Relive the shadows of the 1980 collapse? The gold and silver parabolic rally came to an abrupt end, and strategists called “profit over”

The Zhitong Finance App learned that gold and silver plummeted after hitting record highs, and the parabolic rise in precious metals came to an abrupt end. On Monday, gold futures closed down 4.5%, slightly above $4,340 per troy ounce; silver futures plummeted 8.7% after briefly hitting $80 per ounce in the intraday period, the biggest one-day decline since 2021.

After the Chicago Mercantile Exchange (CME) raised margin requirements for silver futures, traders generally fell into a state of tension before Monday's opening — their highly leveraged positions faced double pressure: either they added huge margins to maintain their positions, or they were forced to close their positions and stop losses.

Meanwhile, China, the world's third-largest bank producer, is expected to restrict silver exports from January next year. As it competes to guarantee supply to the AI industry, this outlook has heightened market concerns.

Last weekend, Elon Musk spoke out about the sharp rise in silver prices on the X platform: “This is bad; many industrial processes require silver.”

According to the non-profit industry organization Silver Association, nearly 60% of silver is used in the industrial sector. Silver is the most electrically conductive material of all metals, and is a key component of solar panels, data center server motherboards, and electric vehicles.

“It's critical to the electronics and computing industry,” said Michael DiRienzo, president and CEO of the Silver Association. “Almost everything with a switch uses it.”

Dirienzo pointed out that the global silver market has experienced a structural gap for the fifth year in a row. In October, silver was added to the US list of key minerals, raising market concerns that it might face tariffs and trade restrictions.

Precious metals performed brilliantly this year: driven by strong purchases by the central bank and the weakening dollar, gold surged 67% during the year; silver, which is a much smaller market, was a star. As industrial demand highlighted supply shortages, the annual increase was close to 150%, and both copper and platinum hit record highs.

But an analyst who has long been optimistic about precious metals continues to warn that the gains may be reversed: the last time there was such a sharp rise was in 1979, when prices peaked in 1980 and then crashed.

Mike McGlone, senior commodity strategist at Bloomberg Intelligence, said earlier this month: “Be careful when prices are stretched to this extent.”

“For people like me who have always looked at gold, the most important sentence is just two words: profit is over.”