The Butterfly Effect of the Gold Crash
$5,590 → $4,404. Gold plummeted 21% in two weeks. The largest single-day drop since 1983.
Silver fell even harder. From $121 to $71. A 31% drop in one day. Unseen since 1980.
What is the trigger? Trump nominates Kevin Warsh to replace Powell as Fed chair. The market repriced the entire yield curve in a second.
But there is a second-order effect that has been overlooked:
Gold crash → Leveraged longs get liquidated → Forced selling of other assets to cover margins → Software stocks get hit → $MSFT drops 12% in one day, evaporating $357B → Risk sentiment transmits to Crypto → BTC breaks below $60,000 in the same week.-----------------------------
Gold is currently consolidating in the $4,900-$5,100 range. Deutsche Bank maintains a year-end target of $6,000. JPM gives $6,300.
Key Trigger: The first FOMC meeting after Warsh officially takes office in May. If a signal to accelerate tapering is released → Gold re-tests $4,400. If moderate → Rebounds to $5,500+.
Keep an eye on DXY and 10Y real interest rates. The direction of gold is the direction of risk assets. It's just a matter of time difference.
