This BBC podcast is supported by ads outside the UK.
If journalism is the first draft of history, what happens if that draft is flawed?
In 1999, four Russian apartment buildings were bombed.
Hundreds killed, but even now we still don't know for sure who did it.
It's a mystery that sparked chilling theories.
I'm Helena Merriman and in a new BBC series I'm talking to the reporters who first covered this story.
What did they miss the first time?
The History Bureau, Putin and the apartment bombs.
Listen on BBC.com or wherever you get your podcasts. precious metals rally is tarnished.
It is World Business Express from the BBC World Service.
I'm Leanna Byrne.
We'll find out what this means for the biggest global consumers of gold.
And what does this mean for the financial markets?
Last month, it was all about the price of metals until it wasn't.
Gold, silver, copper all touching record highs today.
Gold and silver are up.
What we're witnessing in the metals market is stunning.
I think that's the word I want to use.
Gold is back in the headlines again.
It has hit a fresh record.
Gold, copper and silver have all hit record highs.
Record crashes in gold and silver.
Well, big news with precious metal prices dropping at rates not seen in days.
Metals melt down.
Gold and silver continue to plunge, adding to steep losses seen on Friday.
Gold and silver surged to record highs, driven by fears about geopolitics, inflation and trust in the financial system.
So what changed?
Ross Norman is the chief executive of Metals Daily.
You can't really go back a couple of weeks.
You need to go back to 2022.
This is when the bull run started.
But what took place since the beginning of the year is that gold has overextended itself.
The basis of the rally going back three or four years is central bank buying, primarily looking to de-dollarize, looking to buy an asset which removes their vulnerability to US assets.
Now, that rally picked up momentum at the beginning of this year, and it was feeding on itself.
It was in a self-fueling, speculative frenzy.
When markets go parabolic, It only ever ends one way.
So, although it's had a significant decline of about 21 in the last couple of days, we've only taken the price back to where we were three weeks ago.
And actually, we're still up about 8% on the year to date.
That is good to put things into context, that it's not just this crazy drop that a lot of people are talking about.
However, you were saying there was a lot of speculation.
What does that mean?
Does that mean the average maybe retail trader was starting to put their money into gold?
It's a good question.
I mean speculation to me really means leveraged plays where you get a multiplier effect on your investments, such as options and futures.
And it was quite clear that there was a lot of that going on in China.
Now, you mentioned there physical coin and bar demand.
Now in the UK, across Europe US Australia, bullion dealers are finding.
Their phones are being rung off the hook by interested investors.
Physical stocks are light because it's quite a thin pipeline, inventory pipeline for physical.
It's not really quite enough to move the dial in terms of the overall bullion market.
Put you this way.
London is a global capital for trading gold.
We trade between 100 and 150 billion a day.
I mean we are.
I mean that's something most UK people don't realize is just how central London is to the global market.
So the coin and buy markets, which is only a short, small few tons, isn't really enough to move the dial.
Important to you and I, yeah, as investors.
But it's actually a relatively small part of the overall story.
What was the catalyst for this latest drop in gold prices?
A lot of people speculating on different areas, whether it was the appointment of Walsh as the new Fed head.
I think it was a coincidence.
I think what it was was the weight of numbers.
It wasn't just gold.
Gold, as I say... fell 21% in the last couple of days, Friday and today.
But silver fell by double that.
Platinum, palladium, the white metals fell.
Copper fell, oil fell, Asian stocks fell.
It was a very coordinated collapse.
So I don't think it was a one thing, except that the commodities themselves have seen very large leverage plays.
I think it was the weight of numbers that fell in upon itself, as it will do.
That was Ross Norman, Chief Executive of Metals Daily.
And this sell-off hasn't stayed contained.
It's also hit stock markets, commodities, lots of different things.
Jane Sidnam is Investment Director at Rathbones.
And I'm sure you've been following this all, Jane.
How has it affected financial markets?
So I mean we've got a relatively positive stock market today in London, but on Friday we saw falls in the mining stocks, in the oil stocks.
So it was really anything that had a commodity connection, that they were certainly marked down in the face of all this sort of unwinding, really a sense that perhaps you know, was that going to affect their earnings, which in the short term, of course it wouldn't?
I saw European markets, they're back up today, aren't they?
They've kind of corrected themselves, essentially.
They have.
I mean there's often a sort of mismatch between what goes on in a sort of individual market and the economy as a whole.
And it certainly feels as though this was speculative excess, people borrowing money, really sort of leveraging up and pushing as hard as they could to make money in these commodity markets rather than it kind of spilling over into the general economy.
There seems to be quite a gap between those two things.
All right, Jane, stay right there.
China.
It's the biggest consumer of gold in the world and it's often bought as jewellery or a long term saving there.
And a big rise in the price of gold saw lots of ordinary people people like you and I trying to sell their personal jewellery.
These people in Shanghai were visiting a trader to see what they could get.
I never imagined the price of gold would rise so dramatically, so there's an opportunity here.
This is the third time I have come here.
The first time was for a ring left by my father.
It was broken.
Then we felt like there was a bit of a disconnect between the price and its value.
So my mother thought it was only worth 1,000 yuan back then, but now we could sell it for 10,000.
I just felt I had some jewellery that I don't wear often and also had no use.
Since gold prices are already so high anyway, it seemed a perfect time to sell.
It's the perfect time to sell.
Gold is a hedge against inflation, so Chinese people might buy some gold, even if it's just the traditional three gold items given to brides during weddings, right?
Yes.
So that was the view from China.
Let's go to India now because it's recognised as the world's second largest consumer of gold.
So what do the high swings in price mean for people there?
Here's Archana Shukla in Mumbai to explain.
India is one of the biggest buyers of physical golds in jewellery.
And if you look at any Indian household, gold is really part of their life, whether it's weddings, festivals like Diwali.
Any small or big ritual, Indians have to buy gold.
It's their safe haven.
And especially women, see it as their asset.
And if you talk from economic perspective, we import all our gold.
So with being the second largest consumer of gold and importing all of that, it really is a big mark on our import bills.
And also, gold-based jewellery industry is a big export industry in India.
When you have a massive gold market swing, how does that affect the Indian economy and what's it been like trying to keep up with it over the last couple of weeks?
We are seeing some bit of the consumption patterns change here in India.
Jewellery sales have actually come down in the last year by almost 25%.
People are now moving to looking at gold also as long-term investment.
They're buying more paper gold, digital gold.
What we've also seen is the government being a bit mindful because our import bills have gone up.
Most bullion market experts that we've spoken to.
They say that In the next coming months we'll see India's import of gold come down because of high prices and also because our demand for physical gold has slightly moderated by about 20-25.
Any fluctuation in gold prices will really have a direct impact on our trade deficit.
We've seen in the last couple of months our trade deficit widening, especially during the festival months where people buy a lot of gold.
So even gold traders had imported quite a lot at high prices and that really affected our trade deficit.
That was Archana Shukla in Mumbai.
Now, when gold wobbles, investors often look elsewhere.
Sometimes they look to cryptocurrencies.
Jane Sydenham is still with me.
Jane, how has Bitcoin behaved through all of this?
Not that well, really.
I mean, it's fallen from about $125,000 at the peak in the summer to $78,000, $79,000 today.
I think there's a bit of a sense that it's not really viewed in the same way as gold.
It's not quite that hedge against financial tension.
A new digital gold, it doesn't seem to be fulfilling that at the moment.
There you go.
Jane said it first.
Well, probably, maybe not first, Jane.
Not the digital gold.
Jane Sydenham, Investment Director at Rothbuns.
Thank you so much for joining us.
And that is it from World Business Express from the BBC World Service.
I'm Leanna Byrne.
Please subscribe to get the latest from us.
Just search for World Business Express wherever you get your podcasts.
Have a great day.
Thanks for listening.
If journalism is the first draft of history, what happens if that draft is flawed?
In 1999, four Russian apartment buildings were bombed, hundreds killed.
But even now, we still don't know for sure who did it.
It's a mystery that sparked chilling theories.
I'm Helena Merriman and in a new BBC series I'm talking to the reporters who first covered this story.
What did they miss the first time?
The History Bureau, Putin and the apartment bombs.
Listen on BBC.com or wherever you get your podcasts.
