January 31: Silver Crashes 30% as USD Spike Triggers Deleveraging
The silver price crashed about 30% on 31 January after the dollar index jumped on reports that Kevin Warsh could lead the Fed. That surge in the dollar triggered rapid deleveraging and spillovers across precious metals. The gold price also fell. For investors in Germany, euro moves, product costs, and liquidity matter as much as direction. We outline the drivers, risks to miners and ETFs, and how to plan trades in EUR. Expect bigger intraday swings, wider spreads, and fast sentiment shifts in the near term.
What drove the crash on 31 January
Reports that Kevin Warsh could be nominated as Fed chair lifted the dollar index, pressuring dollar‑priced commodities and flipping momentum. Front‑month COMEX silver futures SI=F swung lower as leveraged longs rushed to exit. Liquidity thinned as volatility jumped, accelerating the move. Coverage highlighted the worst day since 1980 for silver and a sharp drop in gold too source.
Positioning was heavy after a record run into late 2025 and January 2026. As the silver price broke key areas, margin calls kicked in across futures, CFDs, and ETFs. That sparked a cascade of selling and wider spreads. The gold price also reversed as cross‑asset funds de‑risked, with European hours seeing intense flows source.
How it hits German portfolios
Metals are priced in USD, so EUR moves can cushion or magnify swings. If the euro weakens while the silver price falls, EUR losses may be smaller. If the euro strengthens, local losses can rise. Hedged products behave differently from unhedged ones. Check your KID, currency hedge, and total costs before adjusting positions in euros.
Miners and silver ETCs listed on Xetra can show tracking gaps on fast days. Discounts or premiums to metal value may appear, and market‑maker spreads often widen. Use limit orders, not market orders. If the gold price stays soft, diversified precious‑metals baskets can also wobble. Check issuer notices for creation or redemption pauses that may affect liquidity.
Key levels and volatility to watch
After a vertical drop, price often retests prior breakout zones and moving averages. Avoid guessing exact bottoms or tops. Build a plan that tests how the silver price behaves near prior congestion and volume shelves. Let price action confirm your idea. If it chops, switch to smaller size and focus on risk per trade, not absolute targets.
Brokers can raise margin requirements and widen financing spreads during stress. That changes breakeven math for short‑term trades. Review margin notices, funding rates, and contract specifications before placing orders. Thin order books can slip entries and exits. Keep position sizes flexible, and consider staging orders to reduce the impact of sudden liquidity gaps.
Strategy for the next week
Decide your maximum daily loss before the open. Use limit orders and pre‑set stops, but size smaller to allow for wider ranges. Avoid chasing breakouts in the first minutes after headlines. Watch the dollar index and any Kevin Warsh Fed updates. Track scheduled data and Fed communications that could swing rates and metals in either direction.
If your thesis is intact, consider staged buying rather than a single trade. Keep allocations modest and diversify across metals and cash. Avoid leverage on core holdings, as the silver price can move faster than expected. Rebalance on set dates, not on emotion. Review product costs, storage fees, and hedge choices to align with your EUR goals.
Final Thoughts
A 30% one‑day collapse in the silver price is rare, but the drivers are clear: a stronger dollar on Kevin Warsh Fed chatter and fast deleveraging in crowded trades. For German investors, the euro’s direction, product structure, and liquidity conditions will shape actual returns. In the short run, we expect larger ranges and wider spreads. Act with a clear plan: smaller sizes, limit orders, and strict risk caps. Track the dollar index, Fed news, and issuer updates for ETFs and ETCs. For long‑term savers, consider staged entries and disciplined rebalancing. Patience and risk control matter more than calling the exact bottom.
FAQs
Why did the silver price drop 30% in a single session?
A sharp jump in the dollar index after reports about a Kevin Warsh Fed nomination pressured metals priced in USD. With positioning crowded, breaks of key areas triggered margin calls and rapid exits. Liquidity thinned as volatility rose, turning orderly selling into a cascade across futures, CFDs, and ETFs.
How does a stronger dollar index affect the silver price for euro‑based investors?
A stronger dollar usually weighs on the silver price in USD terms. For euro‑based investors, the EURUSD move changes local returns. If the euro falls, it can cushion EUR losses. If the euro rises, it can amplify them. Hedged products can offset currency swings but may add costs.
What should German ETF and ETC holders watch after this move?
Focus on tracking differences, premiums or discounts to metal value, and wider bid‑ask spreads. Use limit orders and check issuer notices for creation or redemption changes. Review currency hedges, ongoing fees, and margin policies if using leverage. Confirm that your product still aligns with your EUR‑based objectives.
Will the gold price likely follow silver lower from here?
Silver often moves more than gold in both directions. The gold price fell during the selloff as funds de‑risked, but future moves will depend on the dollar index, rates, and new Fed signals. Treat each metal’s setup on its own merits and manage risk independently for both exposures.
Disclaimer:
The content shared by Meyka AI PTY LTD is solely for research and informational purposes. Meyka is not a financial advisory service, and the information provided should not be considered investment or trading advice.
