By Polina Devitt
LONDON, Feb 2 (Reuters) - Silver has been dubbed the Cinderella of precious metals, spending long periods overlooked before sweeping into the spotlight and disappearing in short order.
In a market analysts say is beset by fairy tales, it is living up to that reputation.
A small, volatile asset prone to squeeze attempts, silver hit an all-time high of $121.6 on January 29, only to shed more than a quarter of its value a day later when technical selling and stop-loss triggers created a snowball effect — the largest one-day fall in LSEG data back to 1982.
Its losses continued on Monday, when it was last down 7% at $78 per ounce. Analysts say a deeper slide could be to come, with a more fundamentally supported price seen at $60-70.
"There's been a massive, massive retail frenzy getting into these markets," said Saxo Bank's head of commodity strategy Ole Hansen. Now, he said, the search for a floor hinges on China, a big source of recent demand, and on volatility easing.
BIGGEST SPIKE SINCE THE HUNT BROTHERS
The speculative frenzy behind Thursday's record came despite weeks of warnings from analysts that the rally had overshot fundamentals, particularly after silver's 147% surge in 2025.
Heraeus described January's 71% spike before the sell-off as the most extreme since 1980, when the Hunt brothers tried to corner the market.
At the core was feverish retail buying driven by fear of missing out, reflected in surging demand for bars and coins.
Silver's break above $100 and then $120 triggered celebrations on social media forums, with users displaying proud photos of accumulated coin and bar stashes.
"You know the old story - when a taxi driver starts asking how to invest, then everyone knows there's something going on," said Hansen.
Analysts are yet to calculate the exact scale of the jump in retail silver demand in December and January by weight.
However, in the U.S., online dealer APMEX was so overwhelmed by record two-way flows in December and January that on January 26 it imposed minimums: $20,000 for sell-backs, and $500 for purchases.
In India, the world's biggest silver consumer, people were "snapping up coins and bars of all sizes," said Chirag Thakkar, CEO of leading silver importer Amrapali Group Gujarat.
MISINFORMATION MONITOR
Adding fuel to the fire in the most acute phase were waves of silver-market conspiracy theories.
In a longstanding narrative, some social media users claim large banks trade huge quantities of paper contracts for silver they don't possess, or take short positions - which in reality balance long positions of their clients - to artificially deflate prices.
The silver market has always been full of secrets and lies, said Adrian Ash, head of research at online marketplace BullionVault.
"If I'd got a dollar every time someone told me the LBMA-Comex paper silver system was about to collapse, I'd now have more than enough money to rescue the bullion banks from their ever-impending 'silver short' bankruptcy."
A more unusual burst of misinformation focused on a routine October document from China's commerce ministry.
Social media accounts miscast it as evidence of new export restrictions, even though Beijing was simply processing applications for 2026–27 licences, ultimately approving 44 exporters — two more than before.
The rumour spread so widely that some AI chatbots still repeat it incorrectly.
MEMEFICATION
Retail enthusiasm was also fed by meme-laden narratives that blended silver and crypto humour, according to BofA strategist Michael Widmer.
Silver's 'memefication', he added, evolved from 2021's Reddit-fuelled squeeze attempt to memes drawing parallels with bitcoin last year that pegged silver as "the original decentralised currency".
If retail buying had continued at recent pace, he estimated, silver could theoretically have reached $170 by end-2027. He sees fair value at $60.
Rhona O'Connell, the StoneX analyst who first used the Cinderella nickname back in the 1980s, says key technical support using Fibonacci levels sits near $66.
"There's not much I can add to my warnings about how silver is always a death trap," she said on Monday. "It gives me no comfort, but all the signs were there."
(Reporting by Polina Devitt; Additional reporting by Rajendra Jadhav and Amanda Cooper; Editing by Jan Harvey)
