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Silver's Year-Start Whiplash Shows How Leverage, Margins, And Thin Liquidity Now Drive The Tape
(MENAFN- The Rio Times) Key Points
Silver hovered near $73.85–$73.90 early Friday after a brutal late-December spike and reversal that reset risk across futures.
The market's late-year plunge was amplified by margin hikes and position cuts, not a sudden collapse in end-user demand.
Inventories and policy talk still matter, but the next move likely hinges on liquidity, ETFs, and exchange risk controls.
Silver opened January 2 around $73.85–$73.90 an ounce, rebounding in holiday-thinned trading after a violent week. The price action has been less about calm fundamentals and more about market plumbing.
The past seven days delivered a textbook squeeze-and-shakeout. Into December 26, silver climbed steadily and broke higher.
On December 29 it surged to an intraday record near $83.62, then snapped lower within hours. That reversal accelerated into year-end as traders reduced leverage and recalibrated risk.
The critical catalyst was margin. As volatility exploded, the CME raised margin requirements, forcing some leveraged positions to shrink fast. Those moves can turn a crowded trade into a cascade, especially when liquidity is thin.
Even after the swing, the underlying story has not vanished. Silver is still widely discussed as supply-constrained, with inventories tight in key hubs.
London remains central to physical price formation, with end-November vault holdings around 27,187 tonnes. In China, SHFE warehouse stocks fell to about 691.638 tonnes on December 31 from 755.754 the prior day, adding to scarcity talk.
ETF and futures channels also matter. The iShares Silver Trust reported 16,444.14 tonnes in trust as of December 31, with heavy share turnover that day.
Reuters pegged the fund at roughly 529 million ounces, worth about $39 billion at the time. On futures, the CME's last reported volume was about 26,110 contracts, though holiday timing complicates comparisons.
Traders are now watching the charts for stability. On the four-hour view, silver is consolidating near $73.85 with momentum close to neutral. Daily momentum remains constructive, but weekly readings are still stretched after the surge.
Market voices point to a familiar mix: fading year-end position squaring, renewed attention to fundamentals, and hedging against currency debasement risks.
The next test is simple. Can silver reclaim levels above $74.20, or does another margin-driven dip push it toward the low $70s.
Silver hovered near $73.85–$73.90 early Friday after a brutal late-December spike and reversal that reset risk across futures.
The market's late-year plunge was amplified by margin hikes and position cuts, not a sudden collapse in end-user demand.
Inventories and policy talk still matter, but the next move likely hinges on liquidity, ETFs, and exchange risk controls.
Silver opened January 2 around $73.85–$73.90 an ounce, rebounding in holiday-thinned trading after a violent week. The price action has been less about calm fundamentals and more about market plumbing.
The past seven days delivered a textbook squeeze-and-shakeout. Into December 26, silver climbed steadily and broke higher.
On December 29 it surged to an intraday record near $83.62, then snapped lower within hours. That reversal accelerated into year-end as traders reduced leverage and recalibrated risk.
The critical catalyst was margin. As volatility exploded, the CME raised margin requirements, forcing some leveraged positions to shrink fast. Those moves can turn a crowded trade into a cascade, especially when liquidity is thin.
Even after the swing, the underlying story has not vanished. Silver is still widely discussed as supply-constrained, with inventories tight in key hubs.
London remains central to physical price formation, with end-November vault holdings around 27,187 tonnes. In China, SHFE warehouse stocks fell to about 691.638 tonnes on December 31 from 755.754 the prior day, adding to scarcity talk.
ETF and futures channels also matter. The iShares Silver Trust reported 16,444.14 tonnes in trust as of December 31, with heavy share turnover that day.
Reuters pegged the fund at roughly 529 million ounces, worth about $39 billion at the time. On futures, the CME's last reported volume was about 26,110 contracts, though holiday timing complicates comparisons.
Traders are now watching the charts for stability. On the four-hour view, silver is consolidating near $73.85 with momentum close to neutral. Daily momentum remains constructive, but weekly readings are still stretched after the surge.
Market voices point to a familiar mix: fading year-end position squaring, renewed attention to fundamentals, and hedging against currency debasement risks.
The next test is simple. Can silver reclaim levels above $74.20, or does another margin-driven dip push it toward the low $70s.
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