The recent dramatic crash in the silver market was not a simple reaction to news but a mechanically engineered liquidation event, driven by leverage and margin changes, that disproportionately affected retail investors while benefiting well-positioned institutions.
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JP Morgan just closed their short
position in silver at what looked like
the exact market bottom on Friday. And
now they're pinning the whole thing on
the Fed chair story. So what on earth
just happened in the silver market
because it wasn't normal. It wasn't
orderly. It didn't feel like price
discovery. It felt like a trap door
opened. And what really gets me is that
the mainstream coverage is telling you
the neat, clean version, the version
that fits in a headline while ignoring
the mechanics that actually force
markets to break. If you hold silver,
gold, mining stocks, or even precious
metals ETFs in a retirement account, you
deserve the full story and the actual
chain of events, not the bedtime story.
So, here it is. First, I asked my editor
to put the screenshot on the chart so
you can see it with your own eyes. The
positioning shift happens right into the
low. That's item number one. Then we had
the wonderful coincidence of the London
Metal Exchange going offline on Friday.
One of the most important venues on
earth for industrial metals pricing and
hedging. And then almost comically,
HSBC, a major short participant in the
London market, also had systems issues
at the same time. Meanwhile, over in
Chicago, ComX through CME Group raised
margin requirements right when the
market was stretched, crowded, and
leveraged. And the timing, they waited
until Asian markets were closing into
the weekend because Asia is roughly 12
hours ahead of the US East Coast. And
then the market gets rattled with a
shiny new narrative about a Fed chair
shift. Now, are these proven coordinated
actions? I can't prove intent. I'm not
in the room. But I can lay out the
sequence, the incentives, and the
mechanism, and you can decide whether
you believe in coincidences because the
outcome was not a small move. We just
saw one of the biggest silver crashes in
decades. A brutal flush that either
becomes an incredible opportunity or it
scares people out right before the next
leg. If you want to get better at
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pinned comment. So, let's step back. On
Thursday, silver hit about $120. On
Friday, it crashed to roughly $78.
That's a $42 dump, about $35 in
basically no time. It was the worst day
in silver since 1980 by many measures
people used to compare these events.
Gold fell hard, too, down around 12% at
the lows. And across the complex, you
had an enormous amount of market value
wiped out in a blink. Mining stocks got
absolutely torched. The big minor ETFs
were hit. Silver miners hit even harder.
Companies didn't suddenly lose the metal
in the ground. The assets didn't vanish.
But the paper value got obliterated
because of how positioning and leverage
get forced out when the plumbing is
turned against the crowd. And here's
what you need to understand. Mainstream
coverage is acting like this was simply
a reaction. Like markets politely
repriced based on a new piece of
information. That's not what this looked
like. This looked like an engineered
flush or if you prefer softer wording, a
mechanically forced liquidation event
that benefited the players position to
survive it. And a month ago, I made a
video about the December silver crash
when we hit $84. I laid out a pattern
1980, 2011, 2025. Same playbook, same
mechanisms, same types of players,
similar outcomes. Some people watched
it, some people ignored it. Well, they
just did it again. But this time it was
bigger. And if you understand the
trigger and the tool they used, it
actually strengthens the underlying
thesis rather than weakening it. So, I'm
going to break down three critical
things for you quickly because it's
freezing out here and I'm trying not to
drop my camera into the snow. First,
what actually triggered the massacre and
who actually won. Second, why this crash
didn't solve anything about supply and
demand. If anything, my previous thesis
is stronger now. Third, what moves you
might consider from a risk and
positioning standpoint. Not advice, not
do this now, but a way to think so
you're not just being whipped around by
noise. Now, put the move in perspective.
Silver hits the high, then it's down 35%
in a heartbeat. Gold drops hard, too.
And the public narrative becomes it was
the Fed chair story. Okay. Was that a
catalyst? Sure. A match can light a
fuse. But it wasn't the bomb. The bomb
is the mechanism that forces
liquidation. The thing that turns normal
selling into a waterfall. And that's
where margin comes in. Because here's
the dirty secret of modern markets. The
crowd doesn't get taken out by being
wrong. The crowd gets taken out by being
leveraged at the moment the rules
change. I went digging through CME
silver margin data and I genuinely
couldn't believe what I was seeing. I
searched around and found almost nobody
talking about it in a serious way. And
that's insane to me because this detail
is not a footnote. It's the lever that
can move the entire structure. And
before anyone clips this and screams
conspiracy, let me be clear. I'm not
claiming I have proof of illegal
behavior. I'm saying the pattern is
consistent. The tool is known. The
incentives are obvious and the results
keep repeating. So, let's walk through
the playbook. We've now seen this
structure multiple times. In 1980, you
had a speculative mania and the Hunt
Brothers story. Silver ran hard. Then,
the exchange implemented rule changes
that restricted buying and effectively
forced liquidation. Silver collapsed
massively. The little guy got kicked
out. The big guy survived. In 2011, you
had the post-financial crisis precious
metals run. silver hits around 49ers,
CME raises margin requirements
repeatedly, multiple times in a short
window and you get a violent flush. Same
mechanism. When margin rises, the
leverage crowd must either add cash or
sell. If they can't add cash, they sell.
And the selling forces more margin
calls, and that forces more selling.
It's a domino chain. Then December 2025,
silver hits $84 during thin holiday
liquidity. Margins get raised again.
Silver dumps. And I said at the time, if
you keep seeing the same levers pulled
in the same moments, it's not random.
It's a system. And then January, silver
hits $120 and then the story drops.
Trump nominates Kevin Walsh as a new Fed
chair, a traditional hawk, the kind of
name that suggests less money printing
and tighter conditions. Tight money is
bad for gold and silver, says the
headline logic. Fine, that's the match.
But then the market does what a crowded
leverage market does. Stops get hit,
liquidation kicks in, algorithms pile
on, and the trap door opens. And it's
very convenient when that happens to
coincide with outages in key venues and
a margin hike that makes it dramatically
harder for the marginal participant to
stay in the game. Again, I can't prove
intent, but I can tell you the mechanism
is real. Now, what is margin really and
why is it such a weapon? Silver trades
in two big worlds, the paper market and
the physical market. The paper market is
futures, mostly comics. In the paper
world, you're not buying silver bars.
You're buying a contract, a promise of
exposure, and you do it with leverage.
So, you might control $100,000 worth of
silver with $10,000 posted as margin.
That leverage makes moves bigger. It
also makes you fragile. And here's the
key. The exchange can change margin
requirements. They can say, "Actually,
we don't want 10% anymore. We want 20%
or 30% or 40%." And when they change
that requirement, they force every
leverage participant to make an
immediate choice. Option one, deposit
more money right now. Option two, sell
your position right now. If silver is
ripping and everyone is already maxed
out on margin, most people don't have
extra cash sitting around ready to wire
in, so they sell. And that selling
pushes the price down, and that triggers
more margin calls, which triggers more
selling, which triggers more forced
selling. and the waterfall feeds itself.
This is why these moves look like a
failure. They look like panic. But a lot
of that panic is mechanical. It's
compulsory. People are not choosing it.
They're being forced. And if you want a
cynical way to put it, margin is a way
to legally change the rules of
participation in the middle of the game.
So what happened Friday in the paper
world is leverage got flushed hard. Some
leveraged silver ETFs got obliterated
down the kind of numbers that teach
painful lessons fast. And I'll say this
bluntly, leveraging something like
silver into a crowded trade when you
know margin can change is madness.
That's not bravery. That's volunteering
to be the exit liquidity. Now the
physical market is different. Physical
silver is bars, coins, real metal. It
moves slower. It's driven by
availability, real demand, real supply
constraints, premiums, and logistics.
And here's the part that matters. You
can pressure paper price, but you can't
print physical silver into existence.
So, if there's a real supply problem, a
paper flush doesn't fix it. It doesn't
create new silver. It doesn't suddenly
reduce industrial demand from solar
panels, electric vehicles, and data
centers. It doesn't change the fact that
a lot of analysts have been tracking
persistent deficits in available supply.
In other words, paper can reset
sentiment. Physical eventually resets
reality. And that's why, in my opinion,
this crash actually strengthens the
thesis rather than destroying it. It
looks like the paper market is being
stressed and reentered by force. And as
paper participation gets punished,
physical becomes the only thing that
matters long-term. Now, one of the
smoking guns for physical tightness is
premium behavior. What people are paying
above the quoted spot price in places
where physical demand is intense. The
premium in Shanghai, for example, the
amount buyers pay above paper price, has
been very elevated. That's not what you
see in a market that is overflowing with
easy supply. So what does this mean
going forward? Well, historically, the
aftermath depends on whether the move
was purely speculative or whether it
collided with real fundamental demand.
In 1980, you could argue it was heavily
speculative. When it popped, it took a
long time to recover because the Y
wasn't industrial necessity. It was
mania and a corner attempt. In 2011, it
was partly a fear trade. Fear fades.
Markets move on. The recovery took time.
In December 2025, there was real demand
underneath and the recovery was faster.
It didn't take years, it took weeks, and
then it ran again. So, the question now
is, is this going to behave more like
1980 and 2011, long recovery, or more
like December, faster recovery? I
personally lean toward faster recovery
if the physical squeeze remains real.
But what I can tell you is this. You
will likely see more of these events. A
former London Metal Exchange market
maker, one of the guys who actually
lived inside the casino, has said for a
while that in a structurally stressed
market, you can see 20 30% dumps that
are not fundamental. They're mechanical.
Until the market reaches a point where
silver demand is meaningfully reduced,
whether through substitution, technology
changes, or price induced demand
destruction, volatility is part of the
package. And that brings us back to what
the mainstream narrative is missing.
They're saying Kevin Walsh crashed the
market maybe as a headline, but the
deeper truth is Walsh was the match. The
fuel was leverage. The accelerant was
margin. The outcome was forced
liquidation. Because when the dollar
spikes, metals priced in dollars often
drop. A hawkish Fed narrative can
strengthen the dollar. And if the metals
trade is the most crowded trade on the
planet, if everyone and their
grandmother is long, if retail is in,
hedge funds are in, institutions are in,
then you don't need much to trigger a
liquidation event. Crowded trades don't
end gently, they end violently. And once
the liquidation starts, algorithmic
systems don't think. They respond. They
hit stops. They pull bids. They chase
momentum. They amplify the cascade. And
here's the part that should make you pay
attention. Brokers and exchanges have
visibility into positioning, leverage,
and liquidation levels. They see where
risk is concentrated. They know where
forced selling is likely to kick in. Am
I saying that's abused? I'm not claiming
that. I'm saying the visibility exists.
And that alone changes the game for the
participant who doesn't have it. Now,
later in the Friday chaos, there were
reports and headlines flying around
about strategic metals policy, about
support being cut, about this or that
being ending. Some of those claims were
disputed. Some officials called things
misleading. But markets don't wait for
clarifications. Algorithms react to
headlines. The cascade was already in
motion. And once you're in waterfall
territory, truth arrives late. The tape
moves first. So again, put it together.
A hawkish fed chair narrative, a
stronger dollar impulse, a crowded
metals trade, high leverage in paper, a
margin hike that forces selling,
headline turbulence, outages, and thin
liquidity at the worst possible moment.
You don't need a cartoon villain to see
how that recipe produces a crash. You
just need to understand mechanics. Now,
I want to slow down and make the margin
weapon crystal clear. Because if you
take nothing else from this video, take
this. Margin is not a side detail.
Margin is the steering wheel. When the
exchange raises margin, it removes the
weakest hands. Not because they changed
their mind, but because they can't fund
the position. That's why technical
analysis often fails during these
events. People draw lines and say
support here, resistance there. But when
liquidation is forced, those levels
don't matter. The selling doesn't stop
because a line is drawn. The selling
stops when the forced sellers are done.
And that means if you're trying to trade
the exact bottom with leverage, you're
playing their game. And in their game,
the house always wins. So, what do you
do with this? First, you stop confusing
paper volatility with physical reality.
Second, you stop letting headlines trick
you into thinking you understand
causality. Third, you get serious about
risk management, which is boring, until
it saves you. Because the number one
riskmanagement rule is position size. If
you're in something so big it messes
with your sleep, you're too big. If a
10% move ruins your week, you're too
big. If a 30% flush wipes you out, you
weren't unlucky. You were overlevered.
Now, I'm going to talk about moves you
might make. I'm not giving you financial
advice. I'm giving you a framework. If
you believe the physical thesis, you
might prefer exposure that doesn't get
margin called out from under you. That
could mean less leverage, longer time
horizons, or instruments that don't
mechanically explode under force
volatility. If you don't have the
stomach for silver volatility, gold
historically tends to be less wild. And
Friday showed that silver down
monstrous, gold down heavy, but not the
same kind of carnage. If you're in
miners, understand miners are equities.
They get hit by equity liquidity events,
too. They can be great in the long run,
but in a flush, they often get punished
regardless of fundamentals. That's not a
moral statement. That's a correlation
and liquidity statement. And if you're
holding any of this in retirement
accounts, 401k, savings, bonds, cash,
broad ETFs, you need to understand that
we're in a world where the plumbing
matters more than most people think. The
next few years may be defined by the
biggest monetary and market regime
shifts most investors have lived
through. What you do with information
like this can matter more than being
right on direction because preserving
wealth isn't about predicting the next
headline. It's about building a
structure that can survive the forced
moves. Now, before my hands freeze off,
let me tie the story back to the
beginning because I started with JPM the
bottom and the Fed chair excuse. When
you see a market bottom ticked
perfectly, you should ask, "Who had the
ability to buy when everyone else was
forced to sell? Who had the balance
sheet to absorb panic? Who benefits from
a margin-driven flush? Usually, it's not
the retail trader. Usually, it's the
participant who can survive the rules
changing. And that's why I want you to
stop consuming the mainstream narrative
like it's a full explanation. It's not.
It's usually a label slapped on a move
after the fact. The real explanation is
incentives and mechanics. And if you
want to learn pattern spotting, not as
astrology, but as a practical how
markets actually behave skill, I'll run
a live session for you guys on Saturday.
There'll be a link below, free seat, no
nonsense. It's going to be in depth.
It'll open your eyes to how these setups
form, how they trigger, and how you
build a plan that isn't based on vibes.
Secondly, we have a daily and weekly
free medals newsletter link below as
well, and a bunch of you are already on
it. It's got humor, but it's also
grounded in data. And listen, the point
of all this isn't to make you angry. The
point is to make you dangerous.
Dangerous in the good way. The way
prepared people are dangerous. They
don't panic. They don't get shaken out
by the obvious trap. They don't gamble
with leverage when the exchange has a
legal lever to pull against them. So,
let me summarize the three critical
points one more time in plain English.
The trigger wasn't just a hawkish Fed
chair headline. The trigger was leverage
meeting a margin hike in a crowded
trade. The crash didn't fix the physical
supply problem. It flushed paper and
sentiment. And the move you make next
should be based on structure, time
horizon, position size, and whether you
can survive volatility without being
forced out at the worst moment. That's
it. That's the real story. If you want
to build real investor instincts, the
kind that spot opportunity and chaos,
join the Buffet Academy. You'll get
exclusive weekly videos, my decision
process, and the frameworks for thinking
like a top 1% investor. It's linked in
the pinned comment below. If you got
value from this, share it because very
few people understand how this works and
even fewer people are willing to say the
quiet part out loud. Markets don't just
move on news. They move on positioning,
leverage, and who gets forced to sell.
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