Sir Issac Newton’s Third Law of Motion states that for every action, there is an equal and opposite reaction. Gold and silver’s parabolic rallies have reached a frenzy, and while prices could continue to rise, the risk of ownership has increased dramatically. In a January 22, 2026, Barchart article on silver, I concluded with the following:
Based on the price action over the past five decades, silver is expensive at nearly $100 per ounce, but that does not mean it will not become even more expensive. Gravity has a way of hitting a parabolic market when no one is expecting it, so approach silver with extreme caution in the current environment. I remain bullish on silver in January 2026, but the odds of a severe, and perhaps ugly, correction are rising as the price rises.
Nearby silver prices traded at $92.64 per ounce on January 21 and rose to the most recent high of $121.785 on January 29.
In a January 6, 2026, Barchart article on gold, I concluded with the following:
Many analysts who did not see gold’s 65.9% 2025 rally are now calling for prices to rise to $5,000 in 2026. Meanwhile, continued uncertainty in the economic and geopolitical landscapes could push prices much higher. I remain bullish on gold’s prospects for the coming year, but buying on pullbacks rather than on rallies has been optimal for over two and a half decades. I expect that trend to continue in 2026.
Gold traded at $4,456.40 on January 5, and reached a recent high of $5,626.80 on January 29.
The risk of owning the two leading precious metals has reached an unacceptable level.
The six-month daily continuous COMEX gold futures chart highlights the precious metal’s ascent and parabolic move that took it to the high of $5,626.80 on January 29, 2026.
The chart shows that gravity hit the gold futures market with a bearish sledgehammer on January 29, sending gold 21.4% lower to its most recent low of $4,423.20 per ounce on February 2.
While gold’s rise and fall were spectacular, silver’s price moves were even more dramatic. Silver eclipsed the 1980 record high of $50.36 per ounce in October 2025, and rallied to over double that level, reaching $121.785 on January 29, 2025.
The six-month daily continuous COMEX silver futures chart highlights silver’s 41.5% decline to a low of $71.20 per ounce on February 2. Silver’s historical volatility is typically far higher than gold’s, as silver is a more speculative metal. The late 2025 through early 2026 price action in both metals was unprecedented, and silver continued to exhibit greater price volatility than gold.
When gravity hits any market that has experienced a parabolic rally, it can take weeks, months, or longer for the dust to settle. Latecomers to the gold and silver rallies could become long-term investors, waiting impatiently for prices to recover. However, if they continue to fall, the risk of pockets of long liquidation will increase. Meanwhile, long-term investors in silver and gold who believe prices will eventually recover and purchased the metals at far lower prices could use the correction to add to their investment positions, thereby increasing their cost basis.
Therefore, competing investment and trading strategies over the coming days and weeks will likely keep gold and silver trading in wide price ranges.
Since October 2025, when silver broke out above its 1980 high and gold continued to reach new record highs, precious metals bulls have dominated the gold and silver markets, driving platinum and palladium to rally. Platinum reached a record high of $2,925 per ounce on January 26, 2026, only to fall 35.7%, reaching its latest low of $1,882 on February 2, 2026. Palladium, the least liquid precious metal based on daily trading volume and open interest, rose to a high of $2,195.50 on January 26, 2026, and fell 30.4%, reaching its latest low of $1,529 per ounce on February 2, 2026.
Bullish sentiment dominated the precious metals sector in late 2025 and early 2026, but that changed on January 29, as prices plunged, altering the prospects for future gains. The bottom line is that bullish sentiment became overwhelming, and the metals ran out of upside steam. The rallies suffered a Newtonian correction, with the downside price action opposite the upside trajectory over the past months. The precious metals took an escalator to the upside, and the correction amounted to a ride down an elevator shaft.
Many investors and speculators choose precious metals mining shares as their investment vehicle because they tend to outperform the underlying commodities during rallies. However, there is no free lunch in markets, and the outperformance during rallies can turn into underperformance during price corrections. As of February 2, the following diversified gold and silver mining ETF products performed as follows compared to the metals:
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Gold futures fell 21.4% from January 29 through February 2, 2026. During the correction, the GDX and GDXJ senior and junior gold mining ETFs posted losses of 18.9% and 20.6%, respectively.
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Silver futures dropped 41.5% from January 29 through February 2, 2026. During the correction, the SIL and SILJ senior and junior silver mining ETFs posted losses of 23.4% and 25.2%, respectively.
Gold and silver prices remain at historical highs, above levels in late 2025, keeping a bid under mining shares. Therefore, the leading gold and silver mining shares add uncertainty to the path of least resistance for the underlying metals. Keep an eye on the miners’ performance over the coming days and weeks, as they could provide clues about the metal’s price direction. However, at $4,700 for gold and over $75 for silver, the miners will continue to earn substantial profits.
I am not bullish on gold, silver, and the mining shares after the latest correction. However, I do believe the market has moved from a speculative buying frenzy to a period where trading with disciplined risk-reward dynamics could yield substantial profits, as volatility creates a paradise for nimble traders with their fingers on the pulse of moving markets.
On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com