It sure doesn't feel that way right now. Not only has their volatility spiked, neither metal has logged a gain since the Coronavirus was first widely reported on January 1. As I write on March 17, gold is down about 1%, while silver has crashed 30%.

Why are they performing so poorly? Are they really not crisis hedges?

There are answers to these questions. And when one looks at history we can even get a hint about when it will all turn around…

The Great 2020 Sell-off

First, there are several specific reasons that account for the decline in gold and silver right now.

Margin Calls/Liquidity Needs

The biggest factor is a direct result of the rout in stocks. The selloff has been so violent and unrelenting that there is an overwhelming and immediate need for liquidity. Cash is desperately needed by traders and investors to meet margin calls and offset losses elsewhere.