On December 29th, the precious metals market staged a spectacular "roller coaster" show. Spot silver became the absolute protagonist—initially surging close to $84/oz in the early session, with an increase of nearly 6%, but then quickly plunged, dropping over 5% in a short period, finally closing around $76.454/oz, with a daily range exceeding 10%.

Other precious metals also failed to escape unscathed. Spot gold briefly fell below the $4,500 mark, with a decline of over 1%; spot palladium plummeted 6.8% to break below $1,800; even more drastic, spot platinum dropped over $100 in a short time, with a decline exceeding 7%.

This intense adjustment indeed has deep-rooted reasons. Silver's performance this year has been truly crazy—rising by up to 140% year-to-date, with over 45% increase just in the past month. The Shenzhen Shuibei market has directly sparked a "silver rush," with silver bars and ingots in short supply, and many retail gold investors turning to long silver positions. Merchants' silver jewelry sales even increased by nearly 10% month-over-month. Even more exaggerated, silver concept stocks in the A-shares market also celebrated, with 11 stocks doubling in value this year, and a certain silver fund LOF once trading at a premium of over 70%.

What is the fundamental logic behind silver's surge? It’s a dual squeeze of supply and demand. The photovoltaic industry accounts for over 50% of global silver demand in one go, coupled with explosive demand from new energy vehicles and AI servers. However, most silver is produced as a byproduct from mining, with expansion cycles lasting 5-8 years, and global inventories have fallen to a ten-year low. That’s why prices have "shot up" so dramatically.

But behind the frenzy, risks have long been lurking. The silver market itself is small and illiquid, making it inherently susceptible to manipulation by large funds. Coupled with the uncertainty of the Federal Reserve's rate cut expectations, silver's volatility has always been much more intense than gold. Some industry leaders have even issued warnings—rising silver prices are detrimental to industrial production. Exchanges and fund companies have also started to act, cooling the market through margin requirements and suspension of subscriptions.

In the short term, this correction is nothing more than a rational adjustment to the previous rapid gains. The long-term supply-demand tight balance has not changed, but the lesson of "buying on the high always leads to standing guard" has been vividly re-enacted.

For ordinary investors, silver is a highly volatile asset with wide bid-ask spreads. Do not be led by short-term market movements; always respect market laws and control your positions reasonably. For industrial enterprises, be more alert to the impact of large fluctuations in raw material prices on production costs, and consider hedging to lock in risks in advance.