China Investment Silver LOF experienced a huge fluctuation during trading, with the limit-down price soaring straight to an increase of over 9%. What happened?

After experiencing extreme market fluctuations with three consecutive daily limit-ups followed by two consecutive daily limit-downs, the Guotou Silver LOF saw another significant shock in early trading on Monday.

On the morning of December 29, Guotou Silver LOF (161226.SZ) was suspended for one hour before resuming trading and quickly hitting the daily limit-down. However, it only stayed at the limit-down price for a short time before surging, at one point rising over 9%. By the close of the morning session, Guotou Silver LOF was up 8.80%, ranking first among LOF funds, with a trading volume of 1.81 billion yuan.

On the same morning, Guotou Silver LOF announced that on December 25, 2025, the net asset value per unit of the fund was 1.9469 yuan. As of December 26, 2025, the closing price in the secondary market was 2.524 yuan, significantly higher than the net asset value of the fund. Investors who blindly invest in fund shares with high premium rates may face substantial losses.

Guotou Ruijin Fund stated that if the premium rate of Guotou Silver LOF's secondary market trading price on December 29, 2025, does not effectively decline, the fund has the right to apply for a temporary suspension of trading through the Shenzhen Stock Exchange to warn the market of risks, with specifics to be announced at that time.

Since December, silver asset prices have experienced a historic surge. On December 29, spot silver quickly rose after opening, at one point increasing nearly 6% to surpass $83.99 per ounce, setting a new historical high, with an annual increase of over 170%, far exceeding gold's 72% performance during the same period.

The rise in silver prices has ignited an investment frenzy in related products. With the A and C classes of Guotou Silver LOF limited in off-exchange trading, fund investors have begun flocking to the on-exchange trading of Guotou Silver LOF.

The increase in the net asset value of Guotou Silver LOF has lagged behind the trend of the silver futures index. However, on-exchange investors have anchored their participation in Guotou Silver LOF trading to the trend of silver futures, pushing the secondary market price of Guotou Silver LOF significantly higher, greatly deviating from the net asset value of the fund and further expanding the premium rate.

Since the beginning of December, Guotou Silver LOF has issued 17 risk warning announcements consecutively and has announced temporary suspensions for the 11th time. Previously, the fund had suspended trading for one hour on December 12, 15, and from 17 to 19, 22 to 26, and on December 29.

In addition, to effectively protect the interests of fund share holders, Guotou Ruijin Fund recently announced that its Guotou Ruijin Silver Futures Securities Investment Fund (LOF) will further strengthen subscription restrictions. Specific adjustments include: the C class fund shares will be suspended from subscription starting December 29, 2025; at the same time, the daily subscription limit for A class shares will also be tightened from the original 500 yuan to 100 yuan starting on the same date Guotou Ruijin Fund stated that even if the fund's net value itself has not declined, investors who bought shares at a high premium may still incur losses due to "narrowing premiums" or even turning into "discounts"—the higher the premium, the greater the risk of pullback.

"Silver itself is a high-volatility asset." Guotou Ruijin Fund emphasized that from the perspective of silver's commodity attributes, silver inventories are at low levels, and tight supply and demand support price increases. Due to the relatively small market size of silver, the influx of investment leads to tight spot conditions, amplifying price elasticity. Caution is still needed regarding the profit-taking risk from the high-level fluctuations in silver prices.

Regarding the future of silver, multiple institutions pointed out that its upward momentum is driven by multiple factors, but also warned that short-term pullback risks are accumulating.

CITIC Construction Investment Securities' research report indicated that the surge in silver prices is driven by multiple factors, resulting from the re-evaluation of financial attributes, tight physical supply and demand, market sentiment, and macroeconomic catalysts.

"As a precious metal, silver's financial attributes have become significantly prominent after gold has risen for many consecutive years. Against the backdrop of strengthened expectations for Federal Reserve interest rate cuts, declining real interest rates, and a weakening dollar, silver has generated strong demand for catch-up due to its relative undervaluation compared to gold. The gold-silver ratio has significantly retreated from high levels, reflecting that funds are rotating from gold to silver, thereby boosting silver's overall valuation level. Currently, the gold-silver ratio has dropped to 55, and caution is warranted regarding the risk of silver price pullbacks," stated CITIC Construction Investment Securities.

Galaxy Securities' latest research report also pointed out that the rise in gold and silver prices is mainly due to increased safe-haven demand, bullish technical indicators, and heightened retail investor sentiment. The price trend of silver cannot be sustained in the long term and may experience significant pullbacks at any time due to profit-taking or changes in liquidity. It is expected that the subsequent silver prices may primarily exhibit a volatile oscillation pattern.

Looking ahead to 2026, CITIC Construction Investment Securities believes that the silver market will stand at a crossroads filled with opportunities and risks, with a mix of bullish and bearish factors, and the game entering a "critical point." The bullish logic remains strong. However, the enormous risks cannot be ignored. The most core challenge comes from the acceleration of technological substitution. The current high silver prices have forced the photovoltaic industry to push forward the "de-silvering" process. Next-generation battery technologies such as TOPCon and BC are expected to achieve a cliff-like decline in silver consumption by 2026 through solutions like copper plating, which will fundamentally shake the long-term industrial demand outlook for silver. "Moreover, high volatility itself is the biggest risk. As prices continue to hit new highs, the pressure for profit-taking is increasing day by day, and this round of price increase is somewhat deviating from the norm, significantly increasing the risk of short-term pullbacks."

Source: The Paper