Well, you can’t say they weren’t due for a pullback.
By “they” I mean gold and silver, which’ve run 160% and 400%, respectively, since the beginning of 2024.
I’ve written more on gold in the past six months than I did over the preceding six years, a testament to the breathtaking scope and escalating rapidity of a rally which crescendoed this week in a 15% eight-session rally and a blow-off top north of $5,000.
With bullion trading at an absurd premium to its own 200-day moving average and implying 10-year US real yields of roughly negative 10%, it was high time for a correction. And we got one.
As the figure shows, gold was down 13% late Friday in the US, the largest one-day decline in 45 or so years.
As discussed here on Thursday (don’t say you weren’t warned), “long precious metals” was the most in-trend of all in-trend trades, and as such, there was significant unwind risk emanating from the CTA crowd.
At the same time, retail investors had taken a shine to metals’ luster, and you can be sure a lot of home-gaming macro tourists were into metals with leverage.
It’s thus hardly surprising that when things started to turn on Friday morning, the situation snowballed into what, just hours later, counted as the worst day for gold and silver in half a century. The figure below shows the drop for the latter. It was a staggering 35% at one juncture.
Not to put too fine a point on it, but that’s what I meant when I (repeatedly) cautioned readers that silver’s “always a soap opera” and thereby not worth taking seriously.
Put differently (as if that wasn’t abrasive enough): Silver’s everywhere and always a clown show, and Friday’s multi-sigma wipeout was commensurately carnivalesque.
I suppose this goes without saying, but the depth of the precious metals rout on January 30, 2026 — a day that’ll live in infamy, seared forever into gold and silver charts which’ll henceforth require a “Black Friday” annotation to mark the occasion — wasn’t the product of a firmer dollar. The DXY was up a mere 0.7% on the session.
Rather, this was a brutal reversal which fed on itself through cascading margin calls, stop-outs, mechanical selling and generalized panic as the world’s most celebrated momentum trade finally hit a wall.
I’ll be curious to see if we get a wave of selling by weekly trading models close to the close. Or do we see short covering by the day traders?
THIS IS NOT THE TOP, Silver is a two way market now. but around $80 it is cheap for about 6 billion less washed and less pampered people with families that have needs and dreams. Trump is making the U.S. the enemy. Why own dollars. U.S. equities or Bonds than the dollar is down 39% from mid-2022 and gold is up over 100%. With Trump in the White House the dollar is a sure loser and gold can’t help but gain.
Bought a few short-dated call options on gold this afternoon. Just in case the president does something or other this weekend.
I’ve noticed something that’s a little interesting. Until pretty recently, options traders liked to dump short maturity options to avoid the large weekend time decay. (No different than in many markets when the cost of carry is significant.) They’d come in and almost hit bids willy-nilly.
But for a little over a month that selling is more subdued. Hey, it’s another Trump Effect!
Ooops – to clarify things, I am speaking of the price action on Friday afternoons exclusively.
Quite interesting phenomena, thanks sharing.
Hurrah for lotto puts! Happy Friday H
Many recent investors were not buying physical gold and silver, but were speculating with options, futures, “paper” gold and silver ETFs, and employing leverage as well. I suspect many were/are crypto traders who have recently turned their backs on BTC, which has now fallen below $84K. I am interested to see what the mining stocks do next, as they have also been heavily bid of late.
Older investors may recall that least part of gold’s “safe haven” appeal came from real world experience during the Great Depression and WWII. The idea was that you needed enough gold to bribe guards and customs officials–at a time when your country’s currency had gone to zero–in order to successfully flee the country when things really got nasty. (Like when the Germans entered Paris.) In that regard, it was never thought of as a get rich quick scheme. I think that is why traditional advice is to hold only about 5-7% of your portfolio in physical gold.
H-Man, you did a nice job of talking about how that wall was looming over the past couple of days and if the snowball started, it could pick up speed and size in a hurry.
Exited my AngloGold trade a few days ago when it hit its profit target. I had a $20 wide bullish call spread and it hit the profit target. I think I bought the spreads for around $6 and had a GTC order sitting there to exit at $13.
I wasn’t going to add again until we got a dip, and this is a dip.
At this point, I’m looking at Barrick Mining. It has better options liquidity than AngloGold, and at the same time, It’s at a better price discount. (As it relates to the DCF valuation.)
If gold can simply hold steady, and not drop too much, most all of the miners should go up over time.
I think inflation is here to stay. I think gold will receive a bid. I think gold could probably drop a little bit more, before it starts going up again. If you have a long-term perspective, the miners are a good investment.
That’s a good example of what I was just alluding to. The current run is simply not a “safe haven” play. No offense to anyone.
Yes, everyone trades the financials. Much much easier to press a button on your brokerage account, than to go down to some coin dealer and buy some gold and then wonder where you’re going to store it.
That’s the way the cookie bounces.
After the bubble pops gold will hit 10K and silver $200.
Scott Bessent, whose rhoumered to wear golden threaded underwear, got rich investing in gold. Soon the Fort Knox gold might get revalued from $35 to current prices.I’m told the current value is around a trillion dollars equal to the annual interest on the national debt. He wants higher prices. Some also say a big money Reset is coming. Gold backed currency. Tokens. Gold is money. Mine production is shrinking with growing world demand. Prices are only going up. Same with silver.
trump’s crown is golden and he doesn’t want it tarnished by a low valuation.
The conditions that have driven the price of physical gold and silver haven’t changed as witnessed by the spot markets in Asia. Banks selling before January deadline.