Witnessing History
Gold has experienced its largest single-day drop since the early 1980s, while silver has recorded the largest single-day drop in history.
The immediate trigger stems from: Trump's nomination of Kevin Warsh as the Chairman of the Federal Reserve.
Markets were originally concerned that Trump would appoint a more dovish (favoring loose monetary policy) candidate, which would lead to further depreciation of the dollar and rising inflation, thus increasing the demand for gold and silver as safe-haven assets.
However, Warsh is seen as an 'inflation fighter', and his nomination is interpreted as a measure to maintain the independence of the Federal Reserve, reducing the panic over currency depreciation, significantly exceeding market expectations, leading to investor sell-offs and the subsequent spiral of forced liquidations, creating the largest single-day drop.
Other reasons include: a strong rebound in the dollar index, profit-taking, an overly crowded market, and weakened safe-haven demand.
Yet many analysts believe this is a shakeout within an upward trend, as fundamentals (such as ongoing geopolitical risks, inflationary pressures, and a shortage of industrial demand for silver) still support precious metals.
In fact, the last batch of retail investors who believed in analysts has been trapped for 40 years.
DYOR
