Monday September 28, mid-afternoon in Paris. An ounce of gold fell by almost 4% during the session and slipped around $4,150, while silver lost almost 5%. The culprit has an unglamorous name, that of the yield on 10-year American debt, which has risen above 5.2% and is among its highest levels since 2007.
Compared to all the metal extracted in history, today's collapse weighs around 1.2 trillion dollars. Eight months after the bursting of the metals bubble in January, safe havens are rediscovering an old market law. An asset that earns nothing is expensive when the bond pays more than 5%.
Gold and silver: a $1.2 trillion session
The figure comes from The Kobeissi Letter on X, supporting graphics. According to the analysis letter, gold and silver together lost $1.2 trillion in value during the day. The method does not look at ETFs or mining companies. It multiplies the day's decline by the global stock of mined metal, or nearly 7 billion ounces of gold according to estimates from the World Gold Council. With a fall of $150 to $165 per ounce, gold alone is worth between $1,000 and $1,150 billion, and silver completes the bill.
In detail, an ounce of spot gold fell towards $4,156, its lowest level since August 5. Silver fell towards $61. Put into perspective with the closing records of January 29, around $5,405 for gold and $118 for silver, the picture is stinging. Silver has lost about half its value in eight months, gold almost a quarter.
Mining companies followed suit before Wall Street opened. Newmont lost 4.6%, First Majestic 6%. No one was spared.
The American 10-year rate, the gravedigger of gold at 5.2%
The 10-year yield is what the US government pays to borrow over a decade. It is now above 5.2%, while its 30-year-old cousin exceeds 5.3%. For an investor, the reasoning is brutally simple: why keep a bar that pays neither interest nor dividend when the US Treasury guarantees more than 5% per year? Financiers call this the opportunity cost, or the return you forgo by holding gold.
The Federal Reserve has added fuel to the fire. On September 16, it raised its rates for the first time since 2023, increasing its key rate range to 3.75% â 4%. And the market is asking for more. The CME's FedWatch tool, which deduces expectations from futures contracts, shows around 70% probability of a further increase at the end of October, compared to 64% the day before.
Oil completes the picture. Donald Trump has rejected the Iranian plan to reopen the Strait of Hormuz, crude oil is rising, and with it the fear of inflation which is forcing the Fed to tighten the screw even more. The dollar, close to 101 points on the DXY index, ends up increasing the bill for foreign buyers of the yellow metal.
Gold, liquidity and bitcoin: who pays the bill?
At Saxo Bank, commodities strategist Ole Hansen believes that goldâs resilience faces âits toughest test yet.â His warning is worth paying attention to: if tighter financial conditions trigger a rush for cash, âgoldâs deep liquidity could make it a source of funds.â In other words, gold sells precisely because it sells easily. Ironically for a safe haven.
Peter Schiff, true to form, sees the fall as a buying opportunity and insists that structural fundamentals remain favorable to precious metals. We must recognize his unfailing consistency.
On the crypto side, digital gold does not act as a substitute refuge. Bitcoin also fell to around $83,000 this Monday, caught in the same mechanism of rates and geopolitical tensions. When free money disappears, non-yielding assets toast together, whether metal or code.
