Inside the Crash: A Bullion Dealer's View from the Trenches

Happy Tuesday, GoldBuzzers!

I know a lot of you woke up to some ugly numbers this weekend. Take a breath. Following on from my piece on Sunday, today we’ll continue to unpack what actually happened, why it happened, and what the people with $100,000 to spend are doing about it.

Spoiler: they're not selling.

Let’s get into it. ⬇️

Market Carnage: Gold and Silver Get Hammered

Well, that escalated quickly. After gold touched $5,600 last Thursday and silver flirted with $120 for the first time ever, precious metals decided to take the express elevator down. Gold's closed Monday night around $4,660 - down about 15% from Thursday's highs.

The mainstream media is still attributing all this to President Trump’s nomination of Kevin Warsh - a known hawk, which sent the dollar ripping higher and had gold bulls scrambling for the exits.

But the real bloodbath? Silver. Friday saw a 26% single-day collapse - the worst since the Hunt brothers got margin-called in 1980 - and the white metal's now hovering around $80 after dipping below $77 in Asian trading. Profit-taking was inevitable after a rally that added around 200% to silver over the past year, but the speed of this correction has heads spinning.

Before you panic-sell your stack, remember: gold's still up 66% year-over-year, the debasement trade isn't going anywhere with governments still drowning in debt, and our friends at J.P. Morgan just dropped a note calling for $6,300 gold by year-end. This isn't the end of the bull run - but it's a gut-check.

The response to my recent interviews with industry veteran Andrew Sleigh from Sprott Money has been fantastic, but we weren’t due to speak again until this weekend.

But after what’s been happening in the markets since Friday, I had to get him on the line for Tuesday’s GoldBuzz, and we spoke again last night.

What a week it’s been. Silver went from $120 to the low $70s in what felt like the blink of an eye. A 40% wipeout in a single day on Friday. I've been studying markets for years, and I've never seen anything like it outside of meme coins.

So I wanted to know what Andrew was seeing on the ground. The guy handles real customer orders, watches actual inventory, talks to investors all day.

Turns out, the phones were ringing off the hook. But nobody was selling. Not one.

"On Friday, I did $2 million in sales," Andrew told me. "That's normally two weeks for me. Just in one day."

And it wasn't just him. Sprott Money processed 400 orders between Friday and Monday. Their product manager said it was the largest four-day stretch in the company's history.

Not a single buyback.

Think about that. When silver peaked last week, Andrew was seeing record numbers of people wanting to cash out. 60-65 buybacks in a month when they'd normally see 10-20. But when the crash hit? Silence. Nobody wanted to sell into weakness. They were buying.

"The savvy people see it as going on sale," Andrew explained. "The nervous Nellies are frozen in fear. Which is exactly what they want."

And these aren't small-timers dipping their toes in. Andrew's average customer order runs around $100,000. So when he says he did $2 million on Friday, we're talking about roughly 20 serious buyers making substantial moves - not a thousand people grabbing a coin or two.

The online orders skew smaller - maybe $10,000 on average - but 400 of them in four days still represents millions flowing into physical metal. Their operations team is swamped. Accounting is buried. The shipping department is working through a backlog that'll take a week to clear.

"We usually have about 100 orders on a weekend," Andrew said. "This was completely different."

His Friday sales split roughly 50/50 between gold and silver, though he said it was skewed by a couple of large gold orders. "Everything else was silver."

What actually happened on Friday?

Andrew spent the weekend piecing it together from industry contacts. Here's what he told me,

“Shanghai closed for Chinese New Year. At that exact moment, LBMA reported a "glitch" on their opening system. HSBC had a mysterious "glitch" too. CME announced a margin call increase. And the government announced Kevin Warsh as the new Fed chair, which spooked the market.”

Then, in that moment of dead air with no resistance, JP Morgan allegedly dumped about a billion dollars in paper shorts.

"It started the ball rolling," Andrew said. "There was no resistance because of the dead air. It triggered the first margin call, they couldn't cover, had to sell, which drove it down, which triggered the next level. And so on."

The circuit breakers? The ones designed to halt exactly this kind of cascade? "They were offline," Andrew said. "If it goes up, circuit breaker trips. If it goes down and they wanted to go down, circuit breaker doesn't work for some reason."

JP Morgan reportedly covered their shorts at the very bottom.

Andrew's not losing sleep over it.

"None of the underlying reasons why silver was at $120 on Thursday have changed," he said. "The system is coming apart. Countries are dumping US treasuries and accumulating gold. There are systemic shortages of silver around the world. None of that has changed at all."

He pointed to the miners. Silver dropped 25% on Friday and the mining stocks fell only 10-11%. In a real bear market, everything falls together. That didn't happen here. This looks more like a flash crash than a trend change.

He also drew a comparison to 2011. Back then, the same margin call tactics crushed silver from $50 down to $18, and it stayed there for years. This time? The same playbook, and prices recover in a day or two.

"Not even close to the same environment," Andrew said. "Black and white."

And then there's China.

As we talked Monday evening, Shanghai had just reopened. Gold was already up $90. Silver up over $2.50.

"If Asia's open and silver is $25 higher in Shanghai, how would you pull off what they just did on Friday?" Andrew asked. "Impossible. They needed that dead air. The snowflake would have just melted on the ground."

What's Andrew doing with his own money?

"I bought Silver on Friday morning thinking I got a good deal. Then I realized I overpaid. It dropped another $20. So I bought again Sunday night."

He laughed.

"I'm out of ammo now. Got to wait for my next paycheck."

Andrew expects this pullback to be relatively short-lived. Some analysts he knows are calling for $150+ silver by late February or March. Whether that happens or not, the fundamentals haven't budged.

The stackers counted their ounces over the weekend. Still the same number. Can't say the same for the paper traders who got margin-called into oblivion.

"If we're back to normal in the next week or two," Andrew said, "everyone should be buying the farm at this point."

Andrew Sleigh is a Precious Metals Specialist at Sprott Money. Fun fact: he's on salary, not commission. His advice comes unencumbered.

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In the meantime, that’s all for this Tuesday, folks. I’ll see you on Thursday.

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Rick Adams
Founder, GoldBuzz
rick@goldbuzz.com