Silver Crashes 36% in Record Plunge From All-Time High
Precious metals suffer worst single-day losses since 1980. Gold falls 11% from $5,600 record. Chinese speculation, CME margin hikes, and Fed chair pick trigger selloff.
The precious metals rally that dominated 2025 just hit a wall. Gold's 66% surge in 2025 and silver's record-breaking run past $80 have reversed violently.
Silver crashed 36% on Friday—its biggest single-day decline since the Hunt brothers' corner collapsed in 1980. Gold fell 11%, its worst session since the early 1980s. The combined wipeout erased roughly $2 trillion in metal valuations in hours.
This is what happens when a parabolic move meets forced selling.
The Numbers
Silver peaked at $120 per ounce Thursday, up 430% from where it started 2025. By Friday's close, it had collapsed to $78.53—a $42 drop that stunned even veteran commodity traders.
Gold touched a record $5,600 before reversing. It closed Friday at $4,745, down $600 or 11.4% on the day. The metal extended losses Monday before stabilizing.
Related ETFs got hit hard. Silver ETFs on the National Stock Exchange fell up to 20% Monday after dropping 17% Friday. Gold-linked funds posted similar losses.
The selloff continued into early February, though selling pressure has eased. Spot gold traded around $4,777 Monday, down roughly 15% from Thursday's high.
What Triggered It
Three forces converged to create the crash.
First, the CME Group changed the rules. In January 2026, the exchange moved to a percentage-based margin system, hiking maintenance margins to 15% for standard positions. That effectively ended the era of cheap paper speculation that allowed traders to control 5,000-ounce contracts with minimal collateral.
Higher margins mean larger traders need more cash to hold positions. When prices reverse, the margin calls come faster and hit harder.
Second, Chinese speculators had crowded into the trade. Shanghai Gold Exchange volumes had surged to record levels throughout late 2025, with retail and institutional investors chasing the rally. When the selling started, leveraged Chinese positions amplified the move.
Third, Trump's nomination of Kevin Warsh as Fed chair shifted rate expectations. Warsh is viewed as hawkish—more likely to keep rates higher for longer. That's bearish for non-yielding assets like gold, which compete with interest-bearing alternatives.
The nomination was a trigger, not a cause. The correction was overdue. Gold and silver had gone parabolic on geopolitical fear, and those trades work until they don't.
Historical Context
Silver's 36% plunge is the worst since March 1980, when prices collapsed after the Hunt brothers' attempted corner failed. That comparison isn't quite apt—today's rally was driven by industrial demand and retail speculation rather than concentrated manipulation—but the magnitude of the reversal is similar.
Gold's 11% drop is also historically significant. You have to go back to the early 1980s to find comparable single-session losses. The metal had never traded above $5,000 before breaking $5,100 last week.
For perspective: gold started 2025 around $2,640 and ended the year near $4,500. It then sprinted to $5,600 in January 2026. The crash brought it back to late-January levels—painful, but the 2025 gains remain mostly intact.
Silver is more damaged. At $78, it's still up roughly 250% from early 2025, but traders who bought the breakout above $100 are nursing deep losses.
Was This Overdue?
Probably. The rally had every characteristic of a blow-off top.
Retail speculation had reached frenzied levels. Social media was flooded with "silver to $200" predictions. Physical coin dealers reported unprecedented demand. And the price action had gone vertical—always a warning sign.
Central bank buying provided a structural bid, but that's a slow, steady force. It doesn't justify the kind of moves silver was making in late January.
Chinese demand was real but also speculative. When property markets underperform and equities disappoint, Chinese investors rotate into gold. That's a legitimate diversification motive, but it also creates crowded positioning that reverses violently when sentiment shifts.
What Now
The selling appears to have stabilized, at least temporarily. Gold held above $4,700 on Monday after testing lower. Silver found support near $75.
Technical traders are watching the $4,500 level in gold—roughly where prices traded before the final January spike. A break below that would suggest the correction has further to run.
For silver, $70 is the line in the sand. That's about 10% below current prices and would bring the metal back to early-December levels.
The fundamental story hasn't changed. Central banks are still buying gold. Industrial demand for silver remains strong. Geopolitical uncertainty persists. But parabolic moves need to reset, and this reset was long overdue.
For traders who missed the rally, this is the first real opportunity to enter at lower prices in months. For those who rode it up, the lesson is familiar: no trend lasts forever, and the exit matters as much as the entry.
For more on the economy and how the Fed's stance on rates is affecting asset prices, follow our coverage of the Warsh nomination and upcoming economic data.