Silver's Explosive Rally Triggers Trading Halt: Guotai Silver LOF Pauses As Premium Soars to 68%

The precious metals market is experiencing a dramatic rally, with London silver climbing to $71.81 per ounce on December 24th, marking a staggering year-to-date gain exceeding 140%. This surge in the spot market has cascaded into the fund space, where Guotai Silver LOF has become the focal point of investor attention—and concern.

The exchange-traded fund's explosive performance masks a growing risk in the secondary market. Trading at a premium of 68.19% and up 254.9% since the start of the year, Guotai Silver LOF has hit its daily trading ceiling for three consecutive sessions. To address mounting investor risk concerns and maintain market stability, fund management announced it will implement a market halt beginning December 26th at market open, lasting until 10:30 AM that morning. Normal trading resumes at 10:30 AM.

Beyond just pausing trading, officials have taken additional protective measures. The current subscription threshold of 500 yuan per Class A share will be adjusted downward, and fund managers have issued explicit warnings about the unsustainability of such elevated premiums. The message is clear: the secondary market's pricing disconnect from underlying silver values presents material downside risk for newer or uninformed investors.

This isn't an isolated incident. The broader commodity and resource LOF sector has collectively experienced similar trading limits in recent days. Multiple fund companies across the space have issued comparable premium risk alerts and announced temporary trading suspensions. These coordinated steps reflect growing industry concern that speculative fervor in silver-linked funds has outpaced the fundamentals, creating a correction risk that could hurt retail investors caught chasing the momentum.

Investors should heed these warnings carefully when deciding how to position themselves in precious metals exposure going forward.