The silver market delivered a heart-stopping performance on Monday, December 29, scripting one of its most dramatic and turbulent sessions in recent memory. The sharp gyrations prompted a stark warning from Nithin Kamath, the co-founder and CEO of India's leading brokerage Zerodha. He cautioned that while such wild swings might seem like a golden opportunity for traders, they can rapidly descend into a financial nightmare without proper safeguards.
The Day Silver Went on a Rollercoaster
According to a Reuters report, the white metal experienced its wildest price swing in almost five years. After scaling record highs earlier in the day, silver prices plunged sharply, showcasing extreme volatility. The move was so pronounced that it captured the immediate attention of market veterans and retail participants alike.
Referring specifically to the chart of MCX Silver futures, Nithin Kamath took to social media platform X to dissect the event. He highlighted the dual nature of such explosive price action. "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," Kamath stated. He particularly emphasized the danger when an asset moves approximately 10% intraday. In the same post, he also pointed out a noticeable surge in overall commodity trading volumes in India.
Kamath's Timely Warning on Risk and Position Sizing
Kamath's comments serve as a critical reminder for traders, especially those lured by the high-octane volatility of assets like silver. While rapid price movements can generate spectacular profits, they demand iron-clad discipline in risk management. The Zerodha CEO has consistently stressed the importance of position sizing, a factor often overlooked by retail investors with potentially fatal consequences for their capital.
"You can be right on direction 60% of the time and still lose everything if you size your positions poorly," Kamath noted in a recent observation. This principle becomes paramount in the commodity futures market, where leverage can magnify both gains and losses. Unlike the equity market, which has circuit limits and broader participation that can sometimes cushion falls, commodity futures are known for their unimpeded, amplified moves.
Understanding Silver's Volatile Nature and Recent Rally
Historically, silver has been a notoriously challenging asset to trade. It is infamous for sudden spikes, deep corrections, and erratic price behavior, often reacting intensely to global cues like currency fluctuations, interest rate expectations, and changes in industrial demand.
The recent spike in volatility coincides with a significant rally in silver prices over the past year. The metal has emerged as one of the standout performers in the global commodities space in 2025, driven by strong industrial demand, geopolitical tensions, speculative interest, central bank buying, ETF inflows, and three interest rate cuts by the US Federal Reserve.
Following Monday's turmoil, silver traded near $73 an ounce on Tuesday, after tumbling 9% in its biggest single-day drop in five years. Prices later rebounded somewhat as bargain hunters stepped in after the profit-booking driven sell-off.
The sharp movements and the coinciding rise in trading volumes suggest renewed and active participation from both retail and professional traders in the Indian commodity markets, a trend that often accompanies periods of high volatility and strong directional price moves.
Disclaimer: The views and recommendations mentioned are those of individual analysts or broking companies. Investors are advised to consult with certified experts before making any investment decisions.
