Earlier this month, when spot gold first cleared $4,000, I gently suggested it was time to consider non-fundamental explanations for the inexorable character of the rally.

A couple of quick things. First, and with apologies to everyone for whom this is nails on a chalkboard, there is no “fundamental” case for gold. It has no internal rate of return. It’s not an “investment.” It’s speculative by its very nature. Yes, there’s a paradoxical sense in which gold also manifests the ultimate fundamental investment case given its two-millennia-long track record as a hedge against the inevitable demise of successive fiat currencies, but that’s a kind of quasi-philosophical discussion that’s not especially useful for “here and now” asset allocation discussions.

Second, any time a rally begins to feel inexorable, regardless of what it is that’s rallying, it’s quite likely that a fundamentals-based explanation is insufficient and in a lot of cases, woefully so.

With all of that in mind, I wrote on October 8 that whatever you wanted to cite while expounding on gold’s stupendous 2025 run, the near vertical inflection that pushed bullion beyond $4,000 suggested the precious metals rally had “morphed into a momentum trade.” “The RSI’s damn near 90,” I said. “People (algos) are chasing this higher and adding fuel to the fire.”

Two weeks and $300 more upside later, the bottom fell out. On Tuesday, gold fell more than 6%, on track for its largest single-session decline since 2013. Silver likewise plunged. The drop for moon-colored metal exceeded 8%.

Why anybody would bother trying to conjure a “fundamentals”-based narrative to explain the selloff — i.e., an explanation beyond one that blames a sudden momentum reversal and associated sell flows — escapes me. Mercifully, no one did. Try to conjure such a narrative, I mean.

The most recent leg of the rally was primarily attributable to trend following strats, BMO’s commodities team said. Given that, it’s “natural” to see a bit of a cascade “as soon as we get a couple of days of prices coming off,” the bank remarked. TD wrote something similar.

The caveat (one caveat) is that when it comes to something like gold, flows themselves arguably count as “fundamentals.” In that regard, “the fundamentals are strong,” as the saying goes.

The figure above’s a reminder: Precious metals funds have seen enormous inflows of late. The near $35 billion influx over the last two and a half months is a record for any 10-week period, BofA noted late last week.

I should mention, if only in passing, that silver’s the usual soap opera. From an editorial perspective, I can’t in good conscience subject readers to silver shenanigans coverage, no matter how magnetic those kinds of stories tend to be. That market — the silver market — exhibits recurring bouts of silliness and always has. You could argue silver actually merits more coverage than gold given that silver’s actually useful for something other than speculation, but… well, I’ll leave it to Bloomberg to tell you how Lakshmi precipitated the great silver crisis of 2025.

As more than one outlet noted when gold careened lower on Tuesday, it doesn’t help that the CFTC reports aren’t available due to the US government shutdown. Without that release, we don’t know how specs are positioned. And specs know we don’t know, which is potentially problematic for obvious reasons.

Anyway, don’t say Bill Gross didn’t warn you. “Gold has become a momentum/meme asset,” he wrote, four days ago. “If you want to own it, wait awhile.”