In the history of the silver market, prices had traded above $40 an ounce for only a handful of brief periods before last year. On Friday, exhausted traders watched in shock as the precious metal plunged by that much in less than twenty hours.
For weeks, traders across the metals world have spent their nights glued to screens as prices for everything from gold to copper and tin seemed to break free from the gravity of supply and demand fundamentals, spurred higher on a wave of hot money from speculators in China.
And then, in just a few hours, the rally reversed into one of the most dramatic crashes ever seen in commodity markets. Silver’s 26% plunge on Friday was the biggest on record, while gold dropped 9% in its worst day in more than a decade. Copper traders were already reeling after a sudden spike past $14,500 a ton that unraveled just as fast.
“In my career it’s definitely the wildest that I have seen,” said Dominik Sperzel, the head of trading at Heraeus Precious Metals, a leading bullion refiner. “Gold, it’s a symbol of stability, but such a move is not a symbol of stability.”
While the trigger for Friday’s crash was the news that US President Donald Trump planned to nominate Kevin Warsh to lead the Federal Reserve, which sent the dollar higher, many had been warning that the metals markets were overstretched and due for a correction following weeks of relentless surges. Still, the speed and scale of the drop was breathtaking, particularly for a market as large and liquid as gold.