Towards the end of last month, gold and silver soared to fresh all-time highs.
Gold came within a couple of bucks of $5,600 while silver topped above $121 per ounce.
The final upside moves were extraordinary, representing unprecedented parabolic blow-off tops, bigger than those that, in hindsight, marked the multi-year peaks in both metals from back in 2011.
And this time round, the subsequent reversal was even more horrific.
From its new record high, gold fell to a low just above $4,680, a drop of 16% in a day.
Never to be outdone, silver gave back 40% of its value over the same few hours. That was on a Friday.
On Monday, the pain continued. Gold fell to $4,400, for a high-low move of 21%.
Silver fell a bit further, then bounced, then fell again, so that by the next Friday, its own high-low decline came in at 47%.
The price of silver had effectively halved in little over a week. That was carnage, and won’t be forgotten by anyone trading either metal.
A key question for many observers, particularly outside the trading community, is how a major industrial commodity can lose half its value in a single day.
Silver is widely used across manufacturing, electronics and renewable energy, features in products ranging from solar panels to smartphones, and has long-standing medical applications due to its antibacterial properties.
Given its extensive practical use and historical importance, such a sharp decline appears difficult to explain.
One way to answer this is, what was silver doing at $120 in the first place?
Part of the response to this question is that when markets move, most traders and investors seek out reasons to explain why the move happened.
The US dollar jumped 100 basis points in five minutes? Oh, that will be because the Fed Chair said something hawkish.
Amazon fell 20% in the first few weeks of February? Ah, well, they freaked everyone out when they revealed their latest AI spending programme.
The same goes for gold and silver. And there were so many stories which eventually emerged to explain the rallies in both.
In the case of gold, there were purchases from developing-world central banks (and China is lying about its holdings).
The world is experiencing an inexorable slide to ‘de-dollarisation’ as everyone looks for alternatives to replace the greenback as the world’s reserve currency.
There’s geopolitical instability; Russia is going to use nukes; Iran is preparing to use nukes; once gold hits $5,000, it will carry on to $10,000.
It was a similar story for silver: there’s a physical shortage; there’s a short-squeeze going on; JP Morgan is artificially suppressing prices; it’s a new paradigm. And so on.
Fair enough. But could it be that the truth is more prosaic?
Gold, and silver, topped in 2011 and then spent a long time in a bear market.
Everyone lost interest, and no one was paying attention as both eventually bottomed and then began to slowly and quietly creep higher.
Where did the rally in gold begin? A look at the chart suggests that it bottomed in December 2015 just above $1,000 per ounce.
But it only broke decisively above $2,000, while taking out its old all-time high, this time two years ago.
Even then, very few people were talking about it. In fact, I’d argue that gold only started picking up some attention last October when it broke above $4,000.
And it took another few months for the stories explaining its behaviour to really get going. Silver’s advance flew even lower under the radar.
And that’s a shame. Because by the time these rallies finally captured mainstream attention, they were effectively over, and all the easy money had been made.
Could we now be seeing a healthy correction ahead of a rally to fresh all-time highs? Of course.
Anything is possible. But it is now a risky trade rather than the slam-dunk it was for those paying attention and who exercised patience.
(David Morrison is a Senior Market Analyst at Trade Nation. Views are his own.)
https://invezz.com/news/2026/02/20/gold-silver-surged-but-why-couldnt-they-hold-on/
