The Rundown - Deep Dive: Why Silver Just Collapsed

Episode Date: January 31, 2026

In today’s weekend deep dive, we’re breaking down the chaos in the silver market.Silver prices went on a historic run before crashing more than 30% in a single day. So what happened?We'll breakdown:Why silver rallied so aggressively in the first placeSilver’s critical role in AI, data centers, solar, and EVsThe tight supply dynamics that make silver uniquely volatileWhy some analysts think we’re entering a commodities supercycleHow Trump’s pick for the next Fed Chair helped trigger Friday’s crashThe bull case vs. the bear case moving forwardWhether this was a healthy reset or the popping of a bubbleAnd finally, Zaid shares his take on silver, commodities, and whether this crash could be a buying opportunity

Welcome back to the rundown for another weekend deep dive. Today, we are talking about silver. The price of silver has been on an absolute tear. Over the last six months, the value has tripled going from $40 to $120 an ounce. But then on Friday, silver had one of its biggest one-day crashes in history. So in today's episode, we'll break it all down. Why did silver see a huge run-up in its price? What role does it play in AI in other industries?

Why some analysts think we're witnessing the start of a commodity super cycle. We'll also dive into Friday's epic crash and what it had to do with Trump's pick for the next chairman of the Federal Reserve. We got a great one for you today. Let's dive in. Now, before we get into the chaos of the last few days, let's zoom out and talk about what silver actually is and the role that it plays in the economy today. Now, silver is a unique metal. Similar to gold, it's considered a safe haven asset. For thousands of years, people have bought silver as a store of value, especially during times of uncertainty. But unlike gold, which mostly just sits in a vault looking pretty, silver has serious industrial applications. You know, silver has the highest electrical conductivity of any metal. It also has the best thermal conductivity. And these properties make it absolutely essential to modern technology, which we'll talk about more in a bit. Now, what makes silver even more interesting is that most of silver is not mined directly. About 71% of silver comes as a byproduct from other mining operations.

So when miners are digging for things like zinc, copper, or gold, those just happen to get silver along with it. And I think one key thing to keep in mind is that the silver market is still relatively small when compared to gold. The total market cap for silver is around $5 trillion, which is similar to the market cap of Nvidia. Gold, on the other hand, has a market cap of around $35 trillion. And the reason this is important for what's happening right now is that it means silver is way more volatile than gold. It takes way less money to move the price of silver compared to gold and a small supply shock or a wave of buying consent prices absolutely flying or crashing.

And that volatility is exactly what we're seeing today. You know, you have these mix of buyers, including industrial users, who need the metal to make stuff. You also have speculators trying to make a quick buck. Retail investors are now jumping in on the bandwagon to make some money. And institutional investors are making big bets as well. So everyone seems to be piling into the silver trade, which has caused a massive run-up in prices.

And there are some analysts that think that the price of silver is just getting started because we could be on the verge of a commodity super cycle. So let's get into the bullcase of silver. There are multiple factors that have led to a huge run-up in silver over the last six months. The first one is supply. The silver market has been in a deficit for five consecutive years. That means the demand has exceeded supply every single year since 2021. And supply has been slow to ramp up, which has led to a supply squeeze.

And then you add in the China factor. China is one of the biggest producers and exporters of silver, and they implemented an export restriction on silver starting January 1st. They're starting to treat silver as a strategic asset, similar to what they're doing with rare earth metals. So all of that was leading to the markets freaking out. In fact, this year alone, the price of silver was up more than 60% until the crash on Friday, which we're going to talk about in a bit.

Now, while there seems to be a supply crunch right now, demand shows no signs of slowing down. In fact, it's accelerating. Like I said earlier, silver has industrial applications. In fact, the modern economy probably can't work without silver. It's used in everything from smartphones to EVs to solar panels. By the way, solar panels accounted for 29% of industrial silver. demand in 2024. And the new driver of silver demand is AI data centers. You know, the economic story of the last two years has been the explosion of AI and there are trillions of dollars being

spent to build AI data centers to meet that demand. More data centers means more servers, more chips, more electrical components and all of those things need silver. So you have a situation right now where there's tight supply meeting surging demand and that's how you have an asset price skyrocket and value over the last five. few months. And some experts think this supply demand imbalance in silver will persist for years, maybe even decades, which is referred to as a super cycle. But there's another huge factor at play here, and that's the dollar debasement trade. Remember, silver serves two roles. It's both an industrial metal, but it's also a store of value. And there's been growing concerns amongst investors

about the U.S. fiscal policy and the strength of the dollar. The U.S. national debt keeps climbing, and there's a growing sense that the dollar will continue losing its purchasing. power. In fact, the U.S. dollar index fell more than 9% in 2025, which was the worst performance it had since 2017. Plus, last year, there was also uncertainty around tariffs and trade policy and also geopolitical tension. So all of that had investors rushing to buy hard assets like gold and silver. And then we have to talk about the meme factor, right? Once silver started moving higher, retail investors started piling in to catch the ride. That sudden surge in price caught the attention of even more investors, so more buyers jumped in, sometimes even using leverage, and that pushed

prices even higher. And that brings us to Friday, because it all came crashing down. So, let's talk about it. On Friday, January 30th, 2026, Silver had one of its worst sell-offs in history. Prices tanked more than 30% dropping from $120 an ounce down to under $80 an ounce. Gold also got hammered losing around 10% and dropping under $5,000 an ounce. So what triggered this sell-off? Well, it might sound unrelated, but it was President Trump's nomination of Kevin Warsh to be the next chairman of the Federal Reserve. Once that news came out, it seemed to set this sell off in motion. Now, you wouldn't think the next Fed chair would impact the price of metals, right? Well, it absolutely could. So let's talk about the guy who Trump picked to be the next Fed chair,

Kevin Warsh. Now, this guy has a stacked resume. He has degrees from Harvard, and Stanford. He's a Wall Street veteran. He's a former Fed governor as well, serving from 2006 to 2011, where he served during the financial crisis. So he's not an outsider. But here's the interesting thing about Kevin Warsh. He's known to be hawkish when it comes to inflation. Historically, he's favored keeping interest rates high to fight inflation. And interest rates being high matters a lot for the price of precious metals. When interest rates are higher, holding gold and silver becomes less attractive because you're missing out on yield. They give it like this.

If you could get 5% by holding a treasury bond with near zero risk, why would you hold silver that pays you nothing? So the higher the interest rate goes, the more yield you can get on your treasuries. So when Kevin Warsh got nominated, the markets freaked out thinking that he might push for higher rates. And that pushed up the value of the dollar and pushed down the prices of silver and gold.

And once the selling started, it caused a full-on crash in silver. She, silver had become a speculative, trade. Investors were piling in using leverage, meaning they were borrowing money to amplify their bets. So when the price of silver started falling, those people were forced to sell to cover their position, which pushed down the price even further, which triggered even more selling. By the end of it, the price of silver dropped more than 30% in just a matter of hours. Personally, I think the markets might have overreacted to the Kevin Warsh news. Yes, Kevin Warsh has historically pushed for higher

rates, but in recent months, he's changed his tune to echo President Trump's call for the Federal Reserve to cut interest rates. Now, it's possible he was only saying that publicly to get the Fed chair job, but President Trump thinks that Kevin Warsh will start cutting rates as soon as he becomes the Fed chairman. So we'll see what ends up happening, but yeah, the Kevin Warsh news set off a massive sell-off. And beyond just that, there's also a broader bear case. Some analysts argued that Silver's run-up was always a bubble driven by speculation rather than fundamentals. There's also growing concerns that AI might be a bubble which could pop soon and put a pause to all this AI data center buildout, which would reduce the demand for silver. And I should point out,

historically, whenever there is a parabolic run-up in silver, it hasn't really ended well. The last time this happened was back in 2011. Silver went from $18 to $49 an ounce in a matter of a few months and then it crashed and spent the next decade going pretty much nowhere. So there is a growing concern that we might repeat that in 2026. So what's my take here? Well, long time listeners know that I'm not big on commodities. I don't typically invest in things like gold or silver. I'm more of a stock sky. That being said, I was starting to get major fomo watching silver go up double digits basically every day. And while the crash on Friday is brutal, I think the long term bull case for silver seems pretty valid. The supply demand imbalance is real. There's been five straight years of

deficits and supply isn't coming back quickly. Meanwhile, the demand from solar panels and EVs and AI data centers is only going to grow. Those trends aren't going away. And then don't forget China's export restrictions, which is adding another layer of supply tightness to the market, and if the US dollar continues its long-term decline, that's another tail win for silver. Now, could this be another 2011-style bubble that pops and stays deflated for a deadline? And if the US dollar, decade, yeah, that's very possible, especially if the AI boom pops and pauses data center build out. But as of right now, big tech is still spending like crazy. So this crash in silver could be a dip buying opportunity. If you do plan to invest in silver for the first time,

just be prepared for some volatility, maybe even a potential crash, and a decade of the price not going anywhere. Well, all right, guys, that's it for today's weekend, deep dive on silver. Let me know in the comments of what you guys thought on YouTube and Spotify. Are you still bullish on silver after the crash on Friday? Do you plan on buying the dip? Or do you think the bubble has popped? Let me know what you guys think. And also let me know what other topics you want us to cover in future deep dive episodes.

And while you're at it, consider giving us a five-star rating on Apple, Spotify, YouTube, wherever you listen to your podcast, all of that engagement really does help us out. And it helps other people find the show. Thank you guys again for listening, watching, and commenting. Shout out to Mike and Connor for all the help behind the scenes. And we'll see you guys back here tomorrow. Frozen lasagna, medium power, 15 minutes. Sounds like Ojo time.

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