A month-long bull run in precious metals ended with an abrupt, record-breaking crash in the early hours of 30 January 2026. Spot gold plunged as much as 16% intraday—the largest single-day drop in almost four decades—while silver sank nearly 36% at its trough, erasing almost a month of gains in one session and triggering panic across trading floors and retail platforms alike.
In Beijing the sell-off produced an unexpected tableau: queues of retirees outside Caibai, the city’s large jewellery department store, where older shoppers calmly lined up to buy kilo-sized bars and 100–200 gram investment pieces. The store’s fourth floor was temporarily reorganised into waiting, selection, payment and collection zones, and an electronic price board updated every few minutes, exposing buyers to a volatile spread that could change thousands of yuan for a 100‑gram purchase in the space of a half hour.
The buyers were decisive. Many of the so-called "dà yé dà mā"—grandfathers and grandmothers, as Chinese social media calls them—opted for sizeable physical holdings, often 100 grams or more. Staff reported heavy demand for 5g to 200g bars, while others in the crowd sought to liquidate silver holdings after sharp losses. Caibai charges retail mark-ups of roughly 12–18 RMB per gram and buys back at prices adjusted to the live market with a per‑gram deduction of about 3.8 RMB; in response to the turmoil the firm announced on 2 February that from 6 February it would suspend repurchases on non‑trading days and impose daily and per‑transaction limits.
The mood among younger, online investors was far less sanguine. Some, who had piled into savings‑style gold products late last year, watched doubled gains evaporate. Others, inexperienced and leveraged into silver funds and accumulation products, found they could not exit quickly: popular silver funds have T+2 redemption rules and had capped daily subscriptions in late 2025, leaving late entrants exposed when silver plunged more than 31% on 2 February alone.
Several structural drivers magnified the fall. After an extraordinary 2025—when global gold rose about 64% and silver nearly 140%—positions were stretched and institutional commitment uneven. Futures‑market data suggested professional traders were not fully chasing the rally, while profit‑taking by those who had staged early exits fed a cascade. The shock was amplified when U.S. exchange operators raised margin requirements: futures margins for gold and silver were increased (to roughly 8% for gold and 15% for silver on major U.S. contracts), forcing leveraged traders to liquidate and accelerating the downdraft. Uncertainty over U.S. monetary policy, including debate about the next Federal Reserve chair, further clouded expectations.
The crash exposed tensions in the market’s plumbing. Physical dealers such as Caibai are important retail liquidity providers, but their fee structures and repurchase rules mean ordinary buyers face significant implicit costs and execution risk if they need to exit quickly. Online platforms and funds, by contrast, offer speed and low entry sizes but can trap investors with settlement lags or subscription caps when volatility peaks.
Views on the aftermath diverge. Some banks and commodity strategists remain bullish: one major Canadian bank predicted a 2026 average for gold near $6,000/oz and a 2027 peak around $6,500/oz, with silver rising toward $105/oz in 2026. Chinese brokerage research cautioned that the bull market’s endgame depends on the Fed and macro conditions—if inflationary pressures ease or quantitative tightening resumes, the gold story could be truncated—but for now many analysts still expect intermittent rallies amid heightened volatility. As of midday on 6 February the market had retreated from its highs: London gold traded near $4,822/oz and silver around $72/oz.
This episode has broader implications beyond headline price swings. It highlights how domestic retail behaviour—particularly the appetite among older savers for tangible assets—interacts with global derivatives markets, margin rules and product design to create acute liquidity stress. For policymakers and market operators the question is whether measures such as temporary buyback suspensions, stricter limits or investor education will be enough to blunt future shocks, or whether more systemic interventions are needed to protect small investors and maintain orderly markets.
For individual investors the immediate lesson is practical: high returns can evaporate quickly in crowded trades, execution costs and settlement rules materially affect outcomes, and the interaction of physical and derivatives markets can produce sudden, asymmetric risks. Whether this correction marks a pause within a longer gold bull market or the start of a broader reversion will hinge on central bank policy, liquidity conditions and whether leveraged positions have indeed been sufficiently purged.