Gold’s $5,500 Week (And Why the Pullback Misses the Point)
Peter Reagan

Gold briefly touched $5,500 before pivoting in a dramatic pullback. But history shows that new highs matter more than short-term volatility – especially when global demand for physical metals quietly hit a record…

As seen on CBS, gold hit $5,100 quickly and early last Monday. This would prove to be nothing, as it leapt past $5,500 on Thursday.

We had UBS calling for $8,100, banks upgrading their forecasts to $6,000, and everything was great.

But if you weren't watching prices, maybe you took an off-the-grid vacation? Regardless, if you’re tuning now, on Friday gold’s price dropped over 9%. For some perspective, that’s the biggest one-day decline since April 2013. (Silver had it worse, dropping 28% in the worst day since the Hunt Brothers crash in 1980.)

Immediately, mainstream coverage flipped. Now, everyone wants to talk about “the correction.” Nobody's talking about $5,500, but rather the dip. Many outlets have all but declared gold and silver “dead,” as if a bout of volatility means an asset is broken somehow.  assets.

That framing misses the more important development.

Moves of this magnitude are extraordinarily rare for gold. Historically, they don’t happen because of one data print or a sudden change in sentiment. They tend to occur when pressure has been building quietly – and then releases all at once.

In this case, it was a combination of two forces: First, massive speculative leverage on commodities markets unwinding all at once. Second, gold and silver had become some of the most popular assets over the last few months. Their prices just kept going up, after all. And that attracts attention…

I’ve said it before and I’ll say it again: Leverage amplifies gains and losses, too. It makes big price movements even bigger.

The good news is, a lot of leverage got flushed out of the precious metals market last week. I have greater confidence that gold and silver prices are closer to their fair values, rather than inflated by a herd of day-traders with borrowed money. And, even after its worst day in over a decade, January was gold’s best month since 1999!

But let’s take a step back. Does last week’s price action really change anything?

From a longer-term perspective, gold didn’t just “fail at $5,500.” It discovered $5,500.

That matters. Gold has a long history of revisiting prior highs after periods of consolidation. What initially looks like excess often turns out to be a recalibration – especially during periods of elevated government debt and persistent inflation. Especially during periods of extreme economic uncertainty.

Context matters. Gold was trading near $1,650 less than two years ago. But now that we’ve seen $5,500 gold, we know that it’s possible. Let me ask you which is more likely: A return to $1,650 gold? Or a return to $5,500 gold?

To me, the answer is obvious.

The mistake investors often make is treating gold like a momentum trade rather than what it has always been: A long-term safe-haven store of value asset that moves in steps, it doesn’t ride the elevator.

About that “$7 trillion wiped out” narrative

Another theme making the rounds is the idea that trillions of dollars in precious-metals “market value” vanished during the pullback. Here’s an example.

That language borrows heavily from how people talk about cryptocurrencies – but it doesn’t translate cleanly to physical metals.

In crypto markets, value disappears when holders sell. In gold markets, that’s not what the data shows.

Central-bank activity remains largely steady, and global demand for physical gold continues to set records. According to industry data, total gold demand reached an all-time high in 2025, with coin and bar demand rising sharply year over year. Swiss export figures also show strong physical flows into major vaulting hubs.

In other words, this wasn’t a mass exit from physical gold.

What moved violently was paper pricing – futures, derivatives, and leveraged positions reacting to volatility. That distinction matters, especially for people who own metals as a way to diversify savings rather than trade headlines.

Whether you want to call them speculators or price manipulators, that's who caused this so-called $7 trillion wipe-out.

But how can this happen and why is it relevant if no physical gold exchanged hands to the outside? Welcome to the wonderful world of modern economy!

Swiss customs data shows gold exports reached 138.98 tons in December 2025 versus 109.52 tons in November 2024. Shipments to the U.K., despite its relative currency stability, were the highest, climbing from 45 tons to 101 tons, the highest level since 2019.

Overall, global gold demand reached an new all-time high of 5,002 tons in 2025. Notably, global demand for coins and bars rose by 16%.

Here’s what I want you to remember: Short-term price moves can create dramatic “loss” narratives without any corresponding change in physical ownership or demand.

Silver stays quiet – and that may be the real story

Compared with gold’s fireworks, silver’s behavior last week looked almost subdued.

That’s notable, because silver’s fundamentals are arguably stronger than they were during the last major precious-metals cycle. Annual supply deficits persist, and industrial demand – particularly from energy and technology applications – continues to grow.

Historically, silver tends to amplify gold’s moves, especially when the gold-to-silver ratio becomes distorted. In past cycles, silver prices that once seemed extreme later looked conservative in hindsight.

What doesn’t align with history or fundamentals is prolonged weakness during periods of strong gold demand and rising industrial consumption.

Whether silver reasserts itself quickly or lags longer remains to be seen. But the disconnect itself is worth watching.

The takeaway for the week

Volatile weeks invite emotional reactions. Perspective filters them.

Gold’s brief move to $5,500 wasn’t erased by a pullback – it was established. Silver’s restraint doesn’t negate its fundamentals – it highlights the gap between pricing and demand.

For savers thinking in years, not weeks, moments like this are less about headlines and more about understanding what’s quietly changing underneath the noise.

That’s the part worth paying attention to.

 

 

Peter Reagan is a financial market strategist at Birch Gold Group. As the Precious Metal IRA Specialists, Birch Gold helps Americans protect their retirement savings with physical gold and silver.

 

www.birchgold.com