The Lone Ranger began as a radio series in 1933 and later ran as a television show for 21 years until 1954. The story follows the last surviving Texas Ranger, who is nursed back to health by Tonto, a Potawatomi tribesman. Together, they ride across the American West on their horses, Silver and Scout, fighting injustice while financing their mission through a silver mine that supplies both income and ammunition.
When the pair set off in pursuit of villains, the announcer famously cried, “Hi-Yo Silver, Away!” The show’s iconic theme music was written for the film The Lone Ranger and the City of Gold.
On Friday, however, silver traders were echoing a very different refrain: “Hi-No Silver, Away!” Silver led a broad selloff across precious metals and related ETFs. The SLV ETF plunged 28.5%, while GLD fell 10.3%. Despite the steep losses, trading volumes did not point to a full-blown panic in either fund.
Along with our colleague Michael Brush, we spent the morning reviewing the various explanations behind silver’s one-day bear market and gold’s sharp one-day correction. Early on Friday, the initial selloff may have been triggered by President Donald Trump’s nomination of Kevin Warsh to replace Jerome Powell as Federal Reserve chair. On the geopolitical side, reports that Iran is willing to negotiate with the U.S.—but only on terms Washington finds unacceptable—seem unlikely to have driven the rout.
Later in the day, at 2:00 p.m. EST, CME Group announced another increase in maintenance margin requirements—the second hike in three days—taking effect after the market close on Monday, February 2. Maintenance margins were raised to 8% from 6% for gold, to 15% from 11% for silver, to 15% from 12% for platinum, and to 16% from 14% for palladium. Margins on copper were also increased.
By announcing the margin increase ahead of Friday’s close, the CME effectively signaled to traders that any positions carried into the weekend would face substantially higher collateral requirements by Monday. This prompted many market participants to unwind positions in the final hours of Friday’s session, contributing to the sharp late-day acceleration in the price decline.
As a result, we discount the various conspiracy theories circulating in the market, including suggestions that the move marks the beginning of another Hunt Brothers–style silver crisis like March 27, 1980, when silver prices collapsed from about $21 to below $11 in a single day.
Notably, Warsh’s nomination should arguably have been supportive for precious metals, as he has favored boosting growth through lower interest rates and has downplayed the need for the Fed to be overly concerned about inflation at present.
Friday’s December PPI report was also hotter than expected and, in theory, should have added to the bullish case for precious metals. Headline producer prices rose 0.5% month over month, while the core index increased 0.7%. On a year-over-year basis, headline and core PPI inflation climbed to 3.0% and 3.3%, respectively. The data suggest producers may be beginning to pass on higher costs from tariffs and a weaker currency further along the supply chain.
We asked Michael Brush for an update on insider buying activity, and he said: “It’s still early, but so far corporate executives and directors have shown little interest in buying the recent market weakness. Their cautious stance remains in place. Buying by investors classified as insiders due to large holdings—10% owners—has increased slightly, but this type of activity is generally less meaningful as a market signal.”
Sources: Ed Yardeni
THE ETERNAL SOVEREIGN 
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