Trump’s silver bullet: the market paid for illusions

XAG/USD

Key zone: 71.5000 - 81.5000

Buy: 82.5000 (on a strong positive foundation) ; target 87.50-91.50; StopLoss 81.7000

Sell: 70.5000 (on a confident breakout of the 71.0000 level) ; target 63.50-60.00; StopLoss 71.3000

The strongest trigger of the recent market panic is considered to be the nomination of Kevin Warsh for the position of Fed Chair. Warsh is perceived by the market as a tough “hawk” and a loyal ally of Trump, which sharply intensified fears regarding monetary tightening.

• Investor reaction turned out to be telling: a market accustomed to easy conditions and constant liquidity support оказался not ready for a shift in expectations.
• Overbought signals had long pointed to a high probability of a reversal, but the speed and scale of the correction came as a surprise. Participants who entered the market at the final stage of the gold and silver rally locked in losses. Those who had built defensive strategies in advance preserved profits, while investors who managed to reverse positions were able to profit from the decline.
• The currency market went through the stress relatively calmly, while the main losses fell on precious metals. Gold and silver formed a classic “blow-off top”: the decline amounted to about 16% and 39%, respectively. Cryptocurrencies, meanwhile, continue to fall.
• The greatest damage was suffered by highly leveraged positions — at the moment when silver became an object of массовой speculation, the correction was only a matter of time.

Warsh’s appointment became a convenient pretext for profit-taking in the overheated “debasement trade” — the bet on dollar devaluation. At the same time, the news background did not provide a полноценное explanation for the scale of the sell-off.

The market collapse turned out to be the result not so much of political statements, but of tighter margin requirements, which triggered massive deleveraging and a chain of liquidations. The catalyst was a technical decision by CME Group (COMEX), which changed the collateral rules for gold and silver contracts.

Let us recall:

Starting January 13, 2026, CME shifted margin requirements for futures on gold, silver, platinum, and palladium from fixed dollar amounts to a percentage of the contract’s notional value. As a result, banks and brokers demanded additional collateral from traders using high leverage. The margin for gold was set at 5%, for silver — 9%, with similar principles applied to platinum and palladium.

The technical increase in margin effectively means a sharp reduction in available leverage: to control the same volume of positions, more own capital is now required. The higher the price of metals, the higher the absolute size of collateral, especially for short positions.

As a result, trading metals became significantly more expensive, and spot traders with excessive leverage began to close positions en masse. Forced exits from the market provoke volatility and accelerate the decline.

Then a classic cascading effect kicked in. When a key asset drops sharply, investors begin selling other instruments in their portfolios, including quality assets, in order to compensate for losses and maintain liquidity.

It is also worth noting separately that the thesis of a “technological silver shortage” is speculative in nature and is not supported by fundamental data. There is no real deficit in the market that would justify an almost threefold price increase — this narrative was used as an element of manipulative hype.

The market has entered a phase of redistribution and declining risk appetite.

From the perspective of medium-term dynamics, the trend in precious metals is likely broken, although the long-term picture still allows for recovery. If the “sell America” scenario continues, the $60 zone for silver no longer looks extreme.

At the same time, there is no noticeable inflow of capital into alternative assets. Judging by the current structure of flows, this is not about new money entering the market, but about internal redistribution of funds within the group of speculators: some participants exited positions, others took them, but both sides prefer to temporarily reduce risk.

So we act wisely and avoid unnecessary risks.

Profits to y’all!