Commodities in Freefall: Silver’s 27% Crash and the Death of the Diversification Myth

If you thought commodities were your portfolio’s ballast, this week’s price action is a reminder that sometimes the anchor is made of lead. Silver just cratered 27% in a week, and the rest of the metals complex is following it down the elevator shaft. DBC, the broad commodities ETF, is frozen at $24.45—not exactly inspiring confidence in the “diversify with real assets” crowd.

The story is as much about psychology as it is about price. Commodities were supposed to be the hedge against everything—Fed policy, inflation, geopolitical risk. Instead, they’re the epicenter of the latest risk-off panic. The selloff started in Asia, as WSJ reports, with stocks pulling back and metals extending their slide. By the time Europe woke up, silver was already in freefall, and gold wasn’t far behind.

The timeline is ugly. The reversal in commodities coincided with a broader shift in risk sentiment. Nasdaq futures are falling, and the S&P 500 is losing momentum. The Fed is about to get a new chair in Kevin Warsh, and the market is bracing for a more hawkish stance. The risk-off rotation is hitting everything that isn’t nailed down, and commodities are no exception.

DBC, the broad commodities ETF, is the poster child for the malaise. Stuck at $24.45, it’s neither rallying nor collapsing, just marking time while the rest of the market panics. The lack of movement is almost more concerning than a sharp drop—it signals a market in stasis, waiting for the next shoe to drop.

The real story is the death of the diversification myth. Commodities are supposed to zig when stocks zag, but right now they’re all falling together. The correlation between stocks and commodities is rising, not falling, and the supposed safe havens are nowhere to be found. Silver’s 27% crash is not just a technical breakdown, it’s a psychological one.

The macro backdrop is toxic. Inflation is sticky, central banks are on edge, and geopolitical risk is rising. The market is pricing in a Fed that’s more likely to hike than cut, and that’s bad news for anything that doesn’t pay a coupon. Commodities are getting hit by the double whammy of slowing growth and rising rates.

Strykr Watch

Technically, silver is in freefall. There’s no support until $20, and even that’s a guess. DBC is stuck at $24.45, with resistance at $25 and support at $23. If DBC breaks $23, expect a quick move to $20. The RSI on most metals is oversold, but that’s been true for days. The trend is down, and there’s no sign of a reversal yet.

The risks are obvious. If the Fed surprises hawkish, commodities will get smoked. If global growth slows, demand for metals will collapse. The opportunity is that panic bottoms are usually where the best trades are made, but only if you have the stomach for it.

For traders, the playbook is to wait for signs of stabilization before getting long. If DBC holds $24, look for a bounce to $25. If it breaks $23, get out of the way. Stops are mandatory, and position sizing is key.

Strykr Take

Commodities are not a safe haven right now. The diversification myth is dead, at least for this cycle. Wait for signs of stabilization before getting long, and don’t try to catch the knife. The next big move will come when everyone else has given up.

Date Published: 2026-02-02 08:15 UTC