Well, that was a Friday
Feb. 2nd, 2026 08:32 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
which_chickFriday was a day for the books on the precious metals front...
January 19th gold price was 4695.80
January 28th gold price was 5535.70
January 30th gold price was 4887.07
Oof that's a drop, yo but still not a drop to "start of January" prices. On the silver front things were also shitty.
January 19th silver price was 95.33
January 28th silver price is 118.63
January 30th silver price was 84.63
Also not back to "start of January" prices, but quite the drop.
You'll see this sort of thing with precious metals sometimes -- it's partly due to fear and loathing inLas Vegas the markets but also due to things like changes in margin requirements and the fact that Dear Leader has named a new dude for chair of the Federal Reserve.
Let's look at those things, each in turn, as contributing causes to the significant drop in precious metals prices.
CME increased the margin requirements on gold and silver futures. (Futures are bets on what things will cost in the future. There are actual business reasons you might want to do this but quite a bit of the action in the market is people doing speculative and risky shit.) Margin is "buying stocks with money you don't have" by putting up collateral (other stocks, typically) for a percentage of the money you don't have and having your broker front you the rest of the money (at interest) based on your credit-worthiness, mad skilz, and certain knowledge that the stocks you are buying are about to moon. If that sounds kinda like handwave-y bullshit that could go seriously wrong, good. I'm doing the Lord's work, here.
Brokerages don't let just anyone go about margin trading, you have to be approved for that shit. (You have to have money, a good credit rating, and other assets that they can seize when you fuck up. You cannot be poor and play margin trading.) Also, unlike buying a regular stock where you can only lose the amount you spent on the stock, buying on margin... enables you to you lose more money than you fronted. If you are wrong about the stocks you bought and they go down instead of up, your broker will call you on the phone and demand you pony up more money or they'll cut and run and sell your position out from under you. (Brokers do not like to lose money.)
If market prices for a thing (like precious metals) start to flail about like a tight rope suddenly cut loose, the brokerages letting people buy on margin get spooked and say "Dude, you need more collateral on file to back up your risky shit." That's the increase in margin requirement happening, right there. As you might reasonably expect, this tends to pour cold water on the Risky Business and cause some market shrinkage.
So that's one downward force on the precious metals market. Let's look at the other, the announcement of a new fed chair. Why does this affect the precious metals markets?
JPow is the current chair of the federal reserve and despite Money Printer Go BRRRRRR memes of him on wsb back in the covid era (he's had the job since 2018 and was a Trump appointee to chair the Fed) he's done an OK job of charting financial policy. I don't love that we have a target inflation rate because I do not understand why it is IMPORTANT that the value of money slowly decline over time but I do understand that consistency and predictability in the financial system is way better than... excitement. Nobody really wants exciting to be a feature of finance.
Announcing a new chair of the federal reserve can make people (a) more confident in the currency or (b) less confident in the currency. The confidence reaction is generally weighted towards "less confident" because change is bad... but it doesn't HAVE to be that way. The new guy (Kevin Warsh) appears to be approved by the markets, because gold and silver took huge hits after the announcement that he was appointed.
Wait, what? How does the precious metals market tanking show "support" for the new guy?
People buy gold and silver when they don't trust the paper money. When they feel inflation is on the rise, investors buy gold and silver. If you cast your eyes upon a graph of the gold or silver price for the last six months, you can see that the prices have gone up quite a bit here lately. Hrm. Guess investors have been worried about inflation and the paper money.
If you watch the financial news, you're aware that Dear Leader has been making noise for a while about how JPow is doing a bad job and that he should lower interest rates and that he doesn't know shit and so forth. Mostly Dear Leader says that shit right around Fed Meeting times when JPow doesn't lower interest rates. Recently that whining has spilt over into some bullshit investigation of JPow about building renovations or something? I dunno. It's clearly just Trumped-up bullshit to attack JPow for not letting Dear Leader give the Fed marching orders.
The markets do not want JPow taking marching orders from Dear Leader. They do not have faith in Dear Leader's ability to do monetary policy and they fear that lower interest rates (what Dear Leader wants) will pour gasoline on the already burning fires of inflation. As well, Dear Leader slamming JPow is completely inappropriate. He doesn't get to tell JPow what to do. The Fed is supposed to be independent of the government. Like, it does not take marching orders from the President or Congress or anybody. It is its own thing and the primary JOB of the Fed is to see to it that people believe in and continue to use the fiat currency of this nation.
The appointing of Kevin Warsh has caused a significant decline in the prices of gold and silver, which means that investors are taking their wealth out of gold and silver to go do other things with that money. They wouldn't do that if appointing Kevin Warsh fanned their fears of fiat inflation. They would only do that if they felt confident that Warsh will be a "hawk" on inflation, that he will remain independent of Dear Leader, and that he will do what is appropriate for the currency.
We'll see how Warsh does -- he has to be approved by Congress and if he is, he takes the reins in May.
For right now I expect some further softening in the prices for gold and silver. I expect silver to remain around 60 an ounce, gold at 4000. Let's re-check at the end of February, shall we? Maybe I'm right, maybe I'm wrong. We'll see.
January 19th gold price was 4695.80
January 28th gold price was 5535.70
January 30th gold price was 4887.07
Oof that's a drop, yo but still not a drop to "start of January" prices. On the silver front things were also shitty.
January 19th silver price was 95.33
January 28th silver price is 118.63
January 30th silver price was 84.63
Also not back to "start of January" prices, but quite the drop.
You'll see this sort of thing with precious metals sometimes -- it's partly due to fear and loathing in
Let's look at those things, each in turn, as contributing causes to the significant drop in precious metals prices.
CME increased the margin requirements on gold and silver futures. (Futures are bets on what things will cost in the future. There are actual business reasons you might want to do this but quite a bit of the action in the market is people doing speculative and risky shit.) Margin is "buying stocks with money you don't have" by putting up collateral (other stocks, typically) for a percentage of the money you don't have and having your broker front you the rest of the money (at interest) based on your credit-worthiness, mad skilz, and certain knowledge that the stocks you are buying are about to moon. If that sounds kinda like handwave-y bullshit that could go seriously wrong, good. I'm doing the Lord's work, here.
Brokerages don't let just anyone go about margin trading, you have to be approved for that shit. (You have to have money, a good credit rating, and other assets that they can seize when you fuck up. You cannot be poor and play margin trading.) Also, unlike buying a regular stock where you can only lose the amount you spent on the stock, buying on margin... enables you to you lose more money than you fronted. If you are wrong about the stocks you bought and they go down instead of up, your broker will call you on the phone and demand you pony up more money or they'll cut and run and sell your position out from under you. (Brokers do not like to lose money.)
If market prices for a thing (like precious metals) start to flail about like a tight rope suddenly cut loose, the brokerages letting people buy on margin get spooked and say "Dude, you need more collateral on file to back up your risky shit." That's the increase in margin requirement happening, right there. As you might reasonably expect, this tends to pour cold water on the Risky Business and cause some market shrinkage.
So that's one downward force on the precious metals market. Let's look at the other, the announcement of a new fed chair. Why does this affect the precious metals markets?
JPow is the current chair of the federal reserve and despite Money Printer Go BRRRRRR memes of him on wsb back in the covid era (he's had the job since 2018 and was a Trump appointee to chair the Fed) he's done an OK job of charting financial policy. I don't love that we have a target inflation rate because I do not understand why it is IMPORTANT that the value of money slowly decline over time but I do understand that consistency and predictability in the financial system is way better than... excitement. Nobody really wants exciting to be a feature of finance.
Announcing a new chair of the federal reserve can make people (a) more confident in the currency or (b) less confident in the currency. The confidence reaction is generally weighted towards "less confident" because change is bad... but it doesn't HAVE to be that way. The new guy (Kevin Warsh) appears to be approved by the markets, because gold and silver took huge hits after the announcement that he was appointed.
Wait, what? How does the precious metals market tanking show "support" for the new guy?
People buy gold and silver when they don't trust the paper money. When they feel inflation is on the rise, investors buy gold and silver. If you cast your eyes upon a graph of the gold or silver price for the last six months, you can see that the prices have gone up quite a bit here lately. Hrm. Guess investors have been worried about inflation and the paper money.
If you watch the financial news, you're aware that Dear Leader has been making noise for a while about how JPow is doing a bad job and that he should lower interest rates and that he doesn't know shit and so forth. Mostly Dear Leader says that shit right around Fed Meeting times when JPow doesn't lower interest rates. Recently that whining has spilt over into some bullshit investigation of JPow about building renovations or something? I dunno. It's clearly just Trumped-up bullshit to attack JPow for not letting Dear Leader give the Fed marching orders.
The markets do not want JPow taking marching orders from Dear Leader. They do not have faith in Dear Leader's ability to do monetary policy and they fear that lower interest rates (what Dear Leader wants) will pour gasoline on the already burning fires of inflation. As well, Dear Leader slamming JPow is completely inappropriate. He doesn't get to tell JPow what to do. The Fed is supposed to be independent of the government. Like, it does not take marching orders from the President or Congress or anybody. It is its own thing and the primary JOB of the Fed is to see to it that people believe in and continue to use the fiat currency of this nation.
The appointing of Kevin Warsh has caused a significant decline in the prices of gold and silver, which means that investors are taking their wealth out of gold and silver to go do other things with that money. They wouldn't do that if appointing Kevin Warsh fanned their fears of fiat inflation. They would only do that if they felt confident that Warsh will be a "hawk" on inflation, that he will remain independent of Dear Leader, and that he will do what is appropriate for the currency.
We'll see how Warsh does -- he has to be approved by Congress and if he is, he takes the reins in May.
For right now I expect some further softening in the prices for gold and silver. I expect silver to remain around 60 an ounce, gold at 4000. Let's re-check at the end of February, shall we? Maybe I'm right, maybe I'm wrong. We'll see.
