The Selling Phenomenon During the Gold Crisis and the Role of Position Adjustment

By: Zhou Ziheng

From 2025 to the beginning of 2026, gold prices saw a sharp rally. Benefiting from geopolitical tensions, inflation concerns, and the de-dollarization trend, gold moved quickly from lower levels to a historical high of about $5,600 per ounce by the end of January 2026. However, after the outbreak of the U.S.-Iran conflict at the end of February 2026, gold did not continue to perform as a safe-haven asset as traditionally expected, but instead saw a significant sell-off. In March, gold recorded its worst monthly performance since 2013, falling by more than 10%, retreating about 20-25% from its peak, and sliding back to the vicinity of the $4,100-$4,300 per ounce range. Then, in early April, driven by ceasefire news, it rebounded somewhat, hovering around roughly $4,800-$4,900 per ounce by mid-April.

The core reason for this abnormal pattern lies in the local bubble formed by the previous overrun rally and the rapid adjustment of market positioning. Before the crisis, gold had rapidly re-priced from being undervalued to near fair value, and even entered a locally overheated zone. The swift climb attracted a large influx of fast money, including speculative positions and leveraged capital. When risk appetite shifted and liquidity demand surged, these positions quickly exited, putting short-term pressure on gold prices. Even when central banks in some cases slightly reduced their gold holdings to obtain U.S. dollar liquidity, it further intensified selling pressure. Historically, during crises, gold often falls first due to liquidity squeezes, then rebounds as uncertainty persists. In the initial phase of the Iran conflict, gold briefly spiked to $5,246 per ounce, but then retreated due to the strengthening U.S. dollar, rising real yields, and changes in rate expectations triggered by a surge in energy prices.

Analysts point out that gold’s traditional safe-haven attributes have not disappeared, but when an asset doubles or triples in the short term, its appeal as a “safe harbor” temporarily weakens. Investors tend to take profits when other assets—such as energy—offer higher immediate returns. Data from the World Gold Council shows that, in the six months after the conflict, gold’s average gain was about 7.5%, provided that earlier gains had not already been overly stretched. This episode again validates the lesson: when positions become excessively concentrated on one-way bullish expectations, any external shock can trigger asymmetric adjustments.

Silver volatility intensifies and asymmetric opportunities fade

Silver’s performance was even more extreme. Silver prices surged by approximately 130-149% in 2025, continued to rise with inertia in early 2026, and then suffered a large pullback as well. Silver has both monetary and industrial attributes, and its price volatility is typically more than twice that of gold. In the first half of 2026, silver’s 180-day volatility reached a new high since 1980, far exceeding five times that of the S&P 500 index.

In the early low-price phase (around $17 per ounce), silver displayed significant asymmetric upside potential: industrial demand (solar, electronics, electric vehicles) and investment demand could combine to drive prices to rapidly double. However, once prices have already realized multiple-fold gains, asymmetry weakens dramatically. The market may face both an optimistic scenario of rising to $100 per ounce and a realistic risk of first falling back to $40 per ounce. After the dramatic rally of 2025-2026, silver experienced one of the largest sell-offs in history, then stabilized, but volatility did not subside.

Silver’s high volatility stems from persistent deficits on the supply side. The Silver Institute’s 2026 report projects that the silver market will see its sixth consecutive year of deficit that year, at a scale of about 46.3 million ounces. Industrial demand remains strong, but high prices may suppress some downstream applications, while ETF inflows and outflows further amplify liquidity volatility. Investors need to recognize that silver is suitable as a complementary exposure to gold, but position sizing should be smaller than that of gold to match silver’s higher risk profile. In the current environment, silver is more appropriate for tactical allocations rather than long-term core holdings, unless industrial cycles clearly shift toward expansion.

Bitcoin’s relative resilience during the conflict and its causes

By contrast with gold and silver, Bitcoin showed relative stability and even staged outperformance during the 2026 Iran conflict. Bitcoin had already undergone a major correction from late 2025 to early 2026, falling from a high of about $126,000 in October 2025 to a further weaker range of about $66,000-$93,000 in early 2026. After the conflict broke out, Bitcoin briefly dipped, but then rebounded. In the first month of the conflict, it performed better than gold, even showing a phase where Bitcoin’s rise versus gold reached 25%.

This resilience does not come from Bitcoin becoming a “digital safe-haven asset,” but rather from the earlier fast-money crowding having largely been cleared out. In 2025, speculative positions in the Bitcoin ecosystem were substantially flushed, leaving mostly “strong hands,” including long-term institutions and believers. In comparison, gold had accumulated too much profit-taking before the conflict. Bitcoin’s network effects and its self-reinforcing protocol characteristics (similar to TCP/IP or USB) provide long-term demand support in decentralized value storage and permissionless payments. Although in the short term Bitcoin still exhibits risk-asset characteristics and is highly correlated with equity markets and liquidity conditions, its pre-2025-2026 adjustment allowed it to avoid additional sell-off pressure during the crisis.

Bitcoin’s current market value is about $2 trillion, far from reaching its long-term peak ceiling. Institutional adoption continues through spot ETFs, and the growth of stablecoins as offshore substitutes for the U.S. dollar further reinforces the foundation of the crypto ecosystem’s infrastructure. Bitcoin and gold are not zero-sum competitors; instead, they each go through their own cycles. Gold is driven more by macro monetary policy and geopolitics, while Bitcoin benefits more from technological adoption and network growth. In the long run, both benefit from the trend of currency depreciation, but investors need to be wary of each asset’s overheated phases.

Gold mining companies: profit margins, energy costs, and risk assessment

Rising gold prices are directly beneficial for mining companies. In 2025-2026, gold’s sharp increase pushed miners’ average realized price—from about $4,100 per ounce previously—up to about $4,600-$4,800 per ounce in the first quarter of 2026, with some quarters even higher. Miners’ all-in sustaining cost (AISC) was maintained at an average of about $1,500-$1,600 per ounce, leading to a significant expansion in profit margins. Many major producers achieved gross profit of more than $2,000 per ounce, with some exceeding 150%. Free cash flow hit record levels, and balance sheets shifted to net cash positions.

However, energy costs make up an important—though not the entirety—of mining expenditures. The energy crisis triggered by the Iran conflict pushed up oil and gas prices, directly squeezing miners’ marginal profits. If gold prices stop rising or fall while energy prices remain high, miners will face dual pressure. Gold mining ETFs such as GDX tracked the rise early on, but then pulled back due to conflict risk. Some analysts believe that if gold structurally moves toward $10,000 while oil remains below $150, miners would still have upside potential. But if gold trades sideways in the $4,000-$5,000 range while energy costs fluctuate in tandem, miner performance may be muted.

The mining sector no longer has the pronounced asymmetry seen in early-generation market bottoms. Early investors could benefit from leverage as valuation moved from undervalued levels to multi-fold returns, but after a large rally, the risk-reward ratio has become more balanced. Professional investors can still uncover opportunities by screening individual stocks: focusing on companies with superior geological conditions, stable jurisdictions, excellent management, and reasonable valuations. Ordinary investors should be cautious and prioritize rebalancing based on realized profits rather than adding new core positions. Although mining stocks in the first quarter of 2026 recorded a phase of gains, energy shocks caused some of that advance to be given back, highlighting the sector’s sensitivity to macro variables.

Bitcoin’s next phase: institutional signals and real-world asset tokenization

Bitcoin’s structural adoption goes beyond short-term hype. The fact that the U.S. president attended a Bitcoin conference in 2024 temporarily boosted prices, but the real driving factor lies in improved regulatory conditions. Moving from adversarial regulation to a more open policy environment, despite the accompanying risk of a certain degree of a “golden age of fraud,” supports long-term growth. As a decentralized ledger, an energy-backed store of value, and a permissionless payment protocol, Bitcoin has self-reinforcing network effects, and the market scale is expected to exceed the previous $2 trillion peak.

The stablecoin market continues to expand and has become an effective solution for offshore U.S. dollar demand. In 2026, stablecoin circulation is expected to surpass $1 trillion, supported by the ability of smartphone users to access equivalent accounts offshore as if they were offshore bank accounts, while also compressing cross-border payment costs. Of course, centralization implies sanctions risk, but for jurisdictions that are not high-risk, stablecoins’ value as working capital tools is significant.

Tokenized gold products have continued to develop since 2018, including Paxos Gold and Tether Gold. Tokenized gold is not tied to a single jurisdiction, which facilitates cross-border transfers and suits capital pools that want to retain gold exposure while avoiding restrictions of the traditional financial system. Similar to gold ETFs, it is not a substitute for physical gold self-custody, but it offers convenience for certain institutional capital. In 2025, the market value of tokenized gold grew from $1.6 billion to $4.4 billion, a rapid increase.

Broader real-world asset (RWA) tokenization focuses on high-quality assets, including stablecoins, gold, and some stocks and securities. Tokenization can enhance global accessibility and enable 24/7 trading, which is especially convenient for investors in developing countries. Blockchain infrastructure companies are putting securities and equity assets on-chain, lowering entry barriers. Institutional signals continue to show up: firms such as Morgan Stanley have launched Bitcoin ETFs, and Tether invests in gold-related companies. However, it is necessary to distinguish structural adoption from temporary hype. Meme coins, parts of the DeFi space, and the NFT sector show weak or stagnating structural growth, even trending toward pause, whereas Bitcoin and the tokenization of high-quality RWAs still have long-term potential.

Investor strategies: distinguishing roads from vehicles

In the realm of crypto and asset tokenization, some strategies focus on “owning the roads and toll booths rather than the vehicles on the road.” That is, they invest in exchanges, infrastructure, or entities that benefit from overall market activity (regardless of bull or bear markets), rather than from the price volatility of a single asset. These companies can keep earning across market cycles and provide more stable exposure.

Overall, gold, silver, and Bitcoin are all in long-term structural uptrend positions, benefiting from the evolution of the monetary system and decentralized demand. But in the short term, investors should watch out for the risk of position adjustments after overheating. The sell-off in gold during crises reminds investors that overly fast prior gains can weaken safe-haven attributes; silver’s volatility requires more cautious position management; Bitcoin’s resilience comes from prior cleansing, but it is still not a traditional safe-haven tool. Mining companies offer leveraged exposure, but energy and geopolitical risks cannot be ignored. Tokenization technology is reshaping asset accessibility; stablecoins and high-quality RWA are worth paying attention to, while meme and speculative areas carry higher risks.

Looking ahead to the remainder of 2026 and beyond, gold prices may fluctuate in the $4,000-$6,000 range, depending on geopolitical easing, inflation trajectories, and the strength of the U.S. dollar. In the long run, gold still has monetary attributes, silver’s industrial demand provides additional catalysts, and Bitcoin’s network growth supports its value-storage role. Investors should adopt a cyclical mindset: build positions gradually after undervaluation or excessive sell-offs, and rebalance during overheated phases. A diversified allocation across gold, Bitcoin, and related infrastructure can better address currency depreciation and geopolitical uncertainty, rather than chasing short-term narratives of a single asset.