitcoin is a "high-risk asset" following the US stock market
• Silver is a "speculative panic asset" for industrial metals
When the stock market declines, institutions initially sell liquid Bitcoin; and when industrial demand collapses, the fall in silver will be more severe than Bitcoin.
6. Survival rules for ordinary investors
When facing "crypto-like" assets in traditional markets, remember these two rules to stay alive:
Rule 1: Don’t participate in high-premium speculation
When the secondary market price of the silver fund is 57% higher, it means you are buying at more than 60% above its true value. Remember the 2015 lesson in tiered funds: premiums will return to zero, and when the bubble bursts, you won’t escape.
Rule 2: Wait for signs of "default panic" before starting to buy
If defaults or bank bankruptcies happen this week, silver could drop to $40–50, presenting a buying opportunity on the dip. Buying now is like trying to buy during the LUNA collapse in 2022.
Rule 3: Focus on industrial signals, not price
Instead of watching candles, monitor the progress of Samsung solid-state battery production and Tesla inventory cycles. When industrial demand truly rebounds, silver will have long-term value; otherwise, it’s just another stimulus game.
Conclusion: When silver learns to intersect, there will be no safe place in the market
The sudden move from $9 revealed the last shameful star — in a time of increasing and decreasing liquidity, no asset is a true refuge. Whether "crypto-like" for Bitcoin or "crypto-like" for silver, they all rely on the same logic: institutional game rules have changed, but investor awareness remains in the previous cycle.
【Interactive Topic】
Do you expect silver to surpass $100, or is the "generational bubble" about to burst? When traditional assets show "crypto-like" volatility, do you see it as chaos, or the beginning of the end?
Waiting for your opinion in the comments section!
And don’t forget:
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Remember, the market thrives on the awake, and the illusionary perish. I am a crypto adventurer and asset volatility interpreter who only tells the truth. See you in the next episode!