ProShares Ultra Silver (AGQ), a leveraged ETF tracking silver, plummeted 12.86% in pre-market trading Monday, mirroring a sharp reversal in silver prices after an overnight surge to record highs. Spot silver initially rallied to $84/oz before dropping over 10% to ~$74.81/oz, erasing gains fueled by speculative demand and industrial optimism.

The volatility stemmed from multiple factors: reports of potential silver export restrictions from China (a major producer/refiner), critical comments from Tesla CEO Elon Musk on the policy’s impact on industrial supply chains, and CME Group’s decision to raise margin requirements on silver futures by 25%. Additionally, year-end position adjustments and upcoming commodities index rebalancing (set to begin Jan. 8) may force investors to sell outperforming assets like silver.

Silver’s demand remains robust due to its use in AI data centers, electric vehicles, and solar panels, but tight supply—evidenced by dwindling Shanghai Futures Exchange stockpiles and record-high borrowing costs in London—has amplified price swings. The U.S. designation of silver as a "critical mineral" and impending 2026 tariffs further complicate the outlook.