The crash in gold and silver prices was a positioning shock, not a fundamental reset. Volatility is expected to persist, with near-term price swings remaining elevated. Silver is more vulnerable than gold, but the structural bull case for gold remains intact.

A historic correction began on Jan. 30, with gold falling 9% and silver dropping 26%. The total market value lost was around USD 7 trillion in a single session. Both metals had seen significant gains prior to the selloff.

The crash was triggered by a sudden shift in the political backdrop, along with liquidity issues. Analysts believe the sell-off was a classic deleveraging shock, forcing out extended speculative positions. The crash was not driven by a sudden change in fundamentals.

Despite the violent correction, most strategists believe this is not the end of the precious metals’ cycle. Gold and silver are undergoing a structural regime shift, broadening their buyer base. The correction may create opportunities for long-term strategic buyers.

Gold’s long-term case remains strong, with central bank buying, ETF inflows, and currency debasement driving demand. Silver, on the other hand, faces challenges due to weak industrial demand and speculative positioning. The correction may present an entry point for gold but not for silver.

Read more at Morningstar: Why Are Gold and Silver Plunging?