To The Moon

Last Friday, precious metals saw an epic meltdown — LME copper plunged 4%, gold crashed 9.5%, and silver collapsed 26.9%. Gold was down more than 12.6% intraday, marking its largest single-day drop in over 40 years, while silver plunged over 36% intraday, the biggest drop on record.

The panic selling carried into today. Gold fell more than 8% intraday, sliding from its all-time high of $5,595 to below $4,500. Silver sank 14% intraday, tumbling from a record $121 to $73. LME copper dropped another 5%.

Precious-metals ETFs were absolutely crushed. $ProShares Ultra Silver(AGQ)$ plunged 60% last Friday and fell another 16% overnight today. $MicroSectors Gold Miners 3x Leveraged ETN(GDXU)$ collapsed 39% last Friday, then another 16% overnight. Even unlevered $SPDR Gold ETF(GLD)$ fell over 10% last Friday and another 8% overnight today. The largest silver ETF, $iShares Silver Trust(SLV)$ , dropped more than 28% last Friday and another 13% overnight.

The precious-metals market was completely wiped out. Just days after a string of record-breaking gains, the reversal was brutal — a stark reminder of how unforgiving capital markets can be.

The trigger for this crash was Donald Trump’s decision to appoint Kevin Warsh as Federal Reserve Chair. Warsh served as a Fed governor from 2006 to 2011 and, even at the height of the financial crisis, was reluctant to cut rates, citing concerns about fueling inflation. He has also been openly critical of several of the Fed’s bond-buying programs. As recently as 2024, Warsh reiterated his concerns about a resurgence of inflation.

As a result, Wall Street widely views Warsh as the most hawkish, anti-inflation candidate among the contenders.

Following Trump’s announcement, the U.S. dollar surged, with the Bloomberg Dollar Index rising 0.88%, marking its largest single-day gain in eight months.

Bloomberg Dollar Index (BBDXY)

Capital that had previously piled into precious metals on bets of a weaker dollar is now retreating. Given the outsized year-to-date gains in gold and silver and severely overbought technical readings, selling pressure gradually morphed into panic-driven exits, triggering a “gamma squeeze” effect. As underlying prices rise (or fall), market makers are forced to continuously buy (or sell) the underlying assets to hedge exposure, which in turn pushes prices even higher (or lower)—creating a self-reinforcing feedback loop.

Viewed this way, the crash in gold and silver looks more like a reaction to negative catalysts after an extremely optimistic setup, rather than a fundamental reversal of the broader logic.

In other words, whoever becomes Fed chair cannot single-handedly dictate monetary policy, because interest rates are set by the Federal Open Market Committee (FOMC). The FOMC has 12 voting members—7 Fed governors and 5 regional Fed presidents. The Fed chair holds just one vote; any policy move requires majority support.

Therefore, whether the Fed cuts rates in 2026—and how many times—will depend far more on economic conditions than on simply changing the Fed chair.

Looking back at gold’s performance over recent years, two core pillars stand out:

1. Fed rate cuts

2. Breakdown of the global order

2022: Gold fell alongside U.S. equities as the Fed pivoted from pandemic-era liquidity to aggressive rate hikes amid surging inflation.

2023–2024: As inflation retreated from peaks and the Fed began cutting rates, gold and equities rose together.

2025: With Donald Trump returning to the presidency and reigniting trade wars, global economic order was disrupted—gold entered a powerful rally.

2026: Escalating geopolitical tensions—from actions involving Venezuela and Greenland to unrest in Iran—further unsettled the world. Canada’s prime minister even stated that the global order has collapsed, accelerating gold’s rise.

At present, the Fed is still in a rate-cutting cycle, with traders broadly expecting two more cuts this year. Meanwhile, global instability has intensified. The logic that underpinned gold’s bull run over the past few years has not been overturned.

Accordingly, even after the sharp sell-off, analysts at Deutsche Bank continue to target $6,000 for gold, arguing that drivers—including central-bank demand—remain supportive. The rationale for allocating to gold has not changed, and they do not see a sustained trend reversal.

Former Goldman Sachs “commodities king” Jeff Currie said the metals market is entering a new commodity supercycle, with the recent frenzy merely “the foothills of the Himalayas.” He argues that the weakening dominance of the dollar is redirecting capital toward commodities. As geopolitical risks rise and supply chains fracture, countries and consumers are turning to “hard-to-seize assets”—such as gold, silver, and copper—boosting demand and encouraging stockpiling, especially silver.

Currie also notes that even with governments pushing to streamline permitting and cut red tape, supply cannot ramp quickly, as commodity production is long-cycle and capital-intensive.

Bottom line: If gold and silver see sharp pullbacks, they may actually present attractive opportunities. That said, silver’s free float is far smaller than gold’s, its speculative nature is stronger, and volatility is much higher—making it unsuitable for most investors. Historically, silver tends to offer higher-probability catch-up rallies only when the gold–silver ratio is well above 80 (currently around 58).

Gold–Silver Ratio

Gold and silver ETF overview:
$SPDR Gold ETF(GLD)$ : the largest gold ETF, tracking gold prices; expense ratio 0.4%;
$Gold Trust Ishares(IAU)$ : the second-largest gold ETF, tracking gold prices; lower expense ratio of 0.25%;
$VanEck Gold Miners ETF(GDX)$ : the largest gold miners ETF, tracking gold mining stocks; expense ratio 0.5%;
$iShares Silver Trust(SLV)$ : the largest silver ETF, tracking silver prices; expense ratio 0.5%;
$Abrdn Silver ETF Trust(SIVR)$ : the second-largest silver ETF, tracking silver prices; slightly lower expense ratio of 0.3%;
$Global X Silver Miners ETF(SIL)$ : the largest silver miners ETF, tracking silver mining stocks; expense ratio 0.65%.

Inverse and leveraged ETFs:
$Proshares Ultrashort Silver(ZSL)$ : 2x inverse silver ETF; expense ratio 0.29%;
$MicroSectors Gold Miners -3x Inverse Leveraged ETN(GDXD)$ : 3x inverse gold product;
$Direxion Daily Junior Gold Miners Index Bear 2X Shares(JDST)$ : 2x inverse gold miners ETF.