The Pattern Nobody Wants to Name

I keep thinking about the phrase "exuberant" and how clinical it sounds when applied to what we've just watched in precious metals. Analysts have started using "parabolic" to describe the moves in gold, silver, copper and South Korean tech stocks. These are polite words for a specific kind of market behavior—the moment when price becomes unmoored from anything resembling causality, and what you're watching is pure narrative momentum.

There's a historical pattern here that's worth sitting with.

In the months before every major market reset, you get these spectacular rallies in things that seem almost quaint in hindsight. Not because the underlying thesis was wrong, necessarily. But because the thesis stopped being about fundamentals and became about the story itself. The story became the product. You didn't buy gold because you were afraid of currency debasement—you bought it because you watched it hit $5,550 and you couldn't be left out of a trade moving that fast.

Gold surged to above $5,550 a troy ounce on Wednesday before dropping 11% on Friday, with silver plunging 31%, and gold trading around $4,680. The collapse took days. The entire edifice of conviction—the geopolitical risk premiums, the inflation hedging narratives, the central bank buying—evaporated on rumors about a Fed chair's preferences on balance sheet policy.

This is the thing I can't stop noticing about modern markets: silver has been at the center of retail investment frenzy with shares like the iShares Silver Trust (SLV) gaining substantially, and when they reversed, they didn't gently correct. They got guillotined. The iShares Silver Trust tumbled more than 28% in five trading sessions, including its worst day on record.

Let me zoom out.

What we're looking at across the past 48 hours isn't a market correction. It's a confidence test, and the market is failing it. The S&P 500 lost 1.23%, closing at 6,798.40 and landing in negative territory for the year. The Nasdaq Composite declined 1.59% and settled at 22,540.59. But the real wound is deeper. The S&P 500 is falling to a 2-week low and the Nasdaq 100 is sliding to a 2.5-month low.

The problem is labor. Available jobs totaled a seasonally adjusted 6.54 million, a drop of 386,000 from November. The ratio of job openings to unemployed workers slid further, falling to 0.87 to 1. Challenger's January job cuts rose 117.8% year-over-year to 108,435, the largest amount of job cuts for a January since 2009.

You understand what this means, right? We've moved from "too hot" to "structurally loosening." And the market knows it. The companies with the highest valuations—the ones that most depend on perpetual growth to justify their multiples—are getting crushed. ServiceNow and Salesforce were both down close to 7%, while Microsoft and Meta Platforms were both down more than 2%.

Then there's the spending problem. Alphabet projected a sharp increase in artificial intelligence spending, calling for 2026 capital expenditures of up to $185 billion. This is where the disconnect gets stark. The company just announced it's doubling down on the biggest bet of the decade, and the market punished it for saying so. Shares lost 0.5%, though Broadcom climbed almost 1% following news of Alphabet's spending plans.

Read that carefully. The chip supplier goes up. The company spending the money goes down. This tells you what traders actually believe: the money gets spent, but the returns stay theoretical.

And cryptos. God, the cryptos. Bitcoin tumbled from above $83,000 to as low as $74,570, hitting its lowest level since April, down sharply from a record high above $126,000 in October. Bitcoin fell more than 4% as Treasury Secretary Scott Bessent suggested the US government would not bail out the cryptocurrency.

There's something almost pathetic about waiting for government reassurance to justify your crypto position. But that's where we are. The bull thesis has become: maybe the government will save it. When that reassurance gets withdrawn, the whole thing unravels because there was nothing underneath it in the first place.

The historical parallel worth examining is what happens after these moments of clarity. You get repricing. You get time. You get a recalibration where the market tries to figure out what cash flows actually matter in an environment where growth can't be taken for granted anymore.

Manufacturing activity unexpectedly improved in January with ISM's Purchasing Managers' Index expanding to 52.6%, above estimates of 48.3%. This is supposed to be good news. And maybe it is. But when it arrives in the context of falling job openings and surging layoffs, it reads differently. It reads like: businesses are making do with fewer people at higher productivity. Which is efficient. Which is also how you get wage pressure that never materializes into actual worker gains.

The market cycle we're in doesn't have a comfortable ending. It has a realistic ending. And realism, after months of narrative-fueled rallies, always feels like a crisis.

Watch what happens this week with the rest of earnings. Watch whether the companies that beat expectations are the ones that raise guidance, or the ones that lower costs. Watch whether consumers actually pull back or whether they've already pulled back and we're just now seeing it in the data. Watch the Fed.

What was true on Friday may not be true on Monday. And we're all acting shocked by it every single time.