Metals Meltdown

John C. Bogle, founder of the Vanguard Group, a $12 trillion global asset management powerhouse, is said to have remarked that ‘reversion to the mean is the iron law of financial markets’, meaning that security returns inevitably gravitate back to longer term averages over time.

In the commodities space, precious metal markets are currently experiencing one of the most extraordinary episodes of mean reversion in financial history. Having delivered returns of +148% and +65% in 2025, silver and gold began this year strongly, soaring to all-time price highs of $122 and $5,600 on 29 January 2026.

The parabolic price melt-up in the first few weeks attracted heavy late interest from retail investors experiencing a healthy dose of ‘FOMO’ (fear of missing out). As is often the case throughout history, the point of maximum retail hysteria coincided with a market peak as a ‘flash crash’ sent gold and silver prices tumbling. Precious metals mining stocks have also sold off sharply.

The damage was enough to wipe out an estimated $7 trillion of market value in just two trading sessions. Factors that are being attributed as catalysts for the violent correction include:

• President Trump’s official nomination of Kevin Warsh to lead the Federal Reserve. The decision caught the market off-guard. Expectations were high that Trump would nominate a ‘dovish’ nominee who would look to cut interest rates aggressively. Instead, Warsh is known as an ‘inflation hawk’, which suggests the Fed might target a smaller balance sheet and maintain a higher-for-longer interest rate scenario.
• Chicago Mercantile Exchange (CME) Group Margin Trading Hikes. To combat the extreme volatility, the CME, the exchange where metals are mostly frequently traded, raised margin requirements five times in nine days. The action forced ‘leveraged’ traders, who borrow money to buy more metals contracts than they would otherwise be able to afford, to either post more cash immediately or sell their holdings. This led to what are forced liquidations, creating a domino effect of selling.
• Technical Indicators Pointing to Extreme Short-Term Optimism. Gold had surged nearly 30% and silver 70% in just the first few weeks of January. Market participants sitting on huge paper profits were looking for a catalyst to lock-in their gains, and the Warsh nomination provided the perfect excuse.
• Easing Geopolitical Tensions. While gold had been propped up by fears of conflict, reports of fresh negotiations between the US and Iran began to circulate late last week. This removed a portion of the ‘risk premium’ that had been driving investors into haven assets.

TEAM Portfolio Activity

The parabolic upside price moves we witnessed in gold, silver, and precious metals mining stocks into late January were clearly unsustainable, and material enough to trigger us to take portfolio action.

We meaningfully reduced our precious metals exposure last week for our core multi asset range (Conservative, Balanced, and Growth) ahead of the big price correction.

In hindsight, we wish we had reduced further, but we did not foresee (nor did anyone else) the astonishing speed and magnitude of the price correction over the past few trading days.

Looking Ahead

With that said, some longer-term perspective is helpful. Despite the extreme price moves of late, at the time of writing, both gold and silver remain up 8% in dollar terms year-to-date and are trading at the same levels as they were a month ago.

We view the short-term reaction as kneejerk, driven by positioning and sentiment rather than any meaningful change in underlying fundamentals. Nothing has changed regarding our constructive outlook for the precious metals sector.

Volatile macroeconomic and geopolitical conditions continue to favour gold as a reserve asset for central banks. Persistent inflation and an unsustainable US federal debt burden point towards fiscal dominance and financial repression ahead, driving investment demand for precious metals as a means of wealth protection. Furthermore, demand from technology (notably demand for silver from solar photovoltaics) is strengthening. Meanwhile the tight physical supply of gold and silver supports higher prices.

We are watching closely for signs of market price stabilisation across the space, and expect to add further exposure to gold, silver, mining stocks, and potentially energy-related companies in the coming days and weeks ahead.