Silverprice collapsed 11% in its steepest single-day plunge since September 2020,hours after touching a record $84.01 per ounce, as traders rushed to bookprofits following an extraordinary year-end rally that pushed both gold andsilver into overbought territory.The whitemetal settled around $72.58 per ounce after the dramatic reversal, while golddropped 5% to $4,343.38, marking the yellow metal's sharpest intraday declinesince October 21. By today(Wednesday), 31 December, 2025, silver extended losses to trade below $72, downnearly 6% from Tuesday's close as the correction deepened. Why are silver and gold prices falling?Why Silver Is Falling? Margin Hikes Trigger Cascade of LiquidationsTheimmediate catalyst for the selloff came from CME Group's decision to raisemargin requirements on silver futures contracts, effective December 29. Initialmargin for March 2026 silver contracts jumped to $25,000 per contract, a movethat forced smaller traders without sufficient capital to close positions orface automatic liquidation.Whenexchanges increase margin requirements, traders must deposit additional cash tomaintain open positions. Those unable to meet the higher threshold get squeezedout, creating downward price pressure as positions unwind. CME officiallyjustified the hike as necessary to "align margins with volatility"after silver surged more than 90% in 2025, but critics view it as an attempt tocool an overheating market.MichaelHaigh, head of FIC and Commodity Research at Societe Generale, downplayed thepanic. "Don't read into massive moves," he said, noting that year-endtrading is "so illiquid" that normal-sized orders create outsizedprice swings.China Demand CreatesHistoric Shanghai PremiumThecorrection arrived just as Chinese investment demand hit fever pitch. Spotsilver premiums in Shanghai climbed above $8 per ounce over London prices onDecember 24 – the widest spread on record – as buyers scrambled for physicalmetal amid supply constraints. The Shanghai Gold Exchange closed at $78.49 perounce that day, nearly $7 higher than COMEX futures."Thespeculative atmosphere is very strong," said Wang Yanqing, an analyst withChina Futures Ltd. "There's hype around tight spot supply, and it's a bitextreme now".Chinaconsumes over half of global industrial silver, primarily for solar panelmanufacturing, electric vehicle production, and electronics. Each EV requiressignificantly more silver than traditional vehicles, particularly in powerelectronics and charging infrastructure. Thisstructural demand, combined with Chinese vault drawdowns, created backwardationin some contracts – a rare signal of acute immediate supply stress.Silver Technical Analysis:Indicators Flash Overbought WarningsFrom atechnical perspective, the correction was overdue. Silver's 14-day relativestrength index (RSI) had remained well above 70 for weeks – a clear overboughtsignal indicating too many investors bought too quickly. Gold's RSI similarlylingered in overbought territory for two weeks before Monday's plunge.The whitemetal gained more than 25% from mid-December alone, racing from the low $60s tobriefly touch $84. Such rapid appreciation without consolidation typicallyprecedes sharp pullbacks as early buyers take profits.Looking atthe current chart structure, silver is now consolidating between $71 and $80per ounce after touching the $83-84 zone. The metal achieved my 100% Fibonacciextension target near $72, and came within striking distance of theultra-bullish 161.8% extension at $88 before reversing.If thelocal support around $71-72 holds, another bounce higher seems likely afterbrief consolidation. However, a breakdown could push silver toward $60, wherethe 50-day exponential moving average provides substantial support. Even such amove wouldn't break the uptrend that's been intact since August.Gold Technical AnalysisGold,meanwhile, is testing two-week lows below $4,300 as of Wednesday's session,returning to the consolidation range established between October's $4,360 highsand $3,900 lows. Accordingto my technical analysis, the yellow metal still benefits from support at therising trendline drawn from August, plus the 50-day exponential moving averagethat could block steeper declines.Silver Price Prediction2026Robert Kiyosaki DoublesDown Despite VolatilityAs silverrocketed toward $80, "Rich Dad Poor Dad" author Robert Kiyosaki tookto social media with characteristically bold predictions. "SILVER BREAKS$80.00. $200 NEXT?" he posted on December 29, just before the crash.SILVER BREAKS $ 80.00$200 NEXt ?— Robert Kiyosaki (@theRealKiyosaki) December 28, 2025Two daysearlier, he warned followers about "FOMO Fear of Missing Out MANIA"and advised patience. "If you are planning on investing in silver bepatient. Wait for a crash then GO or NO," Kiyosaki wrote on December 28.The correction vindicated that caution, though he'd previously predicted silverwould reach $500 from $100 within a year.SILVER BUBBLE ABOUT to BURST?I love silver..I bought my first silver in 1965.But is silver bubble about to burst?FOMO Fear of Missing Out MANIAcrash is coming.If you are planning on investing in silver be patient. Wait for a crash then GO or NO. I believe silver…— Robert Kiyosaki (@theRealKiyosaki) December 28, 2025On December27, before the selloff, Kiyosaki had celebrated: "SILVER To Break $80.Happy New Year….smart silver stackers. Your patience has paid off. Now we getricher. Silver is hotter than gold".Broader Precious MetalsRoutTheprecious metals complex suffered across the board. Platinum plunged 14% whilepalladium sank nearly 16%, posting its largest intraday decline since 2020.Gold mining equities followed bullion lower, with Newmont Corp., Barrick GoldCorp., and Agnico Eagle Mines Ltd. all dropping more than 6%.The iSharesSilver Trust, the world's largest physically backed silver ETF, tumbled 10% inits steepest drop since 2020.Palladiumexhibited particularly dramatic volatility, reaching $2,023 on December 26 – an82% gain – before crashing 21% to $1,600 by December 30. Many traders perceivedthis as a market collapse, though economists noted it reflected an excessiverun-up in thin holiday trading.Holiday LiquidityAmplifies MovesMarketanalysts emphasized that reduced trading volumes during the holiday periodmagnified price swings in both directions. Kyle Rodda, senior financial marketanalyst at Capital.com, acknowledged "the significant price movements inprecious metals are partly due to limited trading during the holidayseason".DianaMousina, AMP's deputy chief economist, characterized the pullback as"essentially due to an excessive run-up in prices" rather than afundamental shift. Devika Shivadekar from RSM Australia warned that"further profit-taking could occur if conditions worsen for precious metalinvestors".Historically,precious metals post powerful year-end rallies. Over the past decade, goldtypically gains around 4% from late December into the New Year, while silveradvances nearly 7% on average during that period. This year's rally exceededthose norms by substantial margins, setting the stage for profit-taking.What's Next for SilverPrices?BrendanFagan, macro strategist at Markets Live, summarized the situation:"Silver's dizzying rally and equally violent pullback are keeping focus ona physical market that remains under acute strain, and China has emerged as acentral pressure point heading into the new year".Kyle Roddaadded that "the fundamental narrative for precious metals remains strong,particularly for silver, which benefits from a deepening supply deficit alongwith loose monetary policies ahead, exacerbated by China's planned exportrestrictions".Much of theworld's available silver remains in New York as traders await the outcome of aUS probe that could lead to tariffs or other trade restrictions. London vaultshave seen significant inflows following a full-blown squeeze in October whenexchange-traded fund flows and exports to India eroded already-critically-lowinventories.Thecorrection, while dramatic, appears to represent a healthy technical pullbackrather than a reversal of the multi-year uptrend. Both silver and gold remainin upward trends, with the pullback respecting technical support levelsestablished during their respective rallies.For tradersasking "why is silver going down today," the answer combinesprofit-taking after overbought conditions, forced liquidations from marginhikes, and thin holiday liquidity amplifying moves in both directions. Thelonger-term picture – driven by supply deficits, industrial demand growth, andmonetary policy expectations – suggests the bull market has further to run onceshort-term excess is wrung out.Silver Price Analysis, FAQWhy is silver droppingtoday?Silver isdropping due to profit-taking after hitting a record $84 per ounce, combinedwith CME Group raising margin requirements on futures contracts. The 14-day RSIstayed above 70 for weeks, signaling overbought conditions that typicallyprecede corrections. Thin holiday trading volumes amplified the price swings inboth directions.Is silver agood investment right now?Silverremains attractive for long-term investors despite short-term volatility,according to analysts at Saxo Bank and MoneyWeek. The metal has gained 182% in2025 driven by supply constraints and industrial demand. However, tradersshould wait for the correction to complete before entering, as technicalindicators suggest further consolidation between $60-80.What caused thesilver crash?The crashresulted from CME increasing margin requirements to $25,000 per contract,forcing smaller traders to liquidate positions. Combined with overboughttechnical signals and record Shanghai premiums above $8 per ounce indicatingspeculative excess, profit-taking accelerated. Easing geopolitical tensionsalso reduced safe-haven demand temporarily.Why is silvermore volatile than gold?Silvermoves approximately 1.7 times faster than gold in either direction due to itssmaller market size and dual role as both industrial commodity and preciousmetal. Industrial demand accounts for over 50% of silver consumption comparedto gold's 10%, making it more sensitive to economic conditions. The silvermarket's lower liquidity amplifies price swings during periods of thin trading.What is RobertKiyosaki's silver prediction?Kiyosakiposted "$200 NEXT?" on December 29 after silver broke $80, though hepreviously warned about "FOMO MANIA" and advised waiting for a crashbefore buying. He has predicted silver could reach $500 from $100 within ayear, calling it "hotter than gold". His December 27 post celebrated"smart silver stackers" as the metal approached record highs.Can silverreach $100 per ounce?FirstMajestic Silver's CEO and several analysts believe silver could exceed $100 perounce, driven by structural supply deficits and surging industrial demand. TheSilver Institute projects cumulative shortfalls could exceed 1.5 billion ouncesby 2030 as renewable energy demand alone reaches 510 million ounces annually.However, this target depends on sustained industrial growth and investmentdemand.This article was written by Damian Chmiel at www.financemagnates.com.