Speculation and a squeeze: A timeline of the roller coaster ride in gold and silver that ended in a crash

• Dramatic declines in gold and silver shook the market on Friday.
• Sell America sentiment eventually sparked a speculative mania that set the stage for the drop.
• The music stopped as momentum traders stumbled, and Trump's Fed pick caused investors to rethink the debasement trade.

The violent drop in silver and gold prices felt like a sudden end to a yearlong party in metal markets, but a cocktail of forces had set the stage for a burst of volatility.

Assessing the carnage in the days after Friday's crash, analysts say the pieces were in place for a correction, thanks to the speculative mania that gripped metals in recent months, particularly silver, and a reassessment of one of the primary forces behind the stunning rally in metals since early 2025.

The abrupt bust after the dizzying boom was the worst sell-off in gold since 2013 and the deepest one-day plunge in silver since 1980. Both gold and silver remained volatile on Monday, flitting between slight gains and losses throughout the day.

Here's the timeline of how metals took off — and why the trade suddenly went up in flames.

April 2025: Tariffs kick off "Sell America" and kindle the debasement trade

President Donald Trump shocked markets last year by following through with his threats to levy tariffs on the US's top trading partners, causing US assets to plunge.

The tariffs, in particular, sparked the "Sell America" trade, a movement in which investors dump US-based assets out of fear for the economic and inflation outlook.

On the flip side of the same coin is the debasement trade, which has investors flocking to assets perceived as protected against a devaluation of the US currency and the erosion of trust in the US amid fights over Fed independence.

Both forces turned into huge tailwinds for gold and silver in 2025. Gold prices rose 14% from their April low to the start of August. Silver prices surged 26% over the same timeframe.

August 2025: Speculation fervor is energized as the Fed signals rate cuts are coming

Jeffrey Christian, a longtime commodities analyst, said he believed speculation in gold and silver began to enter the picture early last fall. He pointed to the sharp increase in gold and silver prices following the Fed's Jackson Hole Symposium, when the central bank signaled it would cut interest rates more aggressively than markets had expected.

Metals surged as concerns grew over the outlook for inflation — particularly as Trump continued his pressure campaign to get the Fed to cut interest rates over the summer. Gold prices surged around 12% in the month following the start of Jackson Hole, while silver climbed 14%.

That rally was the prime opportunity for momentum traders, who enter trades as prices begin to pick up steam, Christian told Business Insider.

The speculative trade fueling gold and silver also caught the attention of investors in China, according to José Torres, a senior economist at Interactive Brokers.

"In China, trading and speculation has been part of the culture, similar to how it is in America," Torres said, pointing to other areas of the Chinese market that are frequent sources of speculation, like real estate. He also noted that many investors in the nation appeared to be interested in the "Sell America" movement.

"China was certainly a big piece of that," Art Hogan, the chief market strategist at B. Riley Wealth Management, told BI.

December 2025: Trading exchanges start imposing stricter cash requirements

In December, the CME Group and the Shanghai Gold Exchange said they would raise cash requirements to hold positions in precious metals, one factor that increased selling pressure. After the CME's announcement, gold prices dipped, and silver dropped 5%.

Momentum traders frequently use leverage to juice returns on their positions, which can increase losses if an investment starts to plunge and create a negative "self-fulfilling" prophecy in the asset's price, Hogan said.

"It increases your returns on the way up, but it doubles your losses on the way down," he added of the effect of leveraged positions on asset prices.

Early January 2025: Metals rally harder amid geopolitical tensions

Rising geopolitical tensions sent gold and silver sprinting to new highs. In the first 29 days of the year, gold rallied 23%, fueled in large part by concerns about the US raid on Venezuela, escalating tensions with Iran, and Trump's aggressive rhetoric about taking over Greenland.

Silver prices soared 62% over the same timeframe.

Meanwhile, selling pressure for metals investors continued to build up. For instance, rising volatility and the approach of Lunar New Year in China are factors that typically cause investors to pull back their positions, commodities strategists at ING wrote on Monday.

Late January 2025: Kevin Warsh is nominated for Fed Chair, momentum traders bail

A day after silver touched an all-time high, Kevin Warsh's nomination to lead the Fed set the stunning decline in motion.

Trump's pick prompted an abrupt rethink of the force that had helped propel precious metals to record highs over the last 12 months. Suddenly, the dollar rose, gold and silver plummeted, and the debasement trade was on shaky ground.

To investors, the logic is that Warsh, who has held a more hawkish stance on inflation, is causing rates expectations to rise. That caused the US dollar to strengthen on Friday, which makes safe-havens like gold and silver look less attractive by comparison.

"The nomination of Kevin Warsh as Fed chair broke the bearish sentiment on the USD and likely became the catalyst for the excessive moves in Gold and Silver, combined with excessive price technicals," Manish Kabra, the head of US equity strategy at Societe Generale, said on Monday.

Hogan said he believed the momentum traders were now being "flushed out" of the market, largely due to struggles with leverage. He said he believed Warsh's nomination was one factor that could have helped trigger the sell-off.

"I don't know that he was necessarily the straw that broke the camel's back on this," he said, pointing to the double-digit increases in gold and silver in recent months. "We had an asset class that went parabolic over the course of the last several months, and those things tend to resolve themselves. And once they start to, there's as much momentum on the downside as there is on the upside."

"This is the way markets behave, and no one should be surprised that speculators have poured into a market that's moving parabolic, and no one should be surprised when they leave," CPM's Jeffrey Christian told Business Insider in a recent interview.