Silver experienced a historic plunge on Friday, dropping more than 30% after rallying over 200% in recent months. According to Jeffrey Christian, managing director at CPM Group, traders should watch for specific warning signs that could indicate further silver price declines ahead. The brutal correction came as the US dollar strengthened and investors reacted to market developments, including uncertainty around Federal Reserve leadership.
Christian told Business Insider that while he believes silver could remain elevated or even rise through 2026, a worst-case scenario could see the precious metal tank to $68 an ounce. This would represent another 17% drop from Friday afternoon levels, extending the pain for investors who piled into the metal during its parabolic rally.
Why Silver Prices Could Continue Falling
The commodities analyst explained that overarching concerns about inflation, dollar strength, and economic risks have driven investors to pile into silver as a safe-haven asset. However, the Friday sell-off was a clear sign that investors are rushing to take profits after the extraordinary rally.
“This is the way markets behave, and no one should be surprised that speculators have poured into a market that’s moving parabolic, and no one should be surprised when they leave,” Christian said, according to the report. He added that this pattern has occurred repeatedly throughout market history.
Trading Momentum Signals to Watch
Christian indicated his firm is monitoring several key indicators that could suggest more volatility ahead for silver markets. One critical factor is whether trading activity and investor interest begin to stumble, which could trigger a mass exit by speculative traders.
The silver investing frenzy reportedly began in September after the Federal Reserve signaled more aggressive interest rate cuts than markets expected. On Monday, retail traders purchased a record net $171 million in shares of the iShares Silver Trust ETF, according to data from VandaTrack Research.
Additionally, Silver’s Turnover Momentum spiked to 11.55 times its normal level at the start of the week, according to Ashwin Bhakre, head of product at VandaTrack. This measure far exceeded even Nvidia’s trading momentum ratio of 7.54 times normal levels.
“Silver has just become retail’s new favourite toy,” Bhakre wrote in a note this week. Meanwhile, Christian emphasized the importance of monitoring trading momentum in silver itself, as well as related bonds and ETF holdings.
Supply and Inventory Considerations
Another factor that could pressure silver prices lower is rising inventories, Christian noted. The global silver supply-demand imbalance has been narrowing in recent years, potentially removing a key support for prices.
The world’s silver supply was estimated to grow 2% over 2025, while demand was projected to pull back 1%, according to a joint report from The Silver Institute and Metals Focus. Christian pointed to record amounts of silver available in mining reserves and increasing backlogs at silver refineries as evidence of growing supply.
“You’re already seeing refineries backed up with silver that investors have been selling,” Christian told Business Insider. In contrast to the recent buying frenzy, these supply dynamics could weigh on the precious metal moving forward.
Open Interest in Futures Contracts
High open interest in silver futures has supported the metal’s price in recent months, Christian explained. He specifically highlighted active March 2026 silver contracts on the COMEX exchange, where open interest stands at around 500 million ounces.
As those contracts approach delivery, some investors are expected to roll their positions forward to future months, maintaining upward pressure on prices. However, if open interest were to decline significantly, that could remove a substantial source of price support.
“The spike may have peaked, but prices may hang up at high levels into March,” Christian said of the silver outlook during Friday’s sell-off. Other market observers have also expressed caution about the metal’s meme-like rally.
Marko Kolanovic, former quant chief at JPMorgan, reportedly said he believed a 50% drop in silver prices was “almost guaranteed,” citing historical episodes of commodity speculation. Jose Torres, a senior economist at Interactive Brokers, told Business Insider that significant speculation naturally creates risk for a reversal.
Market participants will be closely monitoring trading activity, supply dynamics, and futures contract rollovers in the coming weeks to gauge whether silver’s correction will deepen or stabilize. The outcome remains uncertain as conflicting forces of safe-haven demand and speculative profit-taking continue to clash.
