Deutsche Bank’s Early Morning Reid Macro Strategy report reveals that silver has seen its biggest daily drop since 1980, falling by 26.36%. This decline coincided with Kevin Warsh being nominated as Fed Chair, which has sparked a more hawkish outlook. Historically, silver’s price growth has not kept up with inflation over the long term.
On this recent day, silver dropped a staggering 36% during trading and ended with a 26.3% decline. Currently, its price stands about $5 below its real value adjusted for inflation since 1790. Data shows that, despite some historical jumps, silver hasn’t kept pace with inflation for over 230 years.
This article was created with AI support and reviewed by an editor. The FXStreet Insights Team chooses market insights shared by experts, adding their own and external analyst perspectives.
Last year, we witnessed a major market shock when silver experienced its largest single-day percentage drop since 1980, a 26% decline. This serves as a crucial reminder of the extreme price volatility this metal can face. For those trading derivatives, this history of price swings is now the key factor to keep in mind.
The memory of that event has kept silver options’ implied volatility high, currently around 35%. This is a significant premium compared to gold’s volatility of 22%, indicating that the market is still bracing for potential rapid price changes. Strategies that capitalize on volatility, like straddles or strangles, may work well if this uncertainty continues.
The drop in 2025 was linked to a shift toward a more hawkish monetary policy, a trend that remains relevant. With the Federal Reserve indicating a desire to keep interest rates steady after a stubborn January 2026 CPI reading of 3.1%, the environment for non-yielding assets like silver remains tough. This situation may limit any significant upward price movement in the short term.
Given these pressures, traders should be cautious about taking long positions and might find more opportunities on the short side. Buying put options provides a way to manage risk while anticipating a possible retest of last year’s lows. Silver has struggled to stay above the $22 per ounce mark recently, showing weak buying interest.
It’s also essential to remember that silver has a long record of being a poor hedge against inflation, a fact made clear during its decline in 2025. Even with inflation worries since the pandemic, silver hasn’t fulfilled its traditional role as a safe store of value. Therefore, traders should not assume that fears of inflation will automatically drive silver prices higher.
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