Metals Meltdown

A Safe Fed Pick Sends Gold & Silver Down

Precious metals kept plunging on Monday, extending a rout that began with Friday’s shock collapse: Gold sank 9% in its worst one‑day fall since 1983, while silver staged a historic wipeout — plunging as much as 36% intraday before closing down 27%.

This, right after both gold and silver hit all-time highs at about $5,600 and $120 per ounce.

Reasons behind the fall:

• US President Donald Trump nominated Kevin Warsh to lead the Federal Reserve. A relatively conventional new chair reduces “safe-haven” demand for gold.
• Investors expect interest rates to stay higher under him vs. rival candidates.
• Higher rates=stronger dollar (usually), which makes metals more expensive for global buyers.
• A crack-down on speculative trading, particularly from China.

Investors Question the Rate Message

Kevin Warsh’s nomination has created tension between what the White House wants and what investors expect.

President Trump has openly pushed for lower interest rates and said he wouldn’t nominate anyone who wouldn’t deliver them. Markets aren’t convinced.

Warsh, a former Fed governor, has a long record as an inflation hawk, arguing for tighter policy. He’s supported higher rates and a smaller Fed balance sheet in the past.

Speculators Supercharged the Boom and the Crash

A wave of Chinese retail traders piled into gold and silver using high‑leverage structured products, letting small investors take oversized bets. As metals rallied, global retail buyers joined in — exchanging tips on Reddit, like they did during the GameStop short squeeze back in 2021, and rushing into options, exchange-traded funds, and coins.

Regulators then stepped in: the Shanghai Gold Exchange raised margins on Friday, making leveraged bets more expensive. Chicago Mercantile Exchange (CME), a global marketplace where traders place futures bets on metal prices, followed on Monday.

At least five Chinese commodities funds have suspended trading.

Commodities Slump Hits Global Markets

The Monday sell‑off didn’t stay contained to precious metals. It rippled across energy, industrial commodities, and even stocks, as investors scrambled to cover losses and reassess risk.

What moved the most:

• Oil fell nearly 5% as easing US–Iran tensions reduced fears of supply disruptions.
• Copper dropped 3%, pressured by high inventories and slower Chinese demand ahead of Lunar New Year.
• Rubber, wheat, and soybeans also slipped.
• Asian Equities fell sharply: Japan’s Nikkei 225 index 1.5%, Hong Kong’s Hang Seng 2.2%, and South Korea’s Kospi 5.3%.

Silver Thursday’s Warning From 1980

The turmoil this week reminded of Silver Thursday in March 1980 — the last time precious metals market experienced comparable swings.

In the late 1970s, the Hunt brothers drove silver prices up more than 700%, buying so much physical silver and futures that they controlled roughly one‑third of the world’s deliverable supply. Prices rose so sharply that jewelry company Tiffany’s ran a full‑page ad accusing speculators of wrecking the market. 

Regulators eventually tightened rules, triggering huge margin calls. When the Hunts missed one, confidence collapsed and silver prices halved within days — a classic example of how leverage and concentrated bets can turn a boom into a crash almost instantly.