Traders have been left stunned after a

record rally in silver

transformed into a

brutal three-day rout

, battering the retail investors who powered its spectacular rise.

In

boom-and-bust price action

that has drawn comparisons to the “meme stock” craze during the COVID-19 pandemic, the white metal crashed more than 40 per cent from its high of more than US$120 per ounce on Thursday last week. The whiplash continued when prices rebounded nine per cent on Tuesday.

While United States President Donald Trump’s selection of Kevin Warsh as his nominee to chair the Federal Reserve helped

spark the rout in precious metals

— with gold falling 21 per cent peak to trough before jumping 6 per cent on Tuesday — traders put its speed and brutality down to a speculative frenzy in recent weeks that has abruptly gone into reverse.

Traders said speculative investment from retail investors, particularly in Asia, was a key driver as prices marched higher in recent months. Individual traders poured a record US$1 billion into silver exchange traded funds in January, according to data from Vanda Research — leaving them on the sharp end of the crash.

“Silver is always a death trap,” said Rhona O’Connell, analyst at StoneX. “We’ve had this hyperbolic move over the last few weeks — it really was an accident waiting to happen.”

ETFs tracking gold and silver

— often dubbed “gold on steroids” for its greater volatility — have lost about US$150 billion of their value since the market peak last week, according to FT calculations.

January also saw a rush to secure physical supplies of silver as last year’s rally went into overdrive, with national mints struggling to keep up with demand for individual gold and silver coins. Refineries worked around the clock to melt down customers’ jewellery, dining sets and even old dental fillings.

But market participants say the speculative fervour was most evident in financial assets linked to precious metals.

The most popular silver ETF and retail investor favourite, SLV, set a series of records for trading activity last week. On January 26, with the price of silver around its record high, US$39.4 billion was traded on SLV, while on the same day, only slightly more — US$41.9 billion — was traded on the most popular ETF linked to the S&P 500 stock index, SPY. On the same day last year, SPY attracted 70 times more volume than SLV.

One popular leveraged ETF, AGQ, which offers two-times exposure to changes in the price of silver, dropped 60 per cent on Friday and a further 9 per cent on Monday.

Leveraged ETFs were “typically more retail-driven flows” since institutional investors could get leverage “in a more efficient way”, said Trevor Yates, from Global X ETFs.

Many of those who piled in have been left bruised.

One Reddit user

who invested in AGQ close to silver’s record high last week said they were sitting on a loss of more than US$25,000 by the weekend. “I lost a years worth of post tax salary today on my entire portfolio,” they wrote on the forum.

Another “devastated” Reddit user, who had been trading silver derivatives products, said that they “lost a gargantuan amount of money” on Friday, when the metal fell a record 27 per cent in a single day.

“January will be remembered as the month when silver traded like a meme stock,” said Nicky Shiels, analyst at refinery MKS Pamp. “I got notes from people saying ‘you officially work in a casino’.”

Eloise Goulder, head of global data assets and alpha group at JPMorgan, said that, in January, social media mentions of silver by retail investors were 20 times higher than their five-year average.

The sell-off was triggered initially by news of Warsh’s nomination, along with exchanges in the U.S. and China raising margin requirements for precious metals trading and a wave of seasonal selling ahead of the lunar new year.

Some investors argued that Warsh was less likely than some other Fed candidates to cave to Trump’s pressure for lower interest rates, easing some of the fears about a loss of credibility at the U.S. central bank that had fuelled the precious metals rally over the past six months.

But the fallout in gold — and particularly silver — dwarfed the reaction in equity or fixed-income markets. Analysts said the outsized moves in silver came as investors rushed to exit their bullish bets in a relatively niche market ill-equipped to handle the sheer scale of hot money that has flowed in this year.

“There is a reason why silver is called ‘gold on steroids’, because it tends to overshoot in either direction,” said Kirill Kirilenko, analyst at CRU. “Silver is a much smaller market than gold,” he added.

Many investors saw the big drops as just a pullback in a deeper rally driven by investor demand for diversification. Despite the dramatic falls, prices are back only to levels seen in mid-January, and longer-term investors in both gold and silver are sitting on huge gains over the past year.

“For me, it’s just a knee-jerk reaction,” said Sébastien Le Page of consultancy Acumet. “We are still in bull-run territory.”

And for silver’s most loyal proponents in online investing chat rooms, too, the latest price drop was little more than a blip.

“Keep on stacking,” said one Reddit user after the market dramatically turned last Thursday. Even after the slump deepened on Monday, another poster remained bullish, writing: “This is the most obvious long term buy signal ever.”

Data visualization by Jonathan Vincent

© 2026 The Financial Times Ltd

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