Attack the Week (ATW)
Gold, Silver & History / Warsh Reality / Weekly Calendar / Charts / PAAM Model
Sunday Thoughts
January had it all: plenty of swings and turns, geopolitical tensions and a ton of memes. The month’s culminating act on Friday shook a few core beliefs. Most notably, the weekend vibes are all about the crush in gold & silver prices and the resurgence of a bid in the Dollar after we had seen quite sizeable anti-Dollar feeling for most of the month. As I write this, crypto markets are shaking, with Bitcoin touching the April 2025 lows. Our momentum model has been short from around 90k.
A month of positioning can disappear in a day, but beliefs are sticky. And on Friday, a few of them got stress-tested in the most old-fashioned way: price.
Gold’s fall was being framed as one of its most violent daily moves in decades, with silver printing the kind of one-day damage that makes even seasoned metals traders sit up straight. The numbers are almost secondary to the mechanism: when a trade turns from “narrative” into “crowded,” the exit door becomes very small.
If you’ve been around long enough, you’ve seen this movie before — just with different costumes.
“To attain the truth in life, we must discard all the ideas were taught” - Rene Descartes
Historic “air pockets” in gold & silver
1. 1980 – Silver Thursday (the leverage lesson).
The classic reference point: silver goes parabolic, the rulebook tightens, margin pressure ramps, and the unwind becomes non-negotiable.
You don’t need to romanticise it. The takeaway is simple: levered longs are strong until they’re forced sellers. And forced sellers don’t get to negotiate.
2. 2011 – Silver’s spike and the margin ladder.
Silver ran hard, sentiment got loud, and then the mechanics stepped in. When margins rise into volatility, the market doesn’t just “cool off” — it can gap lower because participants are suddenly managing balance sheets, not opinions.
Same story, different decade: the plumbing wins.
3. 2013 – Gold’s crash (disinflation + liquidation).
Gold’s 2013 air-pocket is the other big one people remember: a fast repricing as the macro impulse shifted, rates dynamics changed, and liquidation fed on itself. The emotional pattern was familiar: certainty → consensus → overcrowding → shock → forced selling → post-mortem narratives.
So what rhymes with those episodes today?
Friday’s catalyst was political theatre colliding with positioning.
The Warsh appointment as the surprise new Fed chairman hit the tape as a credibility shock to the “debasement trade” — that comfortable bundle of assumptions that policy will always skew toward inflation tolerance, weaker-currency outcomes, and a structurally supported bid for hard assets.
Maybe that interpretation is right. Maybe it’s too neat. I don’t know yet.
What I do know is that when a market has been leaning one way for weeks — anti-dollar, pro-metals, pro-everything-that-isn’t-cash — it doesn’t take much to start an unwind. It takes something plausible that lets participants tell themselves a new story while they hit bids. Combine this with gloating behaviour on social media, and you typically know what comes next.
And once that first layer sells, the next layer isn’t discretionary anymore. It’s risk managers. It’s VaR. It’s margin. It’s the Friday afternoon version of gravity. This was true as there was a large programme of silver sales in early London evening trading on Friday. That’s typically CTA selling.
The debasement narrative had a stark reality check. Not because debasement is “fake,” but because narratives are not trades until you survive the path.
How many people were long on the idea of gold, but actually long a leveraged expression of it? Most of the froth was building up in option space over the past few weeks. Interestingly, Gold ETF flows were positive on Friday. Zooming out, we retraced to levels last seen in Gold 10 days ago. What’s next is anyone’s guess, but I doubt the longer-term drivers have evaporated suddenly.
What’s inside this week’s note
Behind the paywall: I analyse the Warsh nomination (Warsh reality)— what I think markets are really pricing, what’s still unknowable, and where the macro second-order effects could land (rates volatility, the USD regime, and what it means for the whole “real assets” complex). Fact is, we don’t know how he will settle into his new role; as such, a new narrative will be built, but I have a few things we can all frame for the road ahead.
Then we get Macro D’s thoughts on the Warsh appointment and the FX setups he’s watching. His Macro FX trades in January had a phenomenal start to the year.
After that, we do what we always do:
The weekly calendar (where the market might be vulnerable vs. where it might be numb),
A scan of a few chart setups that look technically interesting
We close with the output of the weekly asset allocation model.
Enjoy!
