The recent market trend of silver is, to be honest, a bit magical.

On the surface, it appears to be bustling with activity—inventory shortages combined with expectations of interest rate cuts have driven prices up rapidly. However, upon closer examination, there are three hidden landmines that could explode at any moment.

First, let's talk about inventory. The ratio of Shanghai silver open interest to inventory has surged to a historical peak, what does this mean? If there is another short squeeze on the December COMEX silver delivery date, the longs may instantly retreat in a panic. After all, making money is what truly counts; unrealized gains can disappear in an instant.

Looking at the policy side again. The market is currently pricing in an 87.4% probability of a rate cut, but don't forget the September PCE data that will be released on December 5. If inflation data rebounds, it's not impossible for the Federal Reserve to change its stance immediately. The key is that silver is 1.8 times more sensitive to interest rates than gold—if the policy wavers slightly, prices will follow suit and ride a roller coaster.

Finally, let's talk about the demand side. The use of silver in photovoltaics is indeed increasing, but the prediction from the Silver Institute is noteworthy: by 2026, this segment's share will drop from 18% to 14%. Battery technology is iterating, and the amount of silver used is being optimized. Once industrial demand weakens, prices will have to rely on their financial attributes to hold up.

The market now feels like walking a tightrope, with one side being the liquidity frenzy that hasn't ended and the other side being the potential emergence of policy black swans at any moment. A smart approach is to not miss this last wave of opportunity while also leaving oneself an escape route.