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Even after Friday’s fumble in the price of gold (and silver), the rush may have yet to conclude. With people reportedly lining up to buy gold bullion in various parts of the world (from Sydney to Singapore), it certainly feels like the latest implosion in the price of shiny metals is more of a buying opportunity than anything else. Of course, it certainly feels like the decline to cap off the month of January was a bit on the overblown side.
Indeed, should the announcement of a new Federal Reserve chair pick really derail a trade that still has steady legs and long-lived drivers?
Time will tell how long the so-called “Walsh Washout” lasts. Either way, the fragility in the price of gold has made for a more opportunistic climate for investors in February. As to whether this latest plunge is the start of a bear market move lower that begins to cut into the gains from last year remains the trillion-dollar question. Either way, I think there’s nothing all too out of the ordinary with the painful 10% slump in gold prices.
Arguably, the correction makes me even more bullish on the sustainability of what could be a multi-year run in the price of gold, as the “debasement trade” continues to play out. Of course, before you start stacking up the bullion or loading up on the gold mining stocks on weakness, investors should take a step back to put things into perspective.
Gold’s correction hurts, but it might be an opportunity
Yes, the 10% single-day drop, which has put the asset down just shy of 14% from its recent January 2026 peak, is a painful one. But gold is still up handsomely for 2026, up more than 7% since 2026 began. Even with the latest correction, gold is still up a ridiculous amount in a month. Even if volatility levels stay up, I’m inclined to think that the selling pressure on silver and other metals could act as a bit of a support for gold. Why?
Silver has a hotter surge, and its implosion is thrice as scary (30% drop in a day). My guess is that silver investors will want to start thinking about rotating some of their silver profits into gold, if not for complete stability, perhaps for relative steadiness. While gold corrected, silver and other metals have crashed viciously.
And the downside could continue to be amplified if this metals meltdown proves far from over. As an industrial metal that’s typically a byproduct of gold production, silver is poised for wilder swings in both directions. Given the boom-and-bust nature of silver, I’d argue that the risk-off option, gold, is the better bet as the red-hot metals trade comes in.
While some may perceive gold, a risk-off asset (a safe haven or hedge against macro chaos for some), as increasingly fragile after the latest slump, I do think that there’s relative opportunity to be had in the miners as the market overreacts in what looks to be a panic.
Time to punch a ticket to a top-tier gold miner?
With JPMorgan recently raising the bar on the price of gold with an $8,000-8,500 projection, the 10% dip seems too good to pass up. Not only is gold a shining bond replacement, but it’s an asset that can really hold up when equity markets sour. Can gold really get off the canvas en route to a 70% or so gain? Only time will tell.
Jumping into the deep end of the gold waters will not be without its fair share of risks. However, if you’ve been waiting for a gold plunge, don’t let fear hold you back from picking up an ounce or a few shares of your favorite miner on the way down. AngloGold Ashanti (NYSE:AU) stands out as a fantastic relative bargain after slipping close to 20% from its peak in just a few days. Shares of the well-run miner now go for close to 12.0 times forward price-to-earnings (P/E), which doesn’t seem to make much sense, given how far gold has run in the past year.
Even as shares flirt with a bear market, I’m a huge fan of the name for the gold bugs looking to take advantage of the recent round of panic-selling. Perhaps the biggest reason to go with AngloGold Ashanti over its rivals is the swollen 2.3% dividend yield, which could move above 3% if there’s more pain to be had from gold’s correction. Either way, the company is a cash cow that can serve up more dividend hikes over time.