MCX silver March futures witnessed unprecedented volatility, crashing over 10% or ₹21,000 per kg from an all-time high of ₹2,54,174 to ₹2,33,120 within a single trading session. The dramatic reversal caught bullish traders off guard after silver's historic breach above the ₹2.5 lakh mark, exposing the fragility of a rally that has delivered over 170% gains in 2025.

Zerodha CEO's Warning on Position Sizing

Nithin Kamath, co-founder and CEO of Zerodha, used the dramatic silver volatility as a teachable moment for traders. Sharing a chart of MCX silver futures on X, he warned: "This type of move is what every trader dreams of capturing, but it can also be a nightmare to manage without a good understanding of how to size your positions. Especially when something moves ~10% intraday." Kamath noted that commodity trading volumes appear to be rising sharply, amplifying both opportunities and risks.

Kamath's warning about position sizing reflects his consistent emphasis on risk discipline. He has previously cautioned that poor position sizing is among the most overlooked causes of heavy trading losses, arguing that traders can be right on direction majority of the time and still lose everything if positions are sized poorly. The Zerodha CEO has referenced lessons from veteran traders, underscoring that risk management is not a secondary concern but a core pillar of trading success.

Global Silver Market Retreat

Silver retreated in international markets after reaching a record high of $80.00 per ounce, with spot silver shedding 4.80% to $75.32 per ounce from its all-time high of $83.62. The selloff was accompanied by similar weakness in gold, which also fell from levels near historic highs during the session. Investors engaged in mass profit-booking as market outlook regarding geopolitical risks shifted, reducing safe-haven buying appetite.

Key Factors Behind the Crash

Peace Talk Progress Reduces Safe-Haven Demand

The immediate trigger came from US President Donald Trump's announcement regarding peace talks on Sunday. Trump's statements about potential progress in resolving geopolitical tensions led to a significant reduction in safe-haven buying, prompting investors to book profits across the precious metals complex.

CME Margin Hike Adds Selling Pressure

The Chicago Mercantile Exchange raised the margin requirement for March 2026 silver futures contracts by $5,000, forcing traders to post additional collateral. The move triggered liquidation pressure as traders were compelled to reduce exposure quickly, amplifying intraday volatility across major derivatives platforms.

Technical and Fundamental Pressures

Other contributing factors included rally fatigue after silver's extraordinary run, strengthening US dollar and yields reducing appeal of non-yielding commodities, and supply-demand imbalances that have characterized the silver market throughout the rally.

Market Implications and Rising Commodity Participation

The episode underscores a broader shift in Indian commodity markets, where rising participation and leverage are pushing volumes higher while making price action more unforgiving. Silver's designation as a critical mineral in the US has added to speculative interest, contributing to the metal's outperformance relative to gold.

As Kamath emphasized, sharp commodity moves like silver's latest volatility are precisely the environments where position sizing mistakes become fatal. The extraordinary rally has hit a pause, serving as a stark reminder that volatility creates opportunity only for those who manage risk appropriately and survive the market's unpredictable swings.

Peter McGuire, CEO of trading.com, has issued a strong warning against shorting silver despite the precious metal's recent retreat from record highs, comparing the white metal's momentum to "a V12 Lamborghini on an autobahn." Speaking to CNBC-TV18 on Monday, McGuire emphasized that current market conditions suggest more upside potential ahead.

Record-Breaking Performance Amid Volatility

Silver reached unprecedented heights on Monday, with spot prices crossing $82 per ounce in early trading. At its peak, the precious metal briefly commanded higher per-unit value than shares of Nvidia, the world's most valuable listed company, making it the second-most valued asset after gold.

However, the rally has shown signs of volatility, with prices declining nearly 10% from the record levels and settling back below the $80.00 per ounce mark by the end of Monday's session.

Exceptional Year-to-Date Performance

Silver's performance has been nothing short of remarkable. Having begun the year at sub-$30 levels, the white metal has surged over 170% with three trading sessions remaining in the year. This trajectory positions silver for its best calendar year performance since 1979, when it gained over 200%.

"If you would have told me that this time last year, I would have laughed, and I would have said I don't think it can get there, but now it has," McGuire acknowledged. "We have got a couple of days left of trade, so we might even punch out 180%."

Multiple Drivers Supporting Rally

McGuire identified several key factors driving silver prices higher, creating a confluence of supportive conditions for the precious metal:

• Supply shortfall pressures
• Strong industrial demand
• Need to cover paper short positions
• Significant speculative inflows

These combined forces have created what McGuire describes as "very dynamic trading" conditions, with momentum remaining strongly tilted toward the upside.

Bullish Long-Term Outlook

Despite acknowledging the current "overdrive" conditions, McGuire maintains an optimistic long-term perspective for precious metals. His projections extend well into 2026, with specific price targets for both silver and gold.

"It's too early to talk about being short at the momentum and the upside is very strong, and let's just see where it rolls," McGuire concluded, reinforcing his stance against premature short positions in the current market environment.