The Crash That Visits Every Bull Market

Gold at $4,770. Silver at $81.

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For precious-metals bulls, those numbers don’t feel like a quote, they feel like a punch. At least after last week's highs.

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And yet… if you’ve lived through enough cycles, you start to recognize the rhythm: melt-up → leverage → margin pressure → air pocket → forced selling → narrative flips → then the bull market either dies… or proves it was real all along. For gold and silver bulls, they are hoping the latter is true.

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The draw down that began last week has the fingerprints of a “classic” metals correction, at least for gold: a parabolic run into record highs, then a violent reset as positioning unwinds, the dollar spikes, and futures-market mechanics do what they always do when too many traders crowd into the same door at once.

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So how “typical” is this crash? To answer that, we won’t start with today. Let's look at the past two bull markets:

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1) 1979–1980: When Silver Hit the Ceiling and the Floor Opened

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In the late 1970s, inflation fear was not a talking point; it was a lived experience. Confidence in paper promises was paper-thin (pardon the pun). And silver turned into a stampede.

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From January 1979 to January 1980, silver ran from about $6 to roughly $49.45 (London Fix), cresting above $50 in intra-day trading, an increase so extreme it looked less like a market and more like a corner. The sell-off became legend: Silver Thursday, as it became known, when silver collapsed more than 50% in a week as rules tightened and margin pressure forced liquidation. But, you'll notice, silver's incredible rise was more or less compressed into a year. It did move up from $1.50 in change to about $6 in 1979, so it had been building, will only one major decline along the way. It dropped about 40-45% in the mid-1970s, from $6.50 to $3.75 per ounce. Keep in mind, silver was a tiny market and got very little attention until 1979.

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Silver is only down about 34% from its highs near $120 per ounce. So, despite the incredible speed of today's decline, it is still a garden variety correction for this volatile metal.

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Gold, on the other hand, saw a truly dramatic decline in the mid-70s.

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Gold peaked around the same time, hitting $850 per ounce in January 1980. It started the decade at $35 per ounce, hit nearly $200 in 1974 and then collapsed 50% to just above $100 in 1976. Only to rise 8-fold into 1980. Incredible.

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Here’s the key lesson from 1980 that every modern bull eventually relearns:
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• When metals go vertical, the market doesn’t need “bad news” to crash. It just needs leverage.
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A highly leveraged market can fall 10–20% on nothing but mechanics. Margin calls don’t care about your thesis. They care about your collateral.

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How typical was that crash?

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The 1980 silver collapse was not a “normal correction.” It was an extreme episode driven by concentrated positioning and policy responses. But it did reveal the template: in metals, the biggest down days often arrive right after the biggest up weeks. We all witnessed that on January 30th 2026 as gold and silver got crushed.

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2) 2010–2011: The QE Era’s “Twin Peaks”

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Fast-forward to today. Different decade, different narrative, same human wiring.

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The post-GFC world gave us Federal Reserve extraordinary policy, growing distrust in currencies, and the birth of the modern “hard assets” trade. From September 2010 to September 2011, gold surged roughly 50%, topping around $1,917.90 in late August 2011.

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Silver, as always, didn’t just follow, it overreacted. In April 2011, silver briefly exceeded $49.50 intraday, revisiting levels last seen in 1980.

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Then came the fall:

Silver fell sharply in the months that followed its 2011 peak.

Gold remained elevated longer, then experienced a prolonged, grinding drawdown after the peak period (including a major down year in 2013).

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How typical was 2011?

More typical than 1980, and more useful as a comparison for today. 2011 wasn’t a corner. It was a crowded trade fueled by policy fear and speculative heat. The crash wasn’t “proof the bull was fake.” It was proof that bull markets can deliver brutal corrections without ending the cycle immediately.

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3) 2026: Why This Crash Looks Familiar

Now, back to today.

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In late January 2026, gold and silver were printing record highs, then something snapped. Gold fell from a record region near $5,600 to the mid-$4,000s, before rebounding to $4,700 in change on February 2nd. Silver traded up to nearly $120 per ounce, and now sits near $81 after an even sharper plunge late last week.

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So what caused it?

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The 3 classic ingredients

• Parabolic runs create leverage.

When price accelerates, futures positioning often piles up. Small moves trigger big forced moves.
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• Policy/dollar narrative flipped fast.

Reporting linked the selloff to shifting expectations regarding the Federal Reserve's policy path and the U.S. dollar following political news involving Kevin Warsh.
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• Futures market mechanics kicked in.

Margin changes and liquidation pressure were cited as accelerants, not the origin, but the gasoline.

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If you’ve studied the previous peaks in 1980 and 2011, this part should feel uncomfortably normal:

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Metals rarely “top” quietly. They talk loudly, then they retest their beliefs with violence.

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How Typical Is This, Really?

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Let’s be precise.

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Gold

A multi-percent down day in gold is rare, but it happens at turning points in sentiment. The current drop is one of the sharpest in decades, which tells you this is not a gentle pullback. But what did we expect? Gold had gone parabolic in the days leading up to the correction. And, from a percentage standpoint, its still well within the range of previous bear market corrections in the mid-70s and late 2000s.

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Silver

Silver’s crash behavior is more typical than gold’s, because silver’s market is smaller, more volatile, and more prone to speculative surges. Big percentage drops have precedent, including the mid-1970s near 45% decline. Silver touched $15 in May of 2006 before dropping to about $9 for an approximate 40% decline, followed by the GFC that saw silver drop more than 55% from $21 to $9 at the lows.

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In plain language:

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Gold corrects.

Silver breaks hearts.

That’s not cynicism, it’s the asset’s personality.

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The Revelation: The Bull Market’s “Entrance Fee”

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Here’s the part most investors only learn after the fact:

Violent corrections are not a bug in precious-metals bull markets. They’re the entrance fee.

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They shake out:

• leverage,
• weak hands,
• late-cycle momentum chasers,
• and anyone who thought the trade was “easy.”

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And then the market asks a single question:

Is the underlying driver still there? Or, in the case of today, 2026, are the many underlying drivers still in play? Has anything fundamental changed since last week? The answer is unequivocally no.
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In 2026, the key driver cited by major banks remains structural demand, including ongoing central bank buying, structural inflation, reserve diversification narratives, and a weaker USD amid rising global tensions.

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That doesn’t mean gold or silver will go straight up once this correction is over. It means the story isn’t automatically over just because the chart looks ugly. Gold and silver both experienced larger percentage declines in the 1970s and in the mid-to-late 2000s, before going on to new all-time highs.

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What Investors Should Watch Next

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This isn’t financial advice, it’s a map of what usually matters in a precious metals bull market:
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• Real rates & the dollar trend
  If the dollar’s surge is a temporary spike and real rates roll over, metals often find their footing again.
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• Positioning + margin stress
  When forced selling ends, volatility often compresses; that’s when the next trend emerges.
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• Physical market indicators
  Silver especially can decouple from paper narratives during supply stress, but you need evidence. Watch silver demand data closely.

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Gold/silver ratio behavior

Extreme moves in either direction often signal exhaustion, not certainty. Keep an eye on the gold to silver ratio. It has jammed higher to nearly 60 to 1 amid silver's sell-off. Meaning it takes nearly 60 ounces of silver to buy one ounce of gold. But reached a peak in this cycle of 47:1. A GSR of 30:1 or even 15:1 is not rare in bull markets, and especially near market tops. We didn't even come close to that this time around. Further supporting the notion that the bull market has not reached maturity and higher highs are coming at some point.

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Closing: The Moment the Crowd Forgets

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Every bull market has a moment when the crowd declares it “obvious”… and that’s usually when the market collects its toll.

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Gold at $4,700 and silver at $81 may feel like a collapse from where we were. But compared to the mid-1970s, 2006 for silver and 2008 for gold, what’s happening is disturbingly familiar: a leverage-flush inside a larger narrative.

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The only real question is whether this flush is the end… or the reset that clears the runway for the next leg.

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Either way, history is clear about one thing:

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The precious metals bull market never moves in a straight line. It moves like a storm. With extreme volatility on the way up. We got a healthy dose of that over the past 3 or 4 days.

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So, whose still holding?

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