In just the past week, retail investors have invested nearly $500 million into silver, nearly undoing a remarkable rally seen earlier this year, even as silver prices have dropped significantly.
During this decline, about $430 million flowed into SLV, the largest silver exchange-traded fund (ETF), in just six trading days ending Thursday. This included over $100 million on January 30, a day when silver prices fell by 27%, marking the largest single-day loss on record, according to analysis from Vanda Research.
Lorna O’Connell, an analyst at StoneX, pointed out that the allure of silver might be connected to its dramatic price drop, which led some investors to perceive this as a chance to buy in at a reduced rate. “People are drawn to the sexual appeal of objects,” she noted, emphasizing the psychology behind such trends.
On Friday, silver’s price hit $64 per troy ounce, a decrease from a late January peak of $121. However, it did manage to rebound slightly to around $78 and rose by 2% to nearly $80 in London on Monday morning.
“Emotions are incredibly heightened right now, and the momentum of self-actualization is sort of taking over. It’s feeding on itself,” O’Connell added.
Last year, precious metals markets surged to record highs, driven in part by unpredictable policy decisions from U.S. President Donald Trump, including a tariff initiative and crises involving Greenland, Iran, and the Federal Reserve. These dynamics initially pushed investors towards what was considered a “safe haven,” which later became a speculative asset.
At the beginning of 2025, silver was valued at less than $30 per troy ounce but saw its price rise more than fourfold before the recent decline. Meanwhile, gold prices doubled from about $2,600 an ounce to a peak of around $5,600 last month, before falling below $5,000.
These markets shifted on January 30, following Trump’s nomination of Kevin Warsh as the next Federal Reserve chair, which alleviated concerns that the Fed would yield to the president’s requests for interest rate reductions, thus making safe assets less appealing.
In the midst of this wild trading, both precious metals attracted heightened interest from speculative and retail traders. Silver, in particular, was viewed as “more expensive” due to its volatility, as noted by Rushab Amin, a portfolio manager at Allspring Global Investments.
Amin pointed out that silver is experiencing a kind of “lottery effect,” with fluctuations reminiscent of meme stocks creating buzz among investors this week. Prices for silver spiked by 7% on Tuesday after a 6% drop on Monday but then fell nearly 20% on Thursday. Early trading on Friday saw shares decline by as much as 10%, only to rebound and close 9.5% higher.
These extreme price changes have made many institutional investors wary, as they have to adhere to risk management practices and face margin calls with risky positions. However, retail traders appear to be less deterred.
Interestingly, many retail investors have shown reduced enthusiasm for gold, pulling their investments out of its largest ETFs since last week’s peak. Conversely, they have not gone net short and continued to invest in SLV during its recent downturn, despite the broader decline in ETF prices.
“That’s why I call him Icarus,” O’Connell said, referencing the mythological figure who flew too close to the sun and met his demise. “Silver will soar too high, and eventually, others might get burned.”
