This serves as a recap for myself and is not to be viewed as any kind of trade suggestion. All views expressed are my own.
Over the past week, there were a few notable stories and happenings.
FOMC held rates steady as expected during Wednesday’s announcement. Powell did not give any clues as to whether he will remain on the board after his presidency term expires and also declined to comment on anything related to politics or USD.
On a related note, Kevin Warsh was nominated by the president for the FOMC chief role, also largely as expected. He is viewed as perhaps more hawkish than the other Kevin, seeing that he was a advocate for managing inflation and generally against QE a decade ago, which some attribute to as the reason for dollar strengthening on Friday and the massive sell-off in gold and silver and bitcoin, as well as general sluggishness in the equities. Personally, I don’t think the Warsh pick is the sole or even the main reason for this any more than a mere catalyst.
Speaking of, gold and silver had a wild rollercoaster ride this week. Over the first half of the week, they continued their seemingly unstoppable rally especially over the dollar weakness, as the president commented that “the dollar is doing great” and that he’s not concerned about a weaker dollar.
If one looks closely, there were signs on Monday that the rally in silver and gold is getting tired and perhaps forming a top. But the comment from the president quickly pushed gold higher and continued into Thursday morning. Silver was notably a bit weaker relatively.
This relative weakness this week of silver compared to gold translated into the much deeper sell-off silver experienced on Thursday and Friday. Silver at one point on Friday was down more than 30% while gold was down more than 10%. Of course it’s also a function of silver being more speculative and has less of a genuine store of value function.
So what happened? Well, one could say the Warsh pick was a trigger, but I’m more inclined to say that it’s really just because gold and especially silver have rallied too far too fast.
I’ve been noting this for the past few weeks, saying that I wouldn’t be surprised of a huge sell-off. I just didn’t expect the rally to be going for as far and for as long, which in turn, I believe contributed to the stunning magnitude of this pullback. What do you expected, after all, if everyone and their mum is long gold and silver?
This is a classic case of a blowoff top and likely combined with the fact that there is a delivery short squeeze, pushing prices ever higher.
To me, when thinking about the lessons that I learn from this, is perhaps:
1. if the position is working, best to stay in it and ride the wave, because the length and distance the trend can go is often beyond the wildest imagination (who’d thought silver could go from $40 in Sep 2025 to $120 in Jan 2026?).
2. really don’t try to time the top or bottom. For those who saw the huge rally and said I don’t think it can continue, and then went to short the thing when it’s not time yet, it usually ends with them being the fuel to further the rally. This is essentially the same as 1 – it can go further and longer than you can imagine and stay solvent.
3. if you are already late to the party, probably best to observe and not chase because when it turns it turns fast. There will be people on the outside looking to take profit or short, and are just waiting for the right cue. Once it turns and people pile on, it gets very ugly very fast.
I’m glad to report that I resisted the urge to buy in on gold and silver after selling silver and de-risking gold early in Jan, despite numerous kicking of myself in the foot for not riding the trend for a bit longer, but oh well this really is a lifelong journey.
So what now? My personal take is that for gold there is still a structural support long term, and that I will be willing to add to gold gradually still. Silver is a bit more speculative and I probably would like to shy away from unless it gets meaningfully lower from here. Just check out the gold silver ratio and how it has absolutely went bonkers. I will be watching how strong or if any bounce we get next week and gauge the short term direction from here.
Ok enough about gold and silver. Now back to equity land.
This week we also had a lot of earnings including the big tech names like MSFT, META and AAPL. Out of these three, MSFT was heavily punished, META was rewarded, despite them basically saying similar things regarding more capex. AAPL dropped after earnings but bounced on Friday but was generally small.
Also within tech, there is a clear divergence between software and hardware, where software has been suffering a lot while hardware especially those memory storage companies have been favorites of the market over the past few weeks. SNDK for example rallied nearly 30% on its high Friday after earnings despite giving back almost all during the day.
Looking at this now, I can envision where this dynamic shifts in the new month where IGVs of the world that was hit hard could see some bids while SNDK and MU and so on could see some profit taking.
Finally, I want to talk a bit about the index SPX and NDX.
I titled this piece ” warning signs”, because although I’ve been saying for a couple of posts that the base case is for equities to go higher and be able to breakout, the outlook has shifted a bit bearishly, following this week’s action.
Both the SPX and NDX pushed higher in the first half of this week, only to be quickly rejected again on Thursday and Friday. On Thursday, equities were able to get back most losses in the afternoon, which would be ok if Friday we follow up with more bullish actions. Instead, what we saw on Friday was another weak and bearish day amid the rout in gold and silver.
This speaks to me that the chop could be dragging on, and that we may need to go meaningfully lower from here for things to reset and attract buyers again. I also read somewhere that CTAs are near max long so it could be that there simply is not enough capital able and willing to buy at this point.
As of Friday close, both SPX and NDX are still above the 21EMA on the daily with SPX faring a bit better than the NDX. This is hopeful still but crucial to see how next week plays out. There is also rumors saying some bank got carried out on the stretcher due to the silver rout but I’ve not even tried to look it up. Sunday’s open might be lower is what I’m saying, but what happens Monday open and during the week and how it closes on Friday is what matters.
The Ephemeral Tourist
February 1st. 2026 @ 12:44pm CST
The Ephemeral Tourist 