Keep Your Eye on the Ball! -

Gold and silver are in the midst of a significant price correction, and with all of the volatility in the markets, it's important to keep your eye on the ball.
By "the ball," we mean the underlying fundamental market dynamics and the trajectory of the economy.
In this episode of the Money Metals' Midweek Memo, host Mike Maharrey digs beneath the recent silver and gold price movements and speculates that there may be more to the recent selloff than just nervous investors worried about an overbought market. It could signal significant strain in the financial system. Along the way, he covers two stories that aren't getting much play in the mainstream financial media – the massive 2025 budget deficit and a recent monetary policy announcement by the Federal Reserve.
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Mike opens the show reminiscing about his childhood.
<blockquote>
"If you played a sport as a kid, at some point, a grown-up told you to keep your eye on the ball. It’s almost a cliché, but it works. I mean, it’s kind of self-evident that if you see the ball, it will be a lot easier to catch, hit, or whatever you’re trying to do with it. … It's not just important to keep your eye on the ball in sports. It’s true with investing as well. It’s easy to get caught up in the noise, right? We’ve seen gold just get pounded the last two days. We’re back below $4,100. Silver is barely holding on above $48. It’s easy to panic. But you have to keep your eye on the ball."
</blockquote>
Mike notes that markets never go up in a straight line.
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"They climb a wall of worry."
</blockquote>
But Mike says he thinks this correction may be more than just nervous investors worried about an overbought market. 
<blockquote>
"Did you hear Jamie Dimon the other day? He’s the JPMorgan Chase CEO. He talked about cockroaches in the credit market. It has grown explosively to over $1.7 trillion. Danielle DiMartino Booth is a former Fed advisor, and she says the big selloff in precious metals may stem from stress due to high levels of bad debt in these private markets. She said that she sees a significant risk of contagion stemming from the lax underwriting standards that persisted during the era of near-zero interest rates."
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Booth speculates that investors are liquidating gold and silver positions in "a dash for cash." 
<blockquote>
"'People tend to, if they get margin calls, if liquidity becomes an issue, they tend to sell their winners,' Booth explained. She warned that this volatility is not healthy. Quote, 'You never want to see gold behave like a meme stock.'”
</blockquote>
For this reason, Mike says it's important not to get too caught up in the hour-by-hour price moves.
<blockquote>
"The high levels of volatility should make you a bit cautious. But if you’re keeping an eye on the ball and focusing on the underlying dynamics, these big dips might present buying opportunities for you."
</blockquote>
Mike notes that Booth thinks the Federal Reserve will likely have to loosen monetary policy more quickly than people expect due to contracting liquidity. That's bullish for gold and silver. 
He points out that the Fed is already moving in the looser direction.
<blockquote>
"In another sign that we are entering an era of even looser monetary policy, Federal Reserve Chairman Jerome Powell hinted last week that balance sheet reduction is about to come to an end. … In practice, this means the central bank will stop reducing its holdings of Treasuries and mortgage-backed securities, maintaining the size of its balance sheet at the current level. Balance sheet reduction, or quantitative tightening (QT), pulls liquidity out of the financial system by reducing bank reserves and shifting government debt financing to the private sector. This tightens funding conditions and market debt. It is effectively deflationary. More significantly, an end balance sheet reduction would take some pressure off the Treasury market, as the central bank would have to purchase new bonds as the old ones mature. In effect, this would create additional artificial demand in the Treasury market."
</blockquote>
Mike explains the mechanics of Fed balance sheet policy and its recent history. He emphasizes that when Ben Bernanke launched QE for the first time, he insisted it was a temporary measure and the assets would be sold once the crisis passed. 
<blockquote>
"That never happened. And then the Fed doubled down, expanding the balance sheet by nearly $5 trillion during the pandemic."
</blockquote>
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<a href="https://www.moneymetals.com/news/2024/01/12/common-definition-of-inflation-you-hear-today-is-wrong-government-propaganda-002925">This is, by definition, inflation</a>.
<blockquote>
"If expanding the money supply is inflationary, it logically follows that to truly beat down price inflation, the Fed needed to shrink the balance sheet substantially. Theoretically, it should have reduced the size of the balance sheet at least to the neighborhood of pre-crisis levels, as Bernanke promised. Rate hikes aren’t enough to ring all the liquidity out of the economy. If the Fed is serious about taming inflation, it needs to significantly reduce the size of the balance sheet. In other words, it needs to undo the money creation of the past decade-plus.
"I didn’t.
"And it won’t."
</blockquote>
This leads to a second bit of news that didn't get a lot of play. Despite all the talk about DOGE and cost-cutting earlier this year, the federal government spent more in fiscal 2025 than it did the previous year and set a new spending record of just over $7 trillion.
Mike says that while it might seem cynical, he doesn't think the government will do anything to tackle the spending problem, even though some education cuts did help push September outlays down slightly year-over-year. 
<blockquote>
"So, credit where credit is due. However, tariff revenue is about as high as it’s gonna get. It will likely start to fall off. And there will be new spending to offset these cuts. I say this with confidence because there always is."
</blockquote>
Mike points out that the political incentives always mean more spending. 
<blockquote>
"And the sad fact is that, given the political incentives, people in power will always kick the debt can down the road. It is a long-term problem that will require painful measures to fix. Politicians don't want to create pain. That's a quick path out of office. So, they will punt the debt problem and spend more to make constituents happy. This is all well and good, I guess, but the problem with playing kick the can down the road is that you eventually run out of road."
</blockquote>
Mike said given the level of debt, simply ending QT might not be enough. 
<blockquote>
"Given falling global demand for Treasuries and persistently high yields, the central bank may well have to launch quantitative easing again in the near future to press its thumb harder on the Treasury market. In effect, this would be a return to money printing.
"That means even more inflation."
</blockquote>
Mike says this is why you want to have gold and silver over the long term.
<blockquote>
"No matter how you slice and dice it, we’re going to have more inflation. Your dollar will continue to be devalued. You need real money — gold and silver."
</blockquote>
With this in mind, Mike provides a call to action. Call 800-800-1865 and talk with a Money Metals' precious metals specialist today.
<h2>Articles Mentioned in the Show</h2>
<a href="https://www.moneymetals.com/news/2024/04/02/what-is-quantitative-easing-and-how-does-it-work-003092" rel="noreferrer">What Is Quantitative Easing and How Does It Work?</a>
<a href="https://www.moneymetals.com/news/2025/10/20/is-silver-overbought-004424" rel="noreferrer">Is Silver Overbought?</a>
<a href="https://www.moneymetals.com/news/2025/10/20/london-india-and-the-anatomy-of-a-silver-squeeze-004422" rel="noreferrer">London, India, and the Anatomy of a Silver Squeeze</a>
<a href="https://www.moneymetals.com/podcasts/2025/10/03/morgan-stanley-says-swap-bonds-for-gold-fed-interest-rate-manipulation-004382" rel="noreferrer">Interview With Economist Daniel Lacalle</a>

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