On January 15ththI wrote an article,“Repeat history? Why is silver making a blow-off top?” Friday, silver and the iShares Silver ETF (SLV) Each day dropped nearly 40%, one of the worst drops in a precious metal in the last century.
Image source: TradingView
“Wall Street never changes, pockets change, suckers change, stocks change, but Wall Street never changes, because human nature never changes.” ~ Jesse Livermore
While I don’t claim to have a crystal ball and I’m only human and often fall short in my analysis, studying the great history of silver provided me with important clues. Some clues that the blow-off was about to peak:
· Distance from 200-day moving average: Silver was above 100% of its 200-day moving average. Historically, such a wide gap from the 200-day is temporary.
· Fatigue interval occurs: An exhausted gap occurs when a stock or ETF gap is higher in overnight trading after a steady price move. Before silver’s plunge, the SLV ETF flashed four classic exhaustion gaps.
· Record trading volume: Like SLV and Silver Proxy Sprott Physical Silver Trust (PSLV), Global Silver Miners ETF (SIL), and ProShares Ultra Silver ETF (AGQ), Flash record trading volume. Record trading volume after a large price advance is a classic sign that a trade has become clear to the crowd and “irrational exuberance” has kicked in.
· 261.8% Fib level: Fibonacci extensions are used by technicians to identify price targets. Silver touched the 261.8% Fib extension target (almost in the money) before falling.
Image source: TradingView
Image source: TradingView
While the loss in silver was due to a combination of profit-taking, a rebound in the US dollar and a new Fed chair, price action told the advance story.
If history is any guide (and it has been great for silver), silver has just seen a multi-year top. Silver had two similar blow-off tops:
1. Hunter Brothers: In the 1980s, silver was the top when Hunt Brothers tried (but failed) to carve out a silver market. Silver will not break the highs for another 30 years.
2. The Commodity Bull of the Early 2000s: After the early 2000s, China-driven bull market, silver again had a screaming bull market that ended in 2011 with a blow-off top. Silver does not make another high for 13 years.
Image source: TradingView
Over the long term, silver is often moderately correlated with equities, as a strong economy boosts industrial demand. Over the past two years, the relationship between silver and equities has grown closer as silver is used in fast-growing technologies such as semiconductors, electric vehicles, and AI data centers.
After silver peaked in 1980, the market was lower and more volatile for a few weeks before the bottom day. However, as the silver and equity relationship has grown closer in recent months, investors may want to look to 2011 as a potential precedent. In 2011, the S&P 500 fell ~11% over the five trading sessions after silver topped out.
Image source: TradingView
The bottom line
The recent 40% intraday plunge in silver is not just a localized phenomenon; It’s a stark reminder that human nature—and its tendency toward “irrational exuberance”—remains the market’s ultimate constant. As silver’s industrial connection to the AI sector strengthens, its decline may no longer be a sideshow but a leading indicator for the stock.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 best stocks for next 30 days. Click to get this free report
iShares Silver Trust (SLV): ETF Research Reports
ProShares Ultra Silver (AGQ): ETF Research Reports
Global X Silver Miners ETF (SIL): ETF Research Reports
Sprott Physical Silver Trust (PSLV): ETF Research Reports
This article originally appeared on Zacks Investment Research (zacks.com).
Zacks Investment Research
Here's what you'll learn as you read this story:Cambridge University archeology graduates were on a…
Brendan Carr, the Trump-appointed chairman of the FCC, wants TV broadcasters to rally around the…
Investors are beginning to see artificial intelligence (AI) as more of a double-edged sword than…
All truck and bus drivers will be required to take their commercial driver's license test…
Holding a digital asset for four years can feel like an eternity in the cryptosphere.…
In late February 2026, Snopes readers asked us about videos of Internet users hearing unidentified…