2026-04-17 11:20:55
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Over the past year, gold and silver have gone through a striking “boom-then-shakeout” pattern. In its March 2026 Quarterly Review, the BIS describes this episode as a rush in precious metals driven not only by macro factors, but also by how capital flows and product structures interacted.
In price terms: Silver almost doubled in 2025, rose by more than 50% again into January 2026, and then saw a single-day drop of roughly 30%; gold climbed by around 60% in 2025, reached new record highs in early 2026 and later retraced by about 9%, with a much milder but still notable “surge plus correction”.
The pattern was not the result of one headline. It reflects how retail flows, ETFs, futures and leveraged products combined to amplify the cycle around an existing macro story.
1. Who was buying? Retail inflows up, institutional positions pared back
According to the BIS, the composition of buyers and sellers shifted markedly during the run-up:
On the inflow side: Retail investors significantly increased their holdings of gold-linked funds, with retail assets in these vehicles rising from roughly USD 20 billion to around USD 60 billion, making them the dominant marginal buyers; in silver, retail participation via ETFs and futures increased sharply, and non-reportable traders (often smaller accounts) held elevated net long positions into the peak.
On the other side of the trade: Many institutional investors began to trim or hedge precious-metals exposure in late 2025; after prices reached new highs in January 2026, the pace of institutional selling and hedging increased.
In other words, the latter stages of the rally were increasingly driven by retail and ETF inflows, while traditional institutions were more often on the side of profit-taking or risk reduction.
2. ETFs: from access channel to sentiment amplifier
ETFs played a central role as the main access point for many investors. The BIS notes that:
During the upswing, some large gold and silver ETFs occasionally traded at premiums to their net asset value (NAV), indicating that secondary-market demand temporarily outpaced the speed at which the funds could add underlying exposure; when sentiment turned and prices corrected, those premiums quickly narrowed or flipped into discounts, coinciding with a shift from net inflows to net outflows.
Mechanically: ETFs make it easier for dispersed investors to gain exposure, concentrating flows into a few liquid vehicles; when positioning becomes strongly one-sided, ETF creation and redemption can reinforce moves: persistent creations and secondary-market buying during an upswing support higher prices; sustained redemptions and selling during downturns add to the pressure on the way down.
This mechanism does not dictate direction by itself, but it helps explain why price swings in an ETF-dominated phase can look more pronounced than those in a purely physical spot market.
3. Futures and leverage: how volatility accelerates on extreme days
The BIS also highlights the role of futures and leveraged products, particularly around silver’s sharp one-day move:
In futures markets: Non-reportable traders had accumulated sizeable net long positions; when prices reversed, higher margin requirements and mark-to-market losses triggered margin calls; accounts unable or unwilling to meet these calls faced forced liquidation, leading to concentrated selling into a falling market.
In leveraged ETFs and structured products: To maintain a stated leverage ratio, these products typically rebalance daily; on down days with large moves, this can require additional selling of futures or related instruments into weakness, especially towards the close, adding to “pro-cyclical” flows.
When significant leveraged positioning and concentrated ETF flows coexist, extreme days can see market?structure effects amplify price moves, both higher during the ascent and lower during the correction.
4. Beyond the narrative: structure as part of the story
The recent cycle in gold and silver certainly had a fundamental backdrop: elevated inflation and uncertainty around monetary policy; long-term themes around the energy transition and industrial demand for silver; episodes of heightened geopolitical risk and safe-haven interest.
At the same time, the BIS analysis shows that who participates, through which instruments, and under what trading rules also shapes the path of prices: when incremental buying is dominated by retail and ETFs while institutions scale back, late-cycle price dynamics can become more sensitive to shifts in sentiment and liquidity; when leveraged exposure is concentrated in one direction, reversals can trigger mechanical flows—via margin calls and daily rebalancing—that add a structural layer to observed volatility.
Viewed
through this lens, the recent boom-and-bust in gold and
silver is not only a macro story, but also a case study in how market structure
can amplify cycles. It offers a reference point for understanding similar
episodes in the future, without prescribing any particular course of action.
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Risk Disclosure
This report is based on publicly available information and mainstream media coverage. Policies and data may change upon release of official documents or judicial rulings. Precious metal prices are affected by USD dynamics, interest rates, geopolitics, and central bank demand, among other factors, and are subject to significant volatility. Any investment views herein are for reference only and do not constitute investment or trading advice for any individual. Please assess decisions prudently in light of your own risk tolerance and financial conditions.
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