Silver Crashes 25 Percent in a Day: What Should Investors Do Now?

Silver stunned the market with a brutal one day crash, plunging about 25 percent on MCX and wiping out nearly Rs 1,00,000 per kg just a day after hitting record highs. 

The sudden reversal has left investors rattled and searching for cues on whether to hold on, book profits or brace for more volatility.

MCX silver prices collapsed back toward the Rs 3 lakh per kg zone after briefly trading near Rs 4 lakh earlier in the week, marking one of the worst single day falls the metal has ever seen. The crash followed a sharp global selloff, with spot silver in international markets tumbling as much as 28 percent to around 85 dollars per troy ounce after touching a lifetime high of 121.60 dollars days earlier.

What's Wrong With Silver?

The trigger came from the United States. President Donald Trump's nomination of Kevin Warsh as the next Federal Reserve chair calmed fears over central bank independence and sent the US dollar soaring. The dollar index recorded its biggest single day jump since May last year, crossing back above the 97 mark. A stronger dollar typically pressures precious metals by making them costlier for non US buyers and reducing their appeal against interest bearing assets.

Gold's own collapse added to silver's misery. After scaling record levels earlier this week, international gold prices reversed sharply, with spot gold falling nearly 9 percent. On MCX, gold February futures dropped about 12 percent to close near Rs 1,50,440 per 10 grams. Analysts say silver often exaggerates gold's moves due to thinner liquidity and higher speculative participation.

As prices broke lower, investors rushed to lock in gains. JM Financial Services in a report said silver has become extremely hard to read at current levels. The brokerage is not advising fresh additions and said investors already holding the metal should keep trailing stop losses below Rs 3,00,000 per kg, adding that that while momentum could still drive prices toward Rs 4,20,000 to Rs 4,50,000, risks have increased significantly after the sharp fall.

Others urge caution without turning outright bearish. Geojit Investments said silver remains structurally strong due to tight supplies and its growing role as an industrial critical metal, but warned that steep corrections are part of its DNA. 

It said technical indicators show the market was deeply overbought and any easing in geopolitical tensions, a stronger dollar or improvement in mine output could trigger further pullbacks.

Some analysts still see silver as relevant in long term portfolios, though they stress discipline. They said silver offers a dual edge because of its industrial demand in solar, electronics and medical technologies, alongside its role as a hedge. Persistent supply deficits over the past five years could continue into 2026, but he cautioned that position sizing and risk management are crucial after such violent swings.

Despite Friday's wipeout, silver is still on track for one of its strongest January performances on record and remains up sharply for the month.