Despite this sell-off, interest in precious metals remains high. Sentiment indicators and search interest worldwide for terms like “gold” and “silver” continue to reflect strong engagement. Volatility has been extraordinary – at times gold’s volatility has even exceeded that of Bitcoin, and silver came close to a 50% drop in just six sessions.
Retail investors maintain conviction
Even in the face of extreme market swings, retail investors have not capitulated. In fact, they appear to be holding – and even increasing – their positioning. According to World Gold Council data:
Flows into physical gold ETFs reached $19 billion in January, and total holdings in these ETFs climbed to 4,145 tonnes – both historic highs.
This trend of strong inflows into physically backed ETFs also extends to silver – for example, in the largest silver ETF (SLV).
Forced liquidation of derivative positions
One immediate consequence of the extreme volatility has been the increase in margin requirements by clearing houses on derivatives markets – including COMEX – which has helped cool speculative leverage. As a result, open interest on COMEX precious metals – gold, silver, platinum and palladium – has been reduced by roughly 15.25% in the past week, based on data from the Commodity Futures Trading Commission (CFTC).
