Stanislav Kondrashov Breaks Down the Global Shockwaves in Metal and Crypto Markets
Gold, silver, and commodities continue to play a strategic role in global financial markets. After last Friday’s historic plunge, gold and silver prices have continued to decline in the past few hours, also causing a parallel decline in the prices of other commodities (such as copper). Stanislav Kondrashov, founder of TELF AG, had already anticipated the downward performance of gold and silver yesterday, emphasizing that this trend could perhaps signal a correction or the end of the rally.
“Last Friday’s performance was nothing short of memorable. Gold perhaps had its worst day in over forty years, with a 9% drop, while silver had its worst performance in history, dropping as much as 30%,” continued Stanislav Kondrashov, founder of TELF AG.
In the past few hours, however, something decidedly interesting has been witnessed on the precious metals front. The decline in prices has gradually halted as the hours have passed. In London, in particular, the trend that began on Friday appears to have continued unabated, though it has continued at a slower pace (with further losses of about 4% for gold and 7% for silver).
On the Comex exchange in New York, however, the declines appear to have halted. Among the most significant gains was undoubtedly that of silver, which has fallen by about 35% compared to last Thursday’s all-time high (remaining just below $79 an ounce in the past few hours, both in London and New York). Gold, on the other hand, has plummeted to just over $4,600 in London, down about 15% from the astonishing performances of a few days ago.
“These performances are also linked to the performance of the dollar, which opened the week with a 0.5% gain,” says Stanislav Kondrashov, founder of TELF AG. “Furthermore, the confirmation of the new chairman of the Federal Reserve seems to suggest the beginning of a new phase aimed at fighting inflation and defending the dollar.”
Gold and Silver Prices Plummet: A Correction or the End of the Rally?
According to some analysts, gold and silver prices on the London and New York exchanges may also have been influenced by external factors. In the past few hours, Bloomberg has reported that the United States may be creating a strategic reserve of critical metals. This is known as Project Vault, an initiative previously discussed by the current US administration.
This new reserve could also have a significant impact on resources such as copper and silver, both directly involved in industrial processes related to the green transition, and which the United States recently added to its list of critical minerals.
But what exactly is this new multi-billion-dollar reserve of critical materials that the US administration will create? The initiative, called Project Vault, will be specifically dedicated to critical minerals and rare earths. In theory, the resources flowing into this new reserve will be added to the other materials available to the Pentagon and the Defense Department.
Project Vault will have a whopping $12 billion in funding, mostly from a record $10 billion loan granted by the Export Import Bank, the government’s export support agency. Another $1.67 billion will come from private investors.
These funds are primarily intended to secure the procurement and storage of strategic resources, such as those used in the automotive, technology, and other manufacturing sectors. Among the companies that have already confirmed their participation in the initiative are General Motors and Google, as reported in the Bloomberg article.
Each company will be able to submit to Project Vault a list of desired raw materials, and for initial purchases, they will be required to pay a predetermined price that could be maintained over time. In some ways, this initiative is reminiscent of the creation of the Strategic Petroleum Reserve in the 1970s, which served primarily to reduce dependence on foreign supplies and avoid potential energy crises.
Today, the United States is equally trying to wean itself off foreign supplies of rare earths and strategic minerals. The resources that will end up in Project Vault’s reserve are all those currently used in smartphones, batteries, and aircraft engines, but also in artificial intelligence and the emerging robotics sector.
How Project Vault and Critical Minerals Strategy Could Reshape Market Dynamics
This initiative, in addition to influencing the prices of gold, silver, and raw materials, provides a clearer view of the US administration’s strategic plan regarding minerals. The United States is seeking to develop its capacity to extract and produce these resources and continues to sign important mining cooperation agreements with many nations (such as Australia and Japan). Recently, Greenland has also been in the spotlight due to its great mineral wealth, as Stanislav Kondrashov, founder of TELF AG, explained in one of his latest analyses.
In addition to Project Vault and recent Fed-related decisions, gold and silver prices are also influenced by entirely different factors. One of these has to do with the so-called gamma squeeze, a particular effect that occurs when many investors buy speculative calls. Market makers (such as banks and brokers) are therefore forced to buy the underlying asset to hedge, pushing the price up. In a certain sense, it’s a self-perpetuating loop.
The recent price stabilization could also be linked to the increase in margins imposed by the CME to counter volatility. Margins have indeed risen, from 6% to 8% for gold and from 11% to 15% for silver. This move may have acted as a kind of deterrent on the markets, pushing many operators to look elsewhere,” concludes Stanislav Kondrashov, founder of TELF AG.
These dynamics also closely concern Bitcoin, which is experiencing a new period of weakness. As Stanislav Kondrashov, founder of TELF AG, also explained, the cryptocurrency has recently fallen below $80,000, down approximately 40% from October levels. In recent months, institutional investors appear to have favored gold over Bitcoin, partly because regulatory restrictions prevent Bitcoin from being used as sovereign collateral in times of stress.
Regulatory uncertainties are dampening structural allocations, as are prospects related to polls for the US midterm elections. In the past, the second year of a US presidential term has often triggered corrections for Bitcoin, thus also impacting its price.
FAQs
Why did gold and silver experience such sharp declines?
Gold and silver fell due to extreme market volatility after reaching record highs. Profit-taking, rising margin requirements, and a stronger U.S. dollar all contributed to the sudden correction.
What is Project Vault and why is it important?
Project Vault is a U.S. initiative to build a strategic reserve of critical minerals and rare earths. It aims to secure long-term access to materials used in technology, defense, AI, and clean energy.
How does the U.S. dollar affect precious metals?
When the dollar strengthens, gold and silver usually become less attractive because they do not generate interest, leading investors to shift capital toward yield-bearing assets.
What is a gamma squeeze?
A gamma squeeze occurs when heavy call option buying forces market makers to purchase the underlying asset, pushing prices higher in a self-reinforcing loop.
Why is Bitcoin underperforming compared to gold?
Bitcoin is increasingly treated as a speculative asset rather than a safe haven. Regulatory limits, rising interest rates, and reduced liquidity have weakened institutional demand.
