‘When it gets this stretched, be careful’
Gold (GC=F) and silver (SI=F) fell after reaching record highs, bringing the parabolic movement in the precious metals space to a halt.
Gold futures fell 4.5% to just over $4,340 an ounce. Silver futures fell 8.7 percent for its worst day since 2021 after briefly touching $80 an ounce.
Investors entered Monday’s session on edge after the Chicago Mercantile Exchange increased margin requirements on silver futures, forcing highly leveraged investors to add cash or sell their positions.
Meanwhile, China, the world’s third-largest silver mining country, is expected to restrict exports starting in January; This raises concerns amid the race to supply the burgeoning AI industry.
Over the weekend, Elon Musk weighed in on the exploding prices of silver. write to x“This is not good. Silver is needed in many industrial processes.”
Read more about today’s market action
According to the Silver Institute, a nonprofit trade organization, approximately 60% of all silver is used in industrial applications.
Silver is the best conductor of electricity among all metals and is an important component of solar panels. data center server motherboardsand electric vehicles.
“It’s vital to electronics and computing,” Michael DiRienzo, president and CEO of the Silver Institute, told Yahoo Finance. “It’s used on just about anything that has an on and off switch.”
DiRienzo points out that silver is in its fifth year of global structural market deficit. The metal was added to the US list of critical minerals in October. fears it could face tariffs and trade restrictions.
Read more: How to invest in gold in 4 steps?
Precious metals have had a remarkable year; Gold has risen 67% so far, driven by strong central bank purchases and the weakening of the dollar.
Silver, which has a much smaller market, has been the star performer this year, rising nearly 150% as industrial use of the metal focuses on supply shortages. Even copper (HG=F) and platinum (PL=F) rose to records this year.
However, one of the precious metal bulls warned that the rise of gold and silver would reverse, stating that the last time such a rapid rise was in 1979, prices reached their peak in 1980 and then started to decline.
“When things get that long, be careful,” Mike McGlone, senior commodity strategist at Bloomberg Intelligence, told Yahoo Finance earlier this month.
“For people like me who think gold will rise forever, the most important thing is two words: Make a profit.”
Ines Ferre is Yahoo Finance’s senior business reporter. Follow him on X @ines_ferre.
