<div id="readability-page-1" class="page"><div><div><p>Author: Ye Huiwen Source: Wall Street News</p><p>Monday's precious metals market continued Friday's downward trend, with spot silver plunging 7% and spot gold falling 4.7%, briefly breaking below the $4,500 mark.</p><p> The current situation is very clear: profits are being taken, and leveraged funds are being forcibly liquidated. Multiple research institutions believe that although the long-term geopolitical game and debt logic remain unchanged, in the short term, one should not try to catch &#34;bloody chips&#34; during a market crash. This decline is the market testing the new Federal Reserve Chairman's bottom line and is also a violent correction of the previous frenzied speculative sentiment. Gold and Silver Plunge: Not Just Warsh, But a Chain Reaction of Deleveraging This plunge was not caused by a single factor, but rather by a resonance of policy expectations, trading congestion, and exchange intervention. 1. Trigger: Warsh's Nomination, Rising Hawkish Expectations. Both Huatai Securities and Tianfeng Securities pointed out that Trump's nomination of Kevin Warsh as the new Federal Reserve Chairman was the direct trigger. Warsh is considered a &#34;hawk,&#34; and his core proposals include &#34;interest rate cuts + balance sheet reduction.&#34; Tianfeng Securities added that Warsh was known as an &#34;inflation hawk&#34; during his tenure from 2006 to 2011. Market concerns about the Fed's independence easing after his appointment led to a dollar rebound, and expectations of tightening liquidity suppressed precious metals. 2. Mechanistic Sell-Off: Exchanges Collaborate to &#34;Cool Down&#34; Huatai Securities and Caitong Securities emphasized the impact of exchange intervention. The CME (Chicago Mercantile Exchange) and the Shanghai Futures Exchange (SHFE) raised margin requirements almost simultaneously. The CME raised margin requirements for gold and silver twice in late January, increasing silver from 11% to 15%; the SHFE followed suit. Caitong Securities added the factors of short squeeze and option gamma pressure. As of January 29, the ratio of open to closed positions in the Shanghai silver futures main contract reached 8.75, significantly higher than the historical average for the same period; simultaneously, a large number of retail investors bought call options, forcing market makers to buy futures to hedge, pushing up prices. Once exchanges strengthened intervention (such as the CME's six increases in gold and silver margin requirements), funds flowed out, and this positive feedback loop instantly reversed into collapse. Furthermore, the sharp decline in silver ETF holdings is also an important signal of adjustment. </p><p><img src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024520964?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="922" height="581" original-src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024520964"/></p><p><img src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024521537?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="922" height="534" original-src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024521537"/></p><p>3. Root cause: Extremely crowded speculative positions and profit-taking. Huatai Securities pointed out that before the crash, non-ferrous metals (especially silver) were the most crowded commodities for long positions globally. Data from Tianfeng Securities shows that the 14-day RSI indicator for gold broke through 90 on January 28th, the first time this century, indicating extreme &#34;overbought&#34; conditions.</p><p> ... </p><p>Founder Securities monitored that the silver volatility index rose to 111 on January 29, hitting a new historical high. Caitong Securities believes that the previous rapid price increase was driven by a combination of short squeeze and option gamma squeeze effect. Once the sentiment reverses, the deleveraging process will be extremely brutal.</p><p><img src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024522043?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="922" height="518" original-src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024522043"/></p><p>4. Macroeconomic Disturbances: Concerns about AI Technology Stock Profitability. Huatai Securities also mentioned that the financial reports of tech giants such as Microsoft and Tesla have triggered market concerns about the return on AI investments, leading to a rise in risk-off sentiment in US stocks, with some funds selling precious metals to remedy stock market liquidity.</p><p>4. Macroeconomic Disturbances: Concerns about AI Technology Stock Profitability.</p><p> ... Market Outlook: Long-Term Logic Remains Unchanged, Short-Term Volatility Inevitable Despite the recent sharp decline, most institutions believe that the long-term bull market logic for precious metals has not fundamentally reversed. 1. Long-term logic remains unchanged, short-term volatility is expected. Tianfeng Securities believes that gold will enter a period of wide-range volatility in the short term, with cautious buying sentiment. However, at a critical juncture in the global competitive landscape, the long-term demand for gold by global central banks will continue to serve as the fundamental support for prices, and the &#34;gold story&#34; will not end here. Caitong Securities also stated that the long-term logic has not reversed. International market concerns about the sustainability of US debt and the independence of the Federal Reserve will continue to drive central banks and the private sector to increase their gold reserves. 2. Policy uncertainty remains. Huatai Securities maintains a long-term bullish view, believing that non-ferrous metals remain the sector most significantly driven by factors such as the global manufacturing cycle, geopolitical restructuring, and AI technology. Founder Securities analysis suggests that future market trends depend on the unfolding of multiple factors. Key variables include: first, the long-term nature of great power rivalry and the potential short-term window for easing; second, the actual progress of AI technology in driving total factor productivity growth; and third, whether the new Federal Reserve Chairman, Warsh, can uphold his policy positions (such as independence and balance sheet reduction) despite internal political resistance (e.g., opposition to nomination, internal divisions, and pressure from the previous administration). Founder Securities' comprehensive analysis concludes that a complete reversal of the precious metals bull market would require the simultaneous fulfillment of several stringent conditions (e.g., a rapid global productivity revolution, Warsh's strong implementation of tightening without disrupting the market, and a decline in central bank gold purchases), a scenario with extremely low probability of occurrence. Therefore, after a period of adjustment and risk release, precious metals still hold significant long-term investment value. It is recommended to focus on core companies with stable performance, excellent fundamentals, clear growth potential, and reasonable valuations. </p><p><img src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024522401?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="922" height="338" original-src="https://imageproxy.pbkrs.com/https://img.foresightnews.pro/202602/4-1770024522401"/></p><h2>Buying the Dip: Don't Rush to Catch a Falling Knife, Wait for Volatility to Return</h2><p>Regarding the most pressing question for investors, &#34;When to enter the market,&#34; most institutions generally advise patience and waiting for volatility to return. </p><p>1. Pay attention to the decline in volatility. Huatai Securities explicitly warns that short-term &#34;buying the dip&#34; requires caution. Due to persistently high market volatility, deleveraging and bubble deflation are still ongoing.</p><p>Caitong Securities provides specific quantitative indicators: It suggests waiting for implied volatility to fall below 20%, which may be a good time to go long again. 2. Refer to historical correction cycles. Caitong Securities, reviewing historical data, points out that in recent years, after gold has peaked, the average correction time is about 18 days, with a correction range of about 8%. This provides investors with a time window reference. Huatai Securities suggests waiting for market volatility to fall significantly from extreme highs (such as gold's implied volatility &gt; 35%) and observing stabilization signals at key support levels (such as gold at $4700/ounce) to avoid buying at the peak of a market crash. 3. Be wary of the risk of price differences between spot and futures markets. Huatai Securities specifically reminds domestic investors that Shanghai silver has room for further decline. When the sharp drop occurred, the closing price of Shanghai silver on January 30th was $111 per ounce, while London silver had already fallen to $85 per ounce. This means that Shanghai silver still had a premium of about 30% over the international market, and the risk of a further decline in Shanghai silver prices should be noted. 4. Pay attention to the risk of a short squeeze in the delivery month. Huatai Securities mentioned that March is the main delivery month for silver. Currently, the total open interest of CME futures is far higher than the deliverable inventory. It is necessary to pay attention to whether a short squeeze will occur in the delivery month, which is both a risk and a potential point of speculation.</p></div></div></div>

<p>The precious metals market saw significant declines, with silver dropping 7% and gold falling 4.7%. This downturn is attributed to profit-taking and forced liquidations, influenced by the nomination of Kevin Warsh as the new Federal Reserve Chairman, raising hawkish expectations. Exchange interventions and crowded speculative positions further exacerbated the sell-off. Despite the short-term volatility, institutions maintain a long-term bullish outlook on precious metals, citing ongoing demand from central banks and geopolitical factors as key support for prices.</p>

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