A violent Gold and Silver selloff tests conviction, not the bull market

In this episode of the Money Metals Midweek Memo, host Mike Maharrey returns with a single message for listeners watching the screen turn red. Perspective matters more than panic.

He opens with a quick personal aside from Florida, where an outdoor hockey game in Tampa turned so cold the crew had to warm the ice to prevent cracking. It is a small story with a larger point. Context changes how you interpret the same number. A 30-degree day feels different after you have just stood in 6 degrees with 11 inches of snow on the ground.

That is the mindset he argues investors needed during last week’s sharp correction in the metals.

The numbers were ugly, but the year still looked strong

Maharrey says the selloff was severe by any standard. During trading sessions on Friday and Monday, gold fell more than 13 percent and dropped several hundred dollars below $5,000 per ounce. He notes Friday’s decline was the steepest single-day drop since 1983.

Silver was even more dramatic. He describes a 34 percent plunge, with silver briefly trading below $80.

Then he widens the frame. Even after that “bulls are dead” moment on Friday, gold was still up 13 percent year to date, and silver was still up 18.7 percent year to date. He emphasizes the psychological whiplash of treating just-under-$5,000 gold as a crisis when, two years earlier, most people would have dismissed $5,000 gold as unrealistic.

By the time of this recording, he says the market had already clawed back a meaningful chunk of the decline. Gold was back above $5,000, and silver was back above $90.

Money Metals says inventory is available for dip buyers

Before diving into causes, Maharrey makes a practical point for listeners trying to take advantage of the move. He says reports of retail shortages are real in some corners of the market, but he states that Money Metals has plenty of inventory and no order limits or restrictions.

He adds that phone wait times may be longer because of the surge in demand. He says the company hired over 50 people since Christmas to handle higher volume. He also claims some silver products are available below spot and directs listeners to the specials on the Money Metals website, while noting the phone line is 800-800-1865.

Two headlines lit the fuse

Maharrey attributes the initial spark to two developments that hit the tape and hit sentiment.

The first was President Donald Trump announcing that Kevin Warsh will succeed Jerome Powell as chair of the Federal Reserve this spring. He says markets interpreted Warsh as a hawkish pick, and traders reacted as if the “easy money punch bowl” might be pulled away.

Maharrey then gives Warsh’s background as context. He says Warsh is 55 years old, served as a Federal Reserve governor from 2006 to 2011, and was the youngest person ever nominated to the Fed board at age 35. He also notes Warsh previously worked in mergers and acquisitions at Morgan Stanley and served in the George W. Bush administration as a special assistant to the president for economic policy and executive secretary of the National Economic Council.

From there, Maharrey argues the “independent Fed” narrative is overstated and calls Fed officials political actors. He frames Warsh’s family and political connections as further evidence that central banking is not conducted in a vacuum.

Warsh’s record sounds hawkish, his recent rhetoric sounds dovish

Maharrey acknowledges why Warsh has the hawk label. He says Warsh has criticized the size of the Fed’s balance sheet, criticized rapid rate cuts during the 2008 crisis, warned about inflation risk, and was the only Fed member to argue against QE2 in 2011, when the Fed bought Treasuries. Maharrey also references the familiar pledge from that era that assets would later roll off the balance sheet, noting that they are still there many years later.

But he argues investors should pay more attention to what people do than what they say, and he uses Alan Greenspan as his example of a purported sound-money figure who ultimately presided over easy money and asset bubbles.

On Warsh specifically, Maharrey says Warsh has more recently aligned himself with Trump’s rate-cut posture. He quotes Warsh calling for “regime change” at the Fed and criticizing the central bank’s hesitancy to cut rates, framing that as dovish behavior despite the historical hawk reputation.

This is where Maharrey argues the market reaction may have been backward. If anything, he suggests Warsh could be more accommodating than Powell, at least at first, particularly because Trump selected him and would not choose a chair expected to do the opposite of what he wants.

Hot producer prices added fuel to the fire

The second catalyst was inflation data. Maharrey says the Producer Price Index came in hotter than expected and reinforced fears that interest rate cuts could be delayed.

He reports headline PPI rose 0.5 percent month over month versus a 0.2 percent forecast. He reports core PPI surged 0.7 percent versus a 0.2 percent forecast.

He characterizes PPI as a leading indicator because companies often pass higher costs to consumers, and he warns this could bleed into CPI over the next month or two. In his telling, that possibility put additional pressure on gold and silver because fewer or later rate cuts are typically seen as headwinds for non-yielding assets.

This was not fundamentals, it was deleveraging

Maharrey then shifts from headlines to mechanics. He describes a market structure event where price levels triggered waves of automated selling.

He explains how stop-loss orders can create a cascade. As prices fall through key levels, more stops trigger, prices fall further, margin pressure rises, and selling becomes self-reinforcing.

He cites Société Générale analysts who characterized the move as not fundamentally driven but driven by positioning. He quotes their description of metals deleveraging, with stops being hit, margin calls rising, systematic funds cutting risk, silver’s outsized drop reflecting leverage being flushed, and the move being accelerated by profit taking, volatility limits, and CTA deleveraging, especially around month-end. His conclusion is that the size of the move was more about market plumbing than a sudden change in reality.

He also notes that stocks sold off alongside metals and that rumors of Warsh’s appointment had already started pressuring markets the day before.

The two reasons he thinks “hawkish warsh” won’t last

Maharrey’s skepticism centers on politics and math.

First, he argues that Trump’s choice implies that Trump expects more favorable policy outcomes than he believes he is getting from Powell. He suggests either that Warsh has been saying what Trump wants to hear, or he will be inclined to cut more quickly once in the chair.

Second, he argues the “debt black hole” is the dominant force. In his view, the Fed is stuck in a catch-22. It needs higher rates to fight persistent inflation, but the debt-burdened economy cannot function at normal rates. He believes that, when forced to choose, central bankers tend to rescue the economy and enable government borrowing rather than keep inflation fully contained.

He also argues there is little room to shrink the balance sheet meaningfully. He says the Fed increased the balance sheet modestly over the last month and returned to quantitative easing without using the term at the December meeting. He adds that weakening demand for Treasuries and persistent yields suggest the Fed will be pushed toward more aggressive buying as a buyer of last resort.

To illustrate de-dollarization pressure and fiscal concerns, he references a Danish pension fund that chose to divest Treasuries, saying its manager cited poor U.S. government finances as the reason rather than a political dispute. In Maharrey’s framing, Warsh’s reputation cannot override these constraints.

Perspective rules for the next correction

Maharrey closes by turning the episode into a checklist of mental habits, framed as lessons rather than trading rules.

He says corrections are normal and healthy in a bull market and that nothing rises in a straight line. He argues gold and silver were likely overbought by technical measures, meaning statistically stretched relative to recent history. At the same time, he says the metals remain underinvested, which matters more over a longer horizon.

He urges listeners to focus on what actually changed. If fundamentals shift, reassess. If nothing fundamental changed, it was likely a headline-driven correction.

The fundamentals, he says, he is watching remain the same. He lists de-dollarization, central bank gold buying, inflation pressures, Federal Reserve easing, geopolitical tension, and U.S. fiscal malfeasance. He argues that nothing that happened on Friday or Monday reversed those dynamics.

He also notes the importance of looking beyond metals in isolation. On Friday, he says nearly everything sold off, including stocks, bonds modestly, commodities, and Bitcoin, while the dollar rose. He asks whether a short-term dollar rally changes anyone’s long-term view of the dollar’s prospects.

Finally, he underscores the emotional trap. He says you have not lost money until you sell, then admits he felt the same gut reaction watching prices drop, even though he did not sell. He uses his own experience of buying silver around $12 as a reminder that emotion can override math if you let it.

Manipulation is real, but it is not an all-purpose explanation

Maharrey addresses a recurring theme in precious-metals circles. He says he believes manipulation exists and that evidence supports that claim, but he argues that a big selloff is not proof of manipulation by itself.

He points out that many people only invoke manipulation when prices fall, not when they spike, and he calls that asymmetric reasoning. He also notes gold is an enormous market with massive volumes, which makes it difficult for any one actor to control for long. Silver, he says, is smaller and more vulnerable to temporary distortions because of the gap between paper exposure and physical supply, but he still warns against treating every downtick as a conspiracy.

A secular bull market thesis, with humility

Maharrey concedes that any sharp selloff forces the question of whether the bull market is ending. He says it is possible, but he does not believe that is what this move signaled.

He reiterates his view that gold and silver are in the early stages of a long-running secular bull market, while bonds are in a secular bear market. He argues bonds have lost their safe-haven role, and he calls gold the last safe haven standing, with the caveat that silver is more volatile.

Even so, he stresses the need for humility and ongoing reassessment. Markets turn, narratives break, and no one is right forever. The discipline, he says, is staying calm, avoiding emotional decisions, tracking fundamentals, and maintaining perspective.

Why he thinks this dip matters

Maharrey ends with a broader demand argument. He says mainstream attention is shifting and points to a claim that the CIO of Morgan Stanley discussed a “60/20/20” portfolio concept that includes a 20 percent allocation to precious metals. He contrasts that with his assertion that most people hold no metals and that the average allocation is around 1 percent.

From there, he frames the asymmetry. Even a move from 1 percent to 2 percent would represent a major step up in demand, layered on top of what he describes as record gold demand last year. He cites 5,000 tons of gold demand for the first time ever.

He closes by directing listeners to Money Metals resources, the email list he says includes more than a million people, and reminders about the weekly Friday Market Wrap show.