The 2026 Precious Metals Surge: Why Gold, Silver, and Bullion Prices Spiked, Why the Physical Market Is Jamming, and Why Volatility and Periodic Crashes Are Part of This Regime

Gold and silver have just experienced the kind of upside acceleration commodities traders describe as a regime change, not a normal rally. Gold has vaulted through the psychologically important $5,000 level and kept going, with the Financial Times reporting new record highs above $5,000 and discussing how safe haven flows have been reinforced by a weaker dollar and growing investor unease about the reliability of government bonds as portfolio ballast.

Silver has been even more dramatic. The Financial Times has described silver’s move as a retail driven stampede that pushed prices above $90, while also emphasizing that the market structure is now thin enough that price can behave more like a high beta risk asset than a stable industrial input. Business Insider also relayed Goldman Sachs’ view that silver could face continued extreme price swings, with the core issue being where physical metal is located and the resulting fragility of liquidity in benchmark hubs.

This is the key point for anyone buying or selling physical bullion, scrap, or “junk” silver: the paper price is only one part of the story. The real story is that the physical supply chain is intermittently clogging. Capacity constraints, financing constraints, and replacement risk are causing refiners and some wholesalers to throttle, delay, or temporarily pause certain categories of intake, while many buyers step back because day to day price movement makes it difficult to quote a bid without absorbing unacceptable risk. The result is an unstable market where periodic sharp pullbacks are not an exception but a feature of the tape.

What follows is a trader’s summary of what caused the runup, what is happening in the physical pipeline, why refiners and dealers sometimes stop taking orders, and why you should expect sudden price drops even if the longer term direction remains constructive.

1) What Actually Drove the Runup

Gold: safe haven demand plus structural buying

Gold’s surge is being framed by mainstream market coverage as a safe haven repricing in response to global instability, currency concerns, and questions about policy credibility. The Financial Times highlighted gold ripping past $5,000 and described investors becoming less price sensitive as uncertainty rises. Reuters has similarly tied the rise in gold to geopolitical risk and strong investment demand, including central bank buying, and reports that analysts see room for further gains in this environment.

From a commodities trading perspective, gold is behaving like a confidence hedge rather than a simple inflation hedge. In a normal cycle, rising nominal yields and risk on sentiment cap gold. In this cycle, the market is intermittently treating gold as an alternative reserve asset, particularly when faith in traditional hedges weakens.

Silver: a tight float meets a flows shock

Silver’s move is a classic “small market” phenomenon. The market is large in industrial importance but smaller in investable float and deliverable inventories than many participants assume. The Financial Times reported silver above $90 and described a mix of supply constraints, speculative retail demand, drained reserves in places like London, and the fact that silver supply is often a byproduct of other mining activity, which limits rapid supply response.

Goldman’s framing, as reported by Business Insider, is that silver’s extreme volatility is being amplified by where physical metal is “stuck” and by lower inventories in key pricing hubs, which makes squeezes and air pockets more likely. That “location of inventory” issue is underappreciated. Even if there is not a true global shortage, a shortage in the wrong place can be enough to trigger a violent repricing.

A mechanical accelerant: forced flows and rebalancing

It is also worth noting that some violent short term moves in gold and silver can be driven by mechanical flows rather than new fundamentals. The Financial Times reported that annual commodity index rebalancing triggered large bullion sales, with JPMorgan analysts noting silver could be disproportionately affected by these forced flows.

This is one reason you can see sharp dips in the middle of a bull move. In metals, prices do not only respond to fundamentals, they respond to positioning, margin, and mandated allocations.

2) What Is Happening in Physical Bullion Markets Right Now

When prices move this fast, the bottleneck shifts from mining to processing, financing, and logistics.

Refining capacity becomes the choke point

In the retail and secondary market, a huge amount of metal comes from scrap, old jewelry, sterling, and “junk” silver coinage that must be refined into .999 bars or grain before it can be used by industrial consumers or minted into new products. When spot prices explode, sellers flood the pipeline. That is exactly what the Financial Times described, noting refiners being overwhelmed with inflows of scrap silver.

Trade press has echoed this. Numismatic News reported that in the fall of 2025, the influx of silver caused multiple refiners to build backlogs, and that several refiners temporarily stopped accepting items that were not already .999 fine due to capacity constraints and industrial demand for commercially pure silver.

This is a critical “why” behind the user facing experience of “refiners are no longer accepting new orders.” Often, it is not a single universal halt. It is category specific throttling, focused on feedstock that requires more time, more processing steps, more assay complexity, and more balance sheet exposure.

Dealers step back because replacement risk becomes unpriceable

In calm markets, a wholesaler can buy scrap, hedge, ship, refine, and replace inventory with reasonably predictable margin and timing. In a market where silver can swing multiple percentage points in a day, and where processing and payment windows can stretch, the dealer is effectively short volatility.

CoinWeek described how dealers rely on refiners to process high volumes of scrap and that when refiners stop accepting material or impose prohibitive terms, dealers cannot afford to buy “junk silver” at their usual close to spot rates.

This leads to a behavior shift you are likely seeing across the industry:

• bids get pulled or widened dramatically
• daily limits appear
• payment terms get longer
• certain categories become “by appointment” or “existing customers only”

Even large dealers have been publishing operational updates that signal strain. BullionStar issued a service update describing unprecedented demand and the need to reset service expectations while continuing to supply physical product.

Mints and sovereign programs do not instantly fix shortages

When retail demand spikes, popular coins and small bars can go “out of stock” even if the world has plenty of raw metal. The constraint is minting capacity, distribution, financing, and working capital.

Perth Mint issued a public statement describing extraordinary times and strong demand, while emphasizing it is working to meet demand and pushing back on the idea of an absolute shortage. The important nuance is that “no global shortage” can be true at the same time as “retail products are hard to source at reasonable premiums” because those are different points in the supply chain.

3) Why You Are Hearing “Refiners Are Not Accepting New Orders”

There are four practical reasons this can happen in a fast metals market. These apply to both silver and gold, though silver tends to hit the wall first.

• Backlog and throughput limits

Refiners have finite furnace, chemical processing, and assay capacity. When the public rushes to sell, intake can exceed capacity for weeks or months. If they keep accepting everything, turnaround times can become unmanageable and operational risk rises.

Numismatic News’ report of refiners temporarily refusing lower purity categories is consistent with this throughput story.

• Hedging costs and inventory financing become punitive

Refiners and large buyers often hedge the metal they have in process, which is standard risk management. But when volatility and borrowing costs surge, hedging can become very expensive, and the time between intake and deliverable output becomes dangerous.

Even if you do not see this in public data day to day, you see it in behavior: tighter intake criteria, higher fees, and more conservative terms.

• Counterparty and settlement timing issues

When the price is moving rapidly, the risk is not only the price itself. It is settlement, credit, and the timing mismatch between when a refiner pays for incoming material and when they can monetize refined output.

That is one reason “buyers are no longer buying” can become true suddenly. It is not always a directional view. It is a balance sheet decision.

• Product mix shifts toward what can be turned quickly

In stress periods, refiners and wholesalers favor categories that can be converted fast or delivered directly into existing commitments. That usually means higher purity, standardized bars, or metal that slots into industrial specs without extra steps.

CoinWeek’s description of dealers being squeezed as refiners stop accepting certain scrap categories fits this pipeline dynamic.

4) Why Many Buyers Stop Buying in Extreme Volatility

In a normal bullion market, a dealer’s edge comes from tight spreads, fast turnover, and predictable replacement. In a volatility shock, those inputs break.

Replacement risk

If you buy a large lot today and cannot hedge or replace it at a known cost, you are effectively taking a speculative position. Many professional buyers do not want that. They want a spread trade, not a directional bet.

Basis and location risk

Goldman’s view, as reported by Business Insider, emphasizes that “where the silver is” matters. If metal is concentrated in U.S. vaults while London inventories are tight, benchmark pricing can decouple from physical reality, and basis risk rises.

That is why you can see:

• spot rising while certain physical products carry extreme premiums
• spot falling while premiums remain sticky due to replacement fear
• certain wholesale channels halting quotes entirely

Industrial demand can pull back

Silver is not just a monetary metal. Roughly half of demand is industrial, and industrial buyers often reduce consumption, substitute, or delay purchases when the input becomes too volatile. The Financial Times explicitly noted risks to industrial demand due to high volatility, and compared the behavior to crypto like instability.

This is one of the primary crash mechanisms in silver: volatility becomes so high that real economy demand steps away, even temporarily. That removes a stabilizing bid.

5) Why This Is an Unstable Market and Why You Should Expect Periodic Price Crashes

Even in a long term bull thesis, the path can be violent. There are multiple reasons the market is structurally prone to sudden drops right now.

• Thin inventories and leverage create air pockets

When inventories in key hubs are low, it does not take much selling to push prices down sharply. In addition, futures markets are leveraged. When volatility rises, exchanges raise margin requirements. That forces de risk behavior and liquidation.

Goldman’s warning about extreme price swings is, at its core, a warning about this fragility.

• Forced selling events can hit without warning

Commodity index rebalancing is a perfect example. The Financial Times reported large, time boxed sales in both gold and silver linked to index rebalancing, and noted silver could be hit hardest.

Those flows do not care about your narrative. They happen because the index says they must happen. In thin conditions, they can trigger cascades.

• Demand destruction is real at extreme prices

When silver triples in a year, industrial users do not simply accept it. They redesign. They thrift. They look for alternatives. The Financial Times has reported that high prices are forcing solar manufacturers to reduce silver use because it becomes a large share of module cost.

This is a classic commodity cycle dynamic: the cure for high prices is high prices. The market overshoots until the real economy responds.

• Sentiment can flip quickly after parabolic moves

When retail demand becomes a dominant marginal buyer, reversals can be sharp. Retail tends to be momentum chasing, and momentum can reverse quickly when price dips break confidence.

The Financial Times described silver’s rally as being fueled by a surge in retail investment and noted the volatility risks.

6) Practical Implications for Bullion, Scrap, and Coin Market Participants

If you are a physical buyer

• Expect wide spreads and intermittent product shortages. This does not necessarily mean “no metal exists,” it often means the pipeline is constrained.
• Pay attention to premiums relative to spot. In volatility shocks, premiums can lag spot on the way up and remain elevated on the way down.
• Understand that certain categories like 90 percent coinage and sterling can become temporarily illiquid if refiners stop taking them or require harsher terms.

If you are a physical seller

• Expect buyers to impose daily limits, longer processing windows, or reduced bids. This is not always a “lowball.” It is often the cost of volatility and settlement risk being passed back to the seller.
• Consider that high spot does not automatically equal easy liquidity. In fact, extreme highs can coincide with the worst liquidity. That is the paradox of squeezes.

If you are trading paper or hedging inventory

• Treat silver as a volatility product as much as a metal. Gold may trend. Silver can gap.
• Watch for flow events and rebalancing windows. Forced selling can create sharp dips that have nothing to do with the longer term thesis.
• Monitor policy, tariffs, and location constraints. If metal is “stranded” in one region, the benchmark can stay unstable.

7) A Trader’s Bottom Line

The recent runup in gold and silver is real, and it is being supported by a combination of macro fear, currency doubts, central bank and investor flows, and fragile physical market structure. Gold’s break above $5,000 reflects a broad safe haven repricing in an uncertain geopolitical and policy environment. Silver’s explosive upside reflects a much tighter and more location sensitive market where retail flows, low hub inventories, and limited refining and minting flexibility can generate squeeze like behavior.

At the same time, the physical pipeline is under stress. Refining capacity constraints and backlogs can cause temporary pauses or throttling in certain categories, and that, combined with violent day to day price swings, forces many professional buyers to step back.

In this regime, instability is not a sign the bull market is over. It is a sign that the market is being repriced faster than supply chains and balance sheets can adapt. That also means periodic sharp crashes should be expected, driven by mechanical flows, margin and leverage dynamics, industrial demand response, and sudden shifts in risk appetite.

If you operate in bullion, coins, or scrap, the operational reality is simple: liquidity can vanish at the top, spreads widen, and “spot” becomes an imperfect reference for what you can actually buy or sell today.

The 2026 Precious Metals Surge: Bullion Volatility, Refinery Backlogs, Buyer Pullbacks, and Why Price Crashes Can Recur

Prepared from a commodities trading perspective. Updated: January 28, 2026.

Gold and silver have entered a phase that looks less like a normal bull market and more like a stress regime. Gold pushed to new records above $5,000, with coverage highlighting the role of safe haven flows, a weaker dollar, and a shifting view of bonds.

Source:

Financial Times (gold above $5,000): https://www.ft.com/content/14cecaac-2aac-4d49-8564-7260dc762abc

Silver has moved even more violently. Coverage has described the rally as retail-fueled and has emphasized the instability created by thin inventories and fragile liquidity in benchmark hubs.

Source:

Financial Times (silver above $90, volatility risk): https://www.ft.com/content/46999508-88ee-470b-902b-177bacb374da

Business Insider (Goldman: extreme volatility): https://www.businessinsider.com/silver-price-today-goldman-sachs-continued-extreme-volatility-swings-inventory-2026-1

1) What Drove the Runup

Gold: safe haven demand plus structural buying

Gold is acting like a confidence hedge. Investors are paying for insurance against geopolitical risk, policy uncertainty, and currency confidence shocks.

Silver: tight float meets a flows shock

Silver’s smaller deliverable market and location-sensitive inventories make it prone to squeezes and air pockets, especially when momentum and retail flows accelerate.

2) What Is Happening in Physical Bullion Markets

In fast metals markets, the bottleneck shifts from mining to processing, financing, and logistics. When spot prices explode, sellers flood the pipeline, and refining capacity becomes the choke point.

Sources and industry notes:

Financial Times (refiners overwhelmed with inflows): https://www.ft.com/content/46999508-88ee-470b-902b-177bacb374da

Numismatic News (capacity backlogs, intake pauses): https://www.numismaticnews.net/price-volatility-and-capacity-problems-with-precious-metals-and-numismatics

CoinWeek (refining backlogs hit junk silver liquidity): https://coinweek.com/the-silver-freeze-refining-backlogs-create-a-liquidity-crisis-for-junk-silver/

Dealers and wholesalers step back because replacement risk becomes difficult to price. If you buy metal today and cannot reliably hedge, refine, and replace inventory within a stable window, you are short volatility.

Even large dealers have published operational updates acknowledging strain and longer service windows during demand surges.

Source:

BullionStar (service update): https://www.bullionstar.com/blogs/bullionstar/service-update/

Sovereign mints and major programs do not instantly fix shortages. The constraint is minting capacity, distribution, and working capital, so popular products can go out of stock even when there is not a true global shortage of raw metal.

Source:

Perth Mint (no silver shortage statement): https://www.perthmint.com/news/media-announcements/investor/no-silver-shortage/

3) Why Refiners May Stop Accepting New Orders

Four practical reasons dominate:

• Backlog and throughput limits: intake exceeds furnace and assay capacity, creating long queues.
• Hedging and financing costs: volatility and rates make in-process inventory expensive to carry.
• Settlement and counterparty timing: the gap between paying for feedstock and monetizing refined output becomes dangerous.
• Product mix prioritization: refiners favor categories that can be turned quickly and meet industrial specs with fewer steps.

4) Why Many Buyers Stop Buying During Extreme Volatility

In calm markets, buyers earn tight spreads with fast turnover. In an extreme volatility shock, they face replacement risk, basis risk, and location risk. Some professional buyers reduce activity because quoting a bid becomes equivalent to taking a directional position.

5) Why This Market Is Unstable and Why Price Crashes Can Recur

Periodic sharp pullbacks are common in this regime. Thin inventories and leverage can create air pockets. Mechanical flows like index rebalancing can force large sales regardless of narrative.

Source:

Financial Times (index rebalancing and forced sales): https://www.ft.com/content/cc6f0f43-d94a-49f7-8c30-ac1730f70570

Demand destruction is also a crash mechanism. When prices reach levels that materially change manufacturing economics, end users delay, redesign, and thrift. That can remove a stabilizing bid and allow momentum to unwind quickly.

Practical Takeaways

• Expect wide spreads and intermittent product shortages even if spot is rising.
• High spot does not automatically equal easy liquidity; tops often have the worst liquidity.
• Premiums can stay elevated on the way down due to replacement fear and processing delays.
• Treat silver as a volatility product as much as a metal when managing risk.