The precious metals market just served up one of its most violent episodes in recent memory, with silver collapsing more than 30% in a single session during early February 2026—among the worst selloffs on record. Gold didn't escape unscathed either, plunging roughly 11% in that same chaotic session. Mining shares naturally followed the carnage downward, leaving investors wondering what just happened to their portfolios.
Silver's 30% single-session collapse and gold's 11% plunge triggered one of precious metals' most violent episodes on record.
Here's the thing though: the technical damage looks worse than the actual sentiment shift. Gold ended January 2026 up more than 9% despite the drop, and silver gained roughly 11% for the month overall. Both metals started February with renewed strength after the plunge. Gold and mining stocks rebounded more than 6% post-drop as buyers stepped in. Classic dip-buying behavior.
The broader picture tells a different story entirely. Gold rose an impressive 64.6% in 2025 and was comfortably over $4,000 per ounce as of late 2025. Silver hit record price levels amid industrial demand, particularly from solar photovoltaics, and faces a persistent supply deficit. Yet mining shares haven't kept pace with the metal they dig out of the ground.
That disconnect is striking. The GDX index showed only modest increases despite gold averaging 20% higher prices. Miners are trading at a massive discount—major gold producers sit at 0.75x price-to-net-asset-value, below long-term averages. Mid-cap and junior miners? Even worse at 0.51x P/NAV per Scotiabank data.
The fundamentals scream opportunity. New Gold trades at just 7.9x forward earnings with 200% earnings growth projected. AngloGold Ashanti sits at 11x forward earnings with 154% growth forecast. Gold Fields has a PEG ratio near 0.19, which is borderline absurd. Earnings revisions are surging—New Gold's quarterly estimates jumped 60%, AngloGold's by 96%.
Supply constraints remain tight. Zero major gold discoveries over 2 million ounces have been made for two years straight. Capital spending sits at extreme lows relative to gold prices. Production across gold, silver, and copper remains stagnant. The South African Reserve Bank's monetary policy decisions also influence mining company profitability through their impact on local operating costs and currency fluctuations. South African miners must also navigate Exchange Controls that govern cross-border capital flows and foreign currency transactions, adding complexity to their international operations.
The selloff created noise, sure. But the underlying fundamentals haven't changed. Interestingly, many South African mining companies face additional currency headwinds as the South African Rand trades as an emerging market currency with heightened volatility in the forex markets.
