Seeking Alpha Contrarian View: Silver's Parabolic Rise as Fed-Induced Bubble Ahead of December FOMC Meeting

This analysis is based on a Seeking Alpha article [1] published on December 9, 2025, which argues silver’s parabolic price surge is a Fed-induced bubble poised to burst if the U.S. Federal Reserve signals a long policy pause at the ongoing December 9–10 FOMC meeting—contrary to the market’s widespread expectation of a 25-basis-point (bp) rate cut.

As of the article’s publication and subsequent trading on December 9, 2025, silver prices remained strongly bullish. Spot silver traded above $58–$60 per ounce, hitting a record high of ~$60.82, with an 84.16% year-over-year (YoY) gain and 21.27% month-over-month (MoM) gain [2]. The iShares Silver Trust (SLV), a leading silver ETF, closed at a 52-week high of $55.09, rising 4.51% on the day with 50.32 million shares traded (137% of its 36.60 million share average volume) [0]. Gold, a related precious metal, also held above $4,200 per ounce, reflecting broad safe-haven demand amid inflation and global uncertainties [3].

The article’s contrarian view stands in tension with prevailing market consensus. CME FedWatch data indicated an 85–90% probability of a 25bp rate cut at the FOMC meeting [4], an expectation that has likely sustained silver’s rally. Notably, the article focuses exclusively on Fed policy as a price driver, overlooking other bullish fundamentals cited in market reports, such as global silver supply tightness and growing industrial demand for renewable energy and electronics [2][3].

1. Contrarian Thesis vs. Market Consensus
   : The article challenges the near-unanimous market expectation of a rate cut, highlighting a potential disconnect between investor positioning and the Fed’s actual policy trajectory. This contrast underscores the high stakes of the December FOMC outcome for silver prices [1][4].
2. Narrow Fundamental Scope
   : By ignoring supply-demand dynamics—critical long-term drivers of precious metals—the article’s analysis may underestimate the resilience of silver’s rally even if the Fed signals a pause [2][3].
3. Elevated Liquidity Risks
   : SLV’s above-average trading volume (137% of average) [0] indicates increased market participation, which could amplify price swings in either direction following the FOMC policy announcement on December 10.

• Policy Reversal Risk
  : If the Fed defies market expectations and signals a long policy pause (as the article predicts), silver could experience a sharp correction due to reduced rate-cut premium [1].
• Overvaluation Risk
  : Silver’s 84% YoY gain and record price levels raise concerns about potential overvaluation, regardless of near-term Fed policy [2].
• Liquidity-Driven Volatility
  : The high trading volume in SLV on December 9 suggests that post-FOMC price movements could be more extreme than usual, presenting both risk and opportunity depending on policy outcomes [0].
• Bullish Fundamental Support
  : Unaddressed by the article, global silver supply tightness and growing industrial demand may support prices over the long term, even if a short-term correction occurs [2][3].

This analysis synthesizes the Seeking Alpha article’s bearish thesis on silver as a Fed-induced bubble with current market data and consensus expectations. Silver has reached record highs (~$60/oz) with SLV posting a 4.51% daily gain and 84% YoY rise [0][2]. The market currently prices in an 85–90% chance of a 25bp rate cut at the December FOMC meeting [4], conflicting with the article’s prediction of a hawkish pause. Critical variables to monitor include the Fed’s policy statement, dot plot projections, and post-meeting commentary on December 10, as well as unaddressed supply-demand fundamentals. High liquidity in SLV amplifies the potential for post-FOMC price volatility.