Gold and Silver Crash: What Is Next?

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Welcome to the One of a Kind Financial Show with your host, Mike Milligan. It is Monday, February 2nd, and we have a special edition of the show for you today. Over the weekend, I recorded a video for our community, Personal Financial Planning, that talks about what is next for gold and silver. It's a conversation on why, um, gold dropped, why silver dropped, Even though economic rules would show that it shouldn't have because there's not a supply and demand issue. There's an issue in contracts in Chicago Mercantile Exchange and leverage. Enjoy that next. If you want to connect and get weekly updates like that, you can join the Personal Financial Planning School community by going to school.com, school.com/personalfinancialplanning, school.com/personalfinancialplanning.

We just witnessed history in the precious metals markets. I'm going to explain what that historical event was, why it impacts you, and why it should have never happened. Let's, let's get started. On Thursday, January 30th, gold crashed from an all-time high of $5,600 per ounce down to $4,700 in a short 24-hour period. That's a 12% plunge, but that's not even the headline. Silver, silver absolutely collapsed from $120 per ounce to $76. That's a 36% crash. Again, in a 24-hour period, the worst single-day drop since 1980 when the Hunt brothers tried to corner the market. That's $6 trillion. That's with a T, by the way. $6 trillion in market value was wiped out in a matter of hours. And here's what makes this truly extraordinary. Just 48 hours earlier, both metals had hit all-time record highs. Gold had briefly touched $5,600 per ounce. Silver crossed $120 for the first time in history. So what happened? Was this manipulation? A bubble bursting? Or is this actually the buying opportunity of a lifetime? Today, I'm breaking down exactly what caused this historic crash, what the world's smartest investors, Ray Dalio, Larry Fink, and Robert Kiyosaki, have been saying about gold and silver, Why this crash actually shouldn't be happening according to basic supply and demand, and most importantly, why I believe there's more downside ahead before this is over. Let's, let's dive in. So let me paint the picture of what happened. January 2026 was the best month for precious metals in decades. Gold was up 17% in January alone, its strongest monthly performance. Since the 1970s. Silver up an absolute parabolic 68% in just 4 weeks, rocketing from around $70 in late 2025 to over $120. Investors were piling in. The debasement trade, the bet that governments will continue printing money and destroying purchasing power, was working beautifully. Then came Thursday night. Reports emerged that President Trump had met with Kevin Warsh, a former Federal Reserve governor, and was planning to nominate him to be the next Fed chair. The news spread throughout the Asian markets overnight. Why does this matter so much? Well, Kevin Warsh is viewed as a monetary hawk, someone who prioritizes fighting inflation over easing money policies. The entire gold and silver rally had been built on the assumption that the Fed would continue cutting rates, that the dollar would keep weakening, and that money printing would continue. The Warsh nomination flipped that narrative on its head. The US dollar immediately strengthened against other worldly currencies, Its biggest single-day gain since May. And when the dollar rises, gold and silver, which are priced in dollars, became more expensive for international buyers. Demand falls, prices collapse. But the war's denomination wasn't just the trigger. Let me explain the full perfect storm that created this crash. First, there was massive liquidation of leveraged positions. Let me explain what a leveraged position is first. A leveraged position is I borrow money to buy a security. It happens, it's happened over and over again. It's called margin. And when there is tremendous upside potential, it doesn't seem like much of a risk to borrow. To fund that purchase. When you have a parabolic move, like we saw silver going from $70 to $120 in weeks, you attract enormous speculation. And that money is often levered. When the trend reverses, those same traders rush to exit to protect from going negative, Creating a cascade of selling. The second thing, the second trigger that happened is the CME raised margin requirements. Right as prices were crashing, the CME Group increased margin requirements for silver futures. Futures is a contract, right? So CME is Chicago Mercantile Exchange. They raised the margin requirements. to 15% to 16.5%. That made it significantly more expensive to hold leveraged positions, forcing even more traders to liquidate just to meet the collateral calls. So we had forced selling to unwind leveraged positions. The third trigger is there was just a technical breakdown. The market went from extremely overbought to outright panic in less than 48 hours. That's textbook blow-off top behavior. As Ole Hansen from Saxo Bank put it, both gold and silver were due for a correction given the speculative and somewhat erotic nature of the recent price surge. Let's talk about what some of the experts have been saying though. Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, has been pounding the table on gold for months. And his reasoning should make every investor sit up and pay attention. Just days before the crash, Dalio stated publicly, gold is now the 2nd largest reserve currency. Think about that. Not the euro, not the yen, gold. Here's how Dalio explained it. The best major investment of 2025 was long gold. Returning 65% in dollar terms. That outperformed the S&P 500 by 47 percentage points. But then he delivered the line that should have woke everyone up, and most people were not even paying attention. I quote him directly because he said, the S&P fell by 28%. in gold money terms. As opposed to getting an 18% return on the S&P, which was in dollar terms, based off the value of gold, the S&P actually lost value. When you measure your portfolio in gold instead of dollars, the stock market actually lost value last year. Your purchasing power, what you actually buy with your money, declined. Dalio's core thesis, well, in the middle of what he calls capital wars. Central banks around the world are losing trust in each other. They're diversifying away from US Treasury bonds and into gold. For the first time since 1996, foreign central banks now hold more gold than US Treasuries in their reserves. That's a historic shift in the global financial order. Dalio recommends every investor create a sliver of their investment portfolio of between 5% and 15% allocation to gold, not for speculation, but for insurance. His exact words are, gold does very well when others don't do well. Even with this crash, Dalio's long-term thesis, thesis hasn't changed. The structural reasons central banks are buying gold hasn't disappeared because of One volatile 24-hour period. Now let's talk about Larry Fink, the CEO of BlackRock, the world's largest asset manager with $14 trillion under management. In October 2025, Fink made a statement that perfectly explains why gold and silver have been surging. He called them, and I quote, assets of fear. Here's exactly what Fink said at the Future Investment Initiative. I quote, owning crypto assets or gold are assets of fear. You own these assets because you're frightened of the debasement of your asset. You're worried about your financial security, security, and you're worried about your physical security. Unquote. Let that sink in. The CEO of BlackRock, the most powerful asset manager on earth, is telling you that people are buying gold because they're frightened. Frightened of inflation, frightened of government debt, frightened of governments, frightened of currency collapse. And this isn't some fringe opinion. Fink has dramatically evolved his views. Back in 2017, he famously called Bitcoin an index for money laundering and thieves. Now BlackRock runs the largest Bitcoin exchange-traded fund in the world with $80 billion in assets. He's evolved in his thought process. Fink understands something critical. We're living through a debasement trade where investors are actively selling government bonds and currencies and moving capital into hard assets like gold, silver, and Bitcoin. At the World Economic Forum in Davos just last week, Fink said he believes the entire financial system should be updated to run on blockchain technology. He's bullish on tokenization, the idea that real-world assets can be Represented digitally on a blockchain. I'm going to take a turn here real fast before I continue on and just let you know that this past weekend, January 31st and February 1st, I was in Puerto Rico at Tokenize Puerto Rico. Then that's exactly what was discussed in this conference where over 400 real-world investors and blockchain experts came together. We talked about how real-world assets are being tokenized, how compliance and transparency are being built on the chain, and how this connects to the future of money in the modern environment that we're in financially. The convergence of precious metals, digital assets, and tokenization is one of the most important trends in finance right now, and it's evolving faster than any change has happened in our economic systems before. And that happened in Puerto Rico this past weekend. So Larry Fink is right. People are moving to tokenization fast. That's not the point of our conversation today. The point of the conversation today is talking about gold and silver, but we will consider— continue the conversation about tokenization in the future. Let me move on to the author of Rich Dad Poor Dad, Robert Kiyosaki. Rich Dad Poor Dad's one of the best-selling personal financial books of all time. Kiyosaki is absolutely obsessed with silver, and unlike many pundits, he's been buying and holding it for decades, since 1975 to be exact, when silver was just $1 an ounce. And here's what Kiyosaki's fascination with it is. He actually predicted this crash. Let me say that again. He's—he owns silver, he owns hard assets, and he predicted this crash on December 28th on X. Just weeks before the collapse, he posted: "If you're planning on investing in silver, be patient. Watch for a crash, then go or no." You can go find that on X. He warned about. FOMO, fear of missing out, and urged followers not to chase the rally. But his long-term conviction hasn't changed. Kiyosaki has said repeatedly that he believes silver will reach $200 per ounce in 2026, and gold, his target is $27,000 per ounce based on projections from his friend Jim Rickards. When asked why he's so bullish, Kiyosaki explained at the VRIC 2023 conference just days ago, quote, silver is the information age's metal. It's the structural metal of the world's economic future, end of quote. He pointed to the industrial demand for silver. It's essential for solar panels and AI hardware, electric vehicles, electronics, and defense technology. The supply is constrained. Quote, you can't find it. That's the big news, he said. When asked about the crash, whether he's selling his silver to lock in profits, Kiyosaki's response was classic. He said, why would I sell silver for fake money? He called fiat currency toilet paper and said he plans to rotate between hard assets, trading silver for gold over time, rather than ever converting back to the dollar. This is a man who's been in the trade for 60 years. He's been He's seen crashes before and he's not panicking. So why this crash shouldn't be happening. Here's where things get really interesting and where I need you to pay close attention. According to standard economic theory, a 30+% drop in price suggests one of two things: either a massive surplus of supply or a complete collapse of demand. But here's the paradox. The fundamentals now suggest the exact opposite. Let me walk you through why this price reaction appears almost irrational when you look at the underlying supply and demand picture. First, the persistent structural deficit. The silver market has been in a structural deficit for 5 consecutive years, meaning demand has exceeded supply every single year since 2000. The 2025 shortfall alone was estimated at 95 to 120 million ounces. Analysts expect another large deficit in 2026. When supply is constrained and demand is high, prices should rise, not plummet 36% in a day. Second, the silver supply is inelastic, and I know that's a term that many of you may not be familiar with. familiar with, but about 70 to 80% of silver produced is a byproduct of mining other metals, primarily lead, zinc, and copper. You can't just turn on more silver production because prices spiked. Miners cannot respond quickly to higher prices the way they can with other commodities. The 3rd trigger here is explosive industrial and strategic demand. Because silver isn't just a precious metal, it's an industrial metal. It's essential in AI data centers, 5G infrastructure, electric vehicles, semiconductors, and especially solar panels. But here's a bombshell that hasn't even gotten attention. China has classified silver as a strategic material in 2026 and has begun restricting exports. Some analysts estimate this could globally Uh, it could, uh, it could reduce global availability of silver by 67% and prioritize domestic Chinese use. Think about what that means. The world's largest refiner of silver is now hoarding it for strategic purposes. And this last trigger of why this, this just doesn't make sense is there's a— there's the physical inventories and exchanges both in London and the Chicago Mercantile Exchange have been Drawn down over multiple years. Lease rates have remained elevated, indicating real scarcity of physical metal. Analysts describe hemorrhaging stocks and growing evidence of physical squeezes. In a genuine shortage, the price of physical assets should rise as buyers scramble for supply, not collapse. So how do we reconcile a 36% drop? In just one day? The answer lies in understanding the difference between the paper market and the physical market. The crash on January 30th is a classic example of market sentiment and financial leverage overpowering physical fundamentals. The real market, industrial buyers, jewelry makers, Mints and long-term investors buying physical metal, medical, is still facing a shortage. But the paper market— future contracts, options, leveraged exchange-traded funds, and speculation trades— have become parabolic. Too high, too fast. And when the macro backdrop shifted— stronger dollar, hawkish Fed nominee, higher margin requirements— that same leverage that pushed prices up worked in reverse and steamrolled them lower. Many analysts are calling this a blow-off top or a reckoning, the moment when sentiment, leverage, and risk management overwhelm the underlying physical story, even though that physical story hasn't fundamentally changed. The long-term bullish structural constraints remain in place, but in the short term, the paper market is in control. Given everything I've just laid out, here's my base case. We are not done with this downside yet. Margin hikes, a firmer dollar, shaken sentiment usually don't resolve in a single day. They tend to produce aftershocks, lower, lower highs on rallies, and often a retest or even break of the first panic low before a durable bottom forms. With positioning still elevated compared to pre-rally levels and volatility spiking, it could be completely rational to expect more price pressure and choppy trading in the weeks ahead. JP Morgan has warned that silver could fall back to $50 in a worst-case scenario. That's another 35% from its current levels. Jeffrey Christian of CPM Group sees a floor potentially as low as $68 an ounce. In other words, fundamentals say silver should be higher over the next several years, but the mechanics of this unwind suggest prices can absolutely go lower. This is the reality of investing in volatile markets. The long-term thesis can be completely correct and you could still experience gut-wrenching drawdowns along the way. This is where personal financial planning and having a plan come into play. You have to be able to interpret this information for what impacts you daily. So you don't build a serious financial plan based off headlines or emotions. You build it on process. Clear allocation ranges for assets like gold and silver or Bitcoin, not all in or all out, but a disciplined percentage that fits your risk tolerance. You put position sizes in place that assume this level of volatility. So when it happens, you're not panicked. And you put a written plan for what you do if prices fall another 20% or 30% from here before they ultimately reflect the structural shortage story. Because the question isn't, Will silver be volatile? It already is. The real question is, do you have a plan that turns that volatility into opportunity instead of anxiety? If today's video resonates with you, if you're why if you've watched gold crash 12%, silver drop 36, and are on edge about what this means for your money, your retirement, your family's future, then I want to invite you to become a. Premier member of our Personal Financial Planning School community. This is where we go deeper, where we discuss not just what's happening in markets, but how to build a financial plan that can withstand volatility, protect your purchasing power, and help you achieve your version of financial freedom. As Premier members, you get a weekly hot take from me about what's happening in the market like this crash, because what I see is this is going to have a ripple effect probably all the way up into the AI stocks that have continued to lead and be an over-concentrated position in the S&P 500. You're also going to have access to my thought framework for position sizing Precious metals. I am a certified financial planner, but I'm not your certified financial planner yet because until until you're part of this group, until we're able to engage with each other, and until we meet, all I all I can do is provide you education. That's why becoming a premier member is so important. That is where you'll get to ask direct. Q&As where we ask about your specific situation, and then I can give you broad strokes on how to build a plan for you. And this is a community of like-minded investors who understand that you live a one-of-a-kind life and you deserve a one-of-a-kind financial plan. So if you're interested in becoming a member, 2 ways to do it. You can go to Skool.com and search personal financial planning. Or search Mike Milligan, and you'll find access to that. Or you can text the word ideas, I-D-E-A-S, ideas to 600-700, and my team will reach out to you and help you get access to personal financial planning. Because crashes will happen, markets will be volatile, but with the right plan and the right community, you can turn Uncertainty into opportunity. I'm Mike Milligan. Thank you for watching. I'll see you inside the community.

It's been a special recording that I did of the— for the Personal Financial Planning community that I host on Skool. Again, if you want to join that community, go to skool.com/personalfinancialplanning and request membership, and our team will get ahold of you to do that. Thank you for joining today. As a reminder, Mike is an investment advisory rep. with Advisory Alpha LLC. Ideas by Mike, doing business as One Oak Financial, is an unaffiliated entity of Advisory Alpha LLC. All information in today's podcast is the opinion solely of Mike Milligan and does not reflect a solicitation to buy. It's for educational content only. If you have specific questions, please consult a licensed financial professional. To reach Mike, you can go to www.oneoakfinancial.com. 1oakfinancial.com. That's the number 1oakfinancial.com. Or mikemilligan.com. That's mikemilligan.com.

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