Blame Putin for the Gold and Silver Crash
After showing steady gains for several days, precious metals and mining stocks suddenly plunged today starting at 11:00 am ET.
By noon, gold had dropped roughly 2.6% to $4,949, while silver tumbled nearly 9% to $76.57.
The GDX gold miner ETF sank 5%, and the SILJ silver miner ETF declined 6.5%.
The move was abrupt and severe. Below is the 1-day silver chart highlighting the sharp downturn at 11:00 am.
Gold experienced a similarly steep decline simultaneously, with miners quickly following suit.
Clearly, something significant occurred right around 11:00 am.
That timing coincides with a report revealing that Russia has proposed returning to the U.S. dollar as part of a potential plan to resolve the Ukraine conflict. According to Bloomberg:
The Kremlin has set out proposals that could see Russia embrace the dollar again as part of a wide-ranging economic partnership with the Trump administration, according to an internal Russian document reviewed by Bloomberg.
The high-level memo, which was drafted this year, details seven points where, in the Kremlin’s view, Russian and US economic interests could converge following a deal to end the war in Ukraine.
The article continues by outlining prospective areas for U.S.-Russia collaboration, including oil and gas, commerce, industry, metals, and nuclear sectors.
The leaked document also describes how American firms with investments in Russia might recover their losses.
The most startling aspect was Russia’s suggestion to adopt the American dollar for trade, instead of relying on its own currency or alternatives like the Chinese yuan, Indian rupees, or euros.
Historically, the dollar was the dominant currency for global trade, but since 2014, nations increasingly prefer to transact in their own currencies.
This shift could provide additional strength to the dollar relative to other fiat currencies. A stronger dollar typically exerts downward pressure on precious metals.
The Connection to Gold and Silver
Why would Russia possibly adopting the dollar trigger a drop in precious metals?
First, such an agreement would likely mark the end of the Ukraine war, which is great news. Historically, geopolitical conflicts tend to push investors toward precious metals as safe havens.
Furthermore, Russia has been a driving force behind efforts to “de-dollarize” international trade ever since 2014, when pro-NATO groups gained control in Ukraine. Russia faced strong sanctions and sought to reduce its dependence on the dollar.
In theory, an accord with Putin could undermine one of the key factors fueling the gold bull market. When Russia invaded Ukraine in 2022, U.S. and allied nations froze $300 billion in Russian central bank assets.
This led central banks worldwide to buy gold rather than dollars or euros, fearing their dollar-denominated holdings might also be seized or blocked.
If Russia recovers those frozen assets, one might argue the need for gold diminishes. However, I believe this logic is flawed.
We still face an imminent global debt crisis, and tech stocks—which have been market leaders for over a decade—may be topping out.
Just a Leaked Proposal
If Russia’s proposal is indeed behind the precious metals selloff, the reaction is exaggerated. To begin with, it is merely a suggestion.
Numerous peace deals have been put forth during the Ukraine conflict with no lasting outcome.
Yet if Bloomberg’s report holds true, it might indicate progress toward a resolution.
Today’s significant decline in gold, silver, and miners represents an overreaction, though further weakness cannot be ruled out. Despite this drop, precious metals have seen strong gains over recent years.
Does Trump Even Want a Strong Dollar?
If Russia switches back to the dollar, the greenback could rally modestly. However, the crucial question remains: does Trump favor a stronger dollar?
On January 27th, when asked about the dollar’s decline, President Trump responded simply, “It’s great.”
Last summer, he also said, “It doesn’t sound good, but you make a hell of a lot more money with a weaker dollar.”
One of Trump’s key objectives is revitalizing American industry—something challenging to accomplish with a strong currency.
A strong dollar hurts exporters by making their goods less competitive overseas.
So, no, I doubt Trump supports a stronger dollar.
Hopeful for Peace
I sincerely hope a peace agreement between Russia and Ukraine is reached soon. The conflict has already caused terrible loss of life.
Should Russia and the U.S. reach a cooperative arrangement, it could have other notable implications, such as advancing President Trump’s aim to weaken the China-Russia alliance.
If Putin does decide to embrace the dollar, I expect any resulting rally in the U.S. currency to be brief—if it happens at all.
Regardless of how events unfold, the long-term bullish outlook for precious metals remains intact. Debt continues to grow at unsustainable levels, with no clear solutions in sight.
In the short run, however, a significant correction may occur. For those interested in buying, spreading purchases over time is advisable.
The market’s volatility makes going all-in unwise, and better entry points might appear soon.
Days like today’s selloff are tough, but they are an unavoidable part of investing amid the current turbulent environment.
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