Silver Rally Sparks Fund Premium Bubble; Guotai Silver LOF Implements Temporary Trading Halts

The precious metal market is experiencing exceptional momentum. London silver jumped to $71.81 per ounce on December 24th, marking a remarkable 140%+ surge since the year began. This bullish trend has created unusual distortions in the secondary market for silver-focused funds, prompting fund managers to take defensive action.

Guotai Silver LOF has emerged as the focal point of this market anomaly. The fund's shares reached their upper limit for three consecutive trading days, with the secondary market premium exploding to 68.19%—an extraordinary gap that signals severe mispricing. On a year-to-date basis, the fund has appreciated 254.9%, significantly outpacing the physical silver rally.

To address this dangerous imbalance, fund management announced a temporary halt: trading will suspend from market opening on December 26th until 10:30 AM. The fund simultaneously plans to adjust its Class A subscription cap, currently set at 500 yuan. These measures aim to cool demand and prevent further speculative accumulation.

The situation extends beyond Guotai Silver LOF. Other commodity-focused LOFs and resource sector funds have also hit their upper limits in recent sessions. Multiple fund companies have issued coordinated caution alerts about elevated premiums, warning that secondary market valuations cannot be sustained at current levels. Several institutions have announced brief trading halts as precautionary measures.

Fund managers are explicitly urging caution. The persistent gap between fund valuations and underlying asset prices creates an unsustainable environment. Retail investors attracted by headline-grabbing returns should recognize the inherent risks: when premium corrections occur, secondary market prices can fall sharply regardless of whether the underlying silver maintains its gains. The current market enthusiasm, while grounded in genuine metal strength, has created conditions ripe for volatility and investor losses in fund shares themselves.