What Just happened with Gold & Silver? What’s Next?

After Thursday night’s volatility (as we wrote about on Friday) things really ramped up on Friday night with some of the biggest moves on record in silver along with gold and platinum down solidly also. Silver saw a drop of 30% off its highs, gold around 8% and platinum 16%.  So, what happened and what could be next?

First some perspective. Those drops were considerably less than the gains in January alone for all three metals. 1 month…

In essence the Friday night metals crash was driven by a violent unwind of an overcrowded, leveraged long trade in all three precious metals after:

• a macro narrative shock around Trump announcing the new Fed Chair,
• a subsequent sharp US dollar bounce,
• classic month‑end profit‑taking from the parabolic surge we have seen in all 3 metals this month, and
• coinciding with futures options expiries.

Let’s break that down…

If we a looking for a ‘trigger event’ then that was certainly Trump announcing Kevin Warsh as his pick for the next US Fed Chair, replacing Jerome Powell (who wouldn’t drop rates). In our article on Friday, we were there along with the rest of the world expecting Trump to choose his much touted ‘dovish’ Fed Chair who would lower rates like Powell refused to do, despite constant pressure from Trump. And then he announces a known inflation hawk in Warsh?? That saw rate cut expectations tumble, long end bond yields to rise and the USD surge by one of its biggest daily jumps in months.

The whole market was priced on the opposite side and that triggered falls in all assets banking on it. That alone may not have caused the drops we saw. Frankly, in our humble opinion, the market would have then realised that this could be classic Trump tactics. The reality of a US Truflation print currently at 0.86%, a flat employment market and a USD40 trillion debt pile (that NEEDS low rates to minimise an interest bill already exceeding the entire US Defence budget) means cuts pressure regardless of Presidential or Fed Chair bias. Markets may ultimately judge that political pressure for easier policy has not disappeared at all.

Additionally, this announcement also coincided with the end of a simply epic month of gains in all three metals and the reality that many managed money funds invested in this space with weighting limit mandates simply had to rebalance given the gains in metals in January. In simple speak, if they had a mandate of say 10% max metals and, by pure virtue of the gains in January, that now sat at say 20%, they automatically need to sell to reweight back to 10%. But wait, there’s more…

All those leveraged positions on COMEX futures were hit as well. Friday also coincided with both weekly and monthly options expiries, after extraordinary moves in the lead‑up. That expiry dynamic was an accelerant rather than the original cause, while forced de‑grossing and position compression across institutional metals books likely meant long liquidation overwhelmed any short‑covering. With order books already fragile after Thursday night’s volatility, the market was vulnerable to exactly this kind of air‑pocket.

In simple terms this was a perfect storm of a left-field macro news shock event coinciding with end of month managed money and futures markets dynamics and a whole lot of leverage. Did anything structurally change to gold, silver and platinum’s core value proposition? No. For longer‑term investors, that kind of forced liquidation is exactly what you want to see to clear froth and over leverage, reset positioning, and create better entry levels within a still‑intact uptrend in monetary metals.

So, what next?

The structural drivers behind gold, silver and platinum did not change on Friday. Central banks continue to diversify reserves, global fiscal policy is loose, geopolitical risk is rising and trust correspondingly falling, and the structural and enduring industrial demands on silver in particular, did not change.

This ‘new world order’ means confidence in purely fiat assets has been challenged, which is why many investors are increasing allocations to hard assets with no counterparty risk.

The demands on the supply of silver, already in deficit, are deep. They are for renewable energy in a world with an imminent energy supply crisis, the build out of AI infrastructure, all the electronics that we use and the AI and robotics explosion of growth for them, and sadly, for many of the weapons that the ‘every nation for themselves’ world will require to be built.

Today and possibly for days, we could well expect more extreme volatility. This is short term noise in a world undergoing a structural fracturing of the trust regime and a move to hard asset collateral with no counterparty risk. Silver shares that ‘monetary’ role together with being the irreplaceable essential metal for the build out of the biggest technology shift in history and the energy it needs.

This correction could literally be a ‘silver platter’ or ‘golden’ opportunity.