The brutal collapse in precious metals on Friday may be remembered as more than a commodities shock—it may mark the opening act of a far more volatile market regime.
According to Wall Street strategists, the historic selloff in silver and gold exposed deep structural risks beneath markets that remain priced for calm.
Why A ‘Black-Swan’ Event Happened To Silver And Gold
Silver prices plunged as much as 35% in a matter of hours, marking one of the most violent moves in the metal's modern trading history. Gold followed, falling more than 10% intraday.
Jeff Jacobson, derivatives analyst at 22V Research, said the move should be a "huge wake-up call" for investors who assume equity volatility – as tracked by the VIX index – cannot rise meaningfully from current lows.
The analyst said the exact trigger mattered less than the speed of the damage. Silver had gained roughly 160% since late October, yet lost nearly a third of its value within hours.
The iShares Silver Trust (NYSE:SLV) suffered one of its worst single-day declines on record, falling as much as 35% on massive volume.
Even more dramatic was the carnage in leveraged products. The ProShares Ultra Silver ETF (NYSE:AGQ), a popular vehicle among retail traders, collapsed more than 70% in just 24 hours after surging to extreme highs earlier in the week.
Whether the trigger was President Donald Trump's nomination of Kevin Warsh to lead the Federal Reserve, higher margin requirements, or some combination of forced liquidation, Jacobson believes the speed and magnitude of the move point to heavy crowding by both quantitative strategies and leveraged retail investors.
“The concern for investors should be that the strongest asset in the market (up 160% since the end of October) could lose a third of its value in a matter of hours,” Jacobson said.
In just two weeks, markets have witnessed extreme, statistically rare moves across Japanese bonds, precious metals, and currencies — both up and down, Jacobson explained.
“I believe all of these ‘black swan’ events happening at the same time speaks to perhaps massive mispricing to tail risks,” he added.
The VIX and MOVE index continue to trade near their respective floors, even as net short positioning in VIX futures increased, according to institutional data released Friday.
"That disconnect," Jacobson argues, "suggests massive mispricing of tail risk."
Goodbye ‘Fed Put'?
Adding to the volatility narrative, Wedbush strategist Seth Basham warned that markets may be entering a post–"Fed put" era amid expectations that Warsh could succeed Jerome Powell as Fed chair.
The "Fed put" refers to the long-held belief that the Federal Reserve would step in to support markets—through rate cuts, liquidity injections, or asset purchases—whenever volatility spiked or equities fell sharply. Basham argues that backstop may now be fading.
Under Warsh, Wedbush expects a pivot toward monetary discipline, with greater emphasis on controlling money supply and shrinking the Fed's $6.5 trillion balance sheet—moves that would drain liquidity and leave markets more exposed to downside shocks. Basham called it the potential "death of the Fed put," as suppressing volatility may no longer be a policy priority.
Reflecting that shift, Wedbush raised the probability of its 2026 bear-case scenario to 30%, while cutting its bull-case outlook to just 10%.
If that view proves correct, silver's collapse may not be an isolated shock—but an early warning that volatility, long ignored, is forcing its way back into the market narrative.
Image created using artificial intelligence via DALL-E.
