Both gold and silver have pulled back sharply from their January 2025 highs, falling below key psychological milestones. Gold is down about 28% from its January high of $5,600 and is now trading below $4,000 an ounce, while silver has fallen more than 50%, falling below $59 an ounce on Wednesday.
The sell-off has been largely driven by growing fears of tighter monetary policy under new Federal Reserve Chairman Kevin Warsh. Markets are currently pricing in two 25 basis point rate hikes for March 2027, which would lift the federal funds rate to 4.00%-4.25% due to renewed inflation fears.
The reversal marks a dramatic shift from the dominant macro narrative of 2025, the “debasement trade,” the belief that persistent fiscal deficits and rising public debt would continue to erode the purchasing power of fiat currencies.
Bitcoin, however, largely stagnated for much of 2025, trading around the $100,000 level, while gold and silver rallied aggressively. The divergence led many investors to question whether bitcoin still belonged in the debasement trade and whether its role as a hedge against fiat currency dilution had weakened.
