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Many people entered gold and silver over the last two months, encouraged by sharp, near-weekly price increases. Inevitably, a part of this participation came through leveraged bets, driven by momentum rather than long-term allocation.

The meltdown of January 29–30 hurt these positions badly. Nearly two months of gains were erased in just two days of selling—an outcome few anticipated. Markets, however, have a habit of delivering such abrupt moves. Hardly anyone can predict them with consistency, and hindsight certainty serves little purpose.

Long-term investors, particularly Indian households, are likely to respond differently. They tend to hold through volatility rather than trade around it. For them, gold and silver are not short-term trades but stores of value within a broader portfolio.

Fundamentals Remain, Sentiment Wobbles

Crucially, the underlying case for gold and silver remains intact. Central banks continue to accumulate gold. Fiat currencies are being steadily debased. Governments across the world are running persistent fiscal deficits and living far beyond their means.

Silver’s industrial demand, from electric vehicles, artificial intelligence infrastructure, and renewable energy, continues to grow, even as new supply remains constrained. There is still considerably less gold and silver being supplied than demanded.

What has changed is sentiment. A sharp correction creates a negative recency effect, temporarily dampening investor enthusiasm. The trades in gold and silver, however, are not over for those with staying power and who avoid leverage.

Conspiracy theories will inevitably emerge, blaming large institutions for engineering the fall. We do not know, and likely will never know, the precise causes. Speculation adds little value to investment decisions.

Asset Allocation Over Forecasts

No one can reliably forecast where prices go next. Markets make sudden, uncomfortable moves; that is their nature.

If you have the capacity to hold a 10–15% allocation to gold and silver, quietly hold it. If the fall causes excessive anxiety, liquidating and reassessing is also a rational response. What matters is alignment with financial goals, not bravado.

I remain underinvested in gold and silver myself, being primarily a stock market follower. A downturn can be prolonged. But over a sufficiently long holding period, gold and silver have historically delivered satisfactory returns.

This is a time for humility, to avoid “I told you so” narratives, and to be polite to those sitting on unsustainable losses due to leverage. Revisit asset allocation, recalibrate incremental flows, and ignore the rest.

Everything else is just noise.