Gold and Silver... From Historical Peaks to Collapse

SadaNews Economy - At the beginning of this year, global markets witnessed a new chapter of violent fluctuations, as gold and silver surged to unprecedented record levels in human history, before crashing into the wall of the new "political reality" in Washington. While gold surpassed the $5,500 per ounce barrier, silver achieved astonishing leaps that outperformed gold, resulting in a week of pricing madness that ended with a "bloody Friday" that reshuffled the cards of safe havens.

Why Did the World Flee to Gold?

The record rise in gold and silver was not accidental; it was the result of the convergence of three strategic factors:

1- The Ambiguity of "Trump" and Trade Wars:

President Donald Trump's threats to impose new tariffs on European countries, Canada, and China have shaken confidence in the global trade system. Tensions surrounding Greenland and trade threats against eight European countries contributed to investors fleeing from the dollar to gold, viewing it as a protective shield against fluctuations in U.S. foreign policy.

2- The Escalating Geopolitical Risks:

The ongoing wars in Ukraine and Gaza, along with dramatic events such as the detention of Venezuelan President Nicolas Maduro, have created an atmosphere of absolute political uncertainty. In this "chaotic world," gold did what it always does; it surged as the only safe haven when the world feels danger.

3- The Central Banks and New Investors’ Buying Frenzy:

Major central banks, led by China, have moved to increase their gold reserves to reduce dependence on the dollar (De-dollarization), fearing asset freezes like those experienced by Russia. This trend was not limited to institutions; new players like the cryptocurrency company "Tether" entered the field, purchasing enormous amounts of gold that surpassed the reserves of entire countries.

Why Did "Silver" Steal the Spotlight?

While gold rose by 30 percent, silver saw an astonishing spike of 60 percent in one month, reaching $120 per ounce. This is attributed to the "dual nature" of silver; it is a safe haven, but also a vital industrial material for artificial intelligence, solar panels (which consume 30 percent of global demand), and electric vehicles. Due to a supply shortage lasting five consecutive years, silver became a target for aggressive speculation by small investors via trading apps like "CommSec."

Kevin Wursh... The Sole Reason Behind the Collapse

While gold was soaring above $5,500, news from Washington flipped the table. As soon as reports surfaced suggesting Kevin Wursh's nomination to chair the U.S. Federal Reserve, prices plummeted sharply.

Why? Because the markets feared the appointment of someone who would "succumb" to Trump's pressures to excessively lower interest rates, leading to massive inflation. However, Wursh is seen as a "safe and systematic" choice compared to other candidates, which partially restored confidence in dollar stability and monetary policy, prompting investors to sell the "news" and take their profits, causing gold to fall below $5,000 and silver to drop to below $75 in a single session.

Despite the recent decline, precious metals remain significantly higher than their levels last year. Academics and analysts warn individual investors against "chasing momentum"; gold and silver are non-yielding assets or dividends, with their value relying solely on resale at a higher price. Experts recommend that the proportion of precious metals in an investment portfolio should not exceed 5 to 15 percent to ensure diversification in an increasingly complex world.