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Inflation heats up, central banks turn hawkish! Is the wind changing for gold prices?
Futubull Options Sir
joined discussion · Feb 5 17:50 ·

Option Sir Breaks Down Hot Topics | After Two Days of Rebound, Another Plunge: How to View Silver Now?

The precious metals market once again witnessed a breathtaking 'roller coaster' performance.After experiencing a technical rebound from the recent plunge off historical highs, silver prices suffered another heavy blow during today’s Asian trading session.
Spot silver prices initially rose slightly to near $90.25/ounce during early trading but then suddenly reversed course, entering a freefall mode starting around 10 AM. As of the time of writing, prices hit an intraday low of $73.5/ounce, with the maximum drop exceeding 16%. This not only erased the previous two days’ rebound gains but also broke through several key integer levels consecutively.
The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
Today’s plunge shattered the illusion of a 'V-shaped reversal' built during the previous two days’ rebound, indicating that market sentiment remains fragile, with intense battles between bulls and bears.
Few are talking about Warsh now.
At the beginning of the weekWeekly Options StrategySir mentioned thatTrump's nomination of Kevin Warsh as the next Fed chairman was more of a trigger, while the sharp decline in gold and silver was largely due to their own structural issues.Over the weekend and at the start of the week, discussions about Warsh were very heated. A few days later, the focus of the US stock market shifted to the impact of AI on software and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare.
Let’s review the reasons behind the extreme volatility:
Before the crash, the futures market had formed an extremely crowded long position environment, filled with profit-taking positions waiting to be closed and leveraged long positions, providing 'dry tinder' for a stampede.
Meanwhile, the gamma squeeze effect in the options market, which had been fueling the rally like 'adding fuel to the fire,' made the entire precious metals market highly vulnerable.
Investors went on a frenzy buying call options, forcing market makers to buy the underlying assets in the futures market to hedge risks, driving prices even higher; the rise in prices attracted more retail investors to follow suit, creating a closed loop of 'buying options - passively buying futures - price rises - buying more options.' However, once there is any sign of instability, this pattern reverses into a downward spiral, amplifying declines when the market faces headwinds.
To guard against market risks, major global exchanges have raised margin requirements intensively. As prices began to retreat, highly leveraged long accounts were forced to liquidate due to insufficient funds to meet margin calls. Liquidation sell orders pushed prices down, triggering more accounts to hit forced liquidation levels, forming a 'longs killing longs' death spiral.
Has the crazy bull market ended, with silver and gold switching roles?
This round of sharp declines is not only a price correction but also a reshaping of market-driven logic and the relationships between assets. Before the plunge, silver, with its higher volatility and sensitivity to economic expectations, saw gains far exceeding those of gold, continuously compressing the gold-silver ratio. Silver once became the sentiment benchmark and leading indicator for the precious metals sector and even the entire commodities market.
After experiencing this round of intense adjustments, its role relative to gold is likely to undergo a profound transformation, becoming more of a 'follower' or 'subordinate' to gold’s movements.
The silver market is smaller in scale compared to gold, making it more susceptible to panic selling when sentiment reverses. The crash served as a lesson to the market, highlighting the double-edged nature of silver's high volatility. In the future, when allocating funds to precious metals, investors may lean toward using gold—with better liquidity and steadier trends—as the core position, while treating silver as a satellite allocation to enhance volatility.
Silver's volatility will retreat from the extreme highs of 'unidirectional surges,' but its characteristic of higher volatility compared to gold will remain. However, this volatility will increasingly manifest as 'gold sets the stage, silver takes the lead'—meaning that after gold establishes an upward or consolidating trend, silver will fluctuate more dramatically around it rather than independently setting new directions.
We can already observe some divergence in the performance of gold and silver following the crash:This Monday, both gold and silver plummeted, testing the crucial support at the MA60 level. Gold rebounded more strongly after the dip; although it declined today, the magnitude was much smaller than that of silver.
The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
In contrast, silver's rebound was limited in amplitude, unable to reclaim key resistance zones, and it touched the MA60 line again today.
The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
Of course, this does not mean the disappearance of silver's value, but rather marks a transition from the 'frenzy phase' driven by leverage and sentiment to a 'rational phase' priced by actual supply-demand dynamics, macro interest rates, and the gold anchor. The long-term logic we have repeatedly mentioned—order restructuring, de-dollarization, structural growth in industrial demand, and rigid supply from mining—still holds true.
Bide your time and patiently wait for 'volatility to decrease.'
For silver, market sentiment has once again been severely impacted, with no hope for a V-shaped rebound. The one-sided smooth upward 'crazy bull' trend has officially come to an end.The market has now formally entered a new phase of cooling sentiment and normalized volatility. For the foreseeable future, silver prices are highly likely to enter a wide-ranging consolidation pattern, trading time for price levels to digest the excessively high gains and speculative positions accumulated earlier.
Silver's volatility remains at an epic high, rendering past data statistically meaningless. As mentioned earlier, 'trading silver based on gold movements' might be a better strategy. The CBOE Gold Volatility Index retreating to around 30 (the level seen during the two previous gold rallies in April/October 2025) indicates that market sentiment is becoming more rational.
Of course, this article mainly discusses the situation with silver. Fellow investors can also use this indicator as a reference for entering $SPDR Gold ETF (GLD.US)$ 、 $ProShares Ultra Gold (UGL.US)$ gold-related products such as
The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
Strategy One: Trading with the Trend
If the market undergoes sufficient consolidation and shows a clear technical breakout or breakdown (around the MA60 line), a more aggressive trend-following strategy can be adopted. For example, if silver prices break below the MA60 on heavy volume, considerbuying out-of-the-money put options. This is a strategy with limited cost and high potential returns, but the key lies in precise timing and strict stop-loss discipline.
The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
(The illustration is for explanatory purposes only and does not constitute any investment advice or guarantee.)
Conversely, if the market stabilizes and rebounds with a strong performance similar to gold, one can directly deploy out-of-the-money call options.
Strategy Two: Defensive Holding
For investors who already hold assets like $iShares Silver Trust (SLV.US)$、 $ProShares Ultra Silver (AGQ.US)$ and are optimistic in the long term but want to avoid significant drawdowns during volatility, options are also an excellent risk management tool.
Covered Call: While holding SLV shares, sell out-of-the-money call options. This generates premium income when the market is range-bound or slightly rising, lowering the cost basis of the position, but it caps upside potential.
The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
(The illustration is for explanatory purposes only and does not constitute any investment advice or guarantee.)
Long Collar: While holding the underlying shares, buy an out-of-the-money put option (paying a premium) to protect against downside risk, while simultaneously selling an out-of-the-money call option (collecting a premium) to offset the cost of protection.
This creates a 'floor on the downside and ceiling on the upside' safety net that effectively locks the position's risk within a defined range, making it highly suitable for protecting existing profits or avoiding deep losses in uncertain market environments.
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The precious metals market once again staged a heart-stopping 'roller-coaster' price movement.After experiencing a technical rebound from the historic high plunge over the previous two days, silver prices suffered another heavy blow during today's Asian trading session. The international spot silver price initially climbed slightly to near $90.25 per ounce in early trading. However, conditions suddenly changed, and a sharp decline began after 10 a.m., dropping in a straight line. As of the time of writing, the intra-day low touched $73.5 per ounce, with the maximum decline exceeding 16%. This not only completely erased the rebound gains of the previous two days but also successively broke through key integer thresholds. Today’s plunge shattered the 'V-shaped reversal' fantasy built up over the past two days of rebound, indicating that market sentiment remains relatively fragile, with bulls and bears locked in intense confrontation. Few people are discussing Volker anymore. In the early part of this week,[Share Link: Weekly Options Strategy]Sir had already mentioned,Trump's nomination of Kevin Warsh as the next Fed chair was more of a trigger; the sharp decline in gold and silver prices is largely due to their own structural issues.Over the weekend and at the start of the week, there was heated discussion about Warsh. However, a few days later, the focus of the US stock market shifted to the impact of AI on the software side and the capital expenditures of tech giants. In the recent rebound of precious metals, discussions about Warsh have become quite rare. Let’s review the reasons behind the dramatic ups and downs: Before the crash, the futures market had formed an extremely crowded long position environment, filled with profitable positions waiting to take profits and leveraged long positions, creating conditions for panic selling...
Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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