The annual rebalancing of the commodity index has been executed, and silver took a heavy hit this time — its weight was sharply cut from 9.6% to 3.94%, resulting in $7 billion of passive sell orders flooding out. It might seem like a warning signal for silver, but upon closer inspection, the core story has long been written: funds and ETFs tracking the index are simply rebalancing mechanically according to their weightings. When the weight drops, they must sell, regardless of the fundamentals.

Silver’s predicament is actually somewhat unfair. It surged too aggressively last year, becoming a big winner in the index, only to be targeted by the "sell winners, buy losers" rule. It’s like the top student in class being temporarily moved to a different seat; the score remains the same, but the rules change. The $7 billion sell volume sounds intimidating, and the figures from Deutsche Bank and TD Securities are indeed significant, but you must understand that these are mostly "one-time liquidations" — passive disposals that end once completed, unable to influence the overall trend. The 13% open interest liquidation is similar; it looks alarming but is just a normal response during index adjustments.

What markets fear most is never this visible selling pressure, but rather panic-driven chaos. The bullish structure for silver has not been broken at all. From a weekly chart perspective, the upward trend since 2024 remains intact — this correction is just a normal shakeout in the long-term rally, not the start of a reversal. After passive selling subsides, the real trading logic will return to supply and demand fundamentals, which still favor silver’s underlying strength.