Gold falls below $3,900 and silver drops 6% in a day as the Fed's hawks gain ground

Gold fell to $3,875.84 an ounce on October 30, down 3.62% on the day and 7.23% over the month. Silver fell further, to $48.90, a one-day drop of 6.22% and a monthly loss of 19.17%, although it was still slightly higher than a year earlier. Two days earlier, after the Fed held rates and two officials voted for a hike, spot gold had been $4,039. CNBC said higher oil prices hurt gold that day, because traders read the oil price as a reason for tighter policy.

The monetary metals and crude moved in opposite directions. Brent rose about 14% in October while gold and silver fell. The market is treating the energy shock as a reason for a tighter Fed and higher real interest rates, not as a reason to expect currency debasement. Holders of gold and silver earn no yield, so higher expected real rates raise the cost of holding them.

Bitcoin did not offer a hedge either. It traded near $77,170 on October 31, about 39% below its record, after the Binance theft and ETF outflows. Bitcoin's defenders still argue the long-run case. In a CoinDesk opinion piece marking 18 years since the Bitcoin white paper, Onramp chief executive Michael Tanguma argues that small businesses still pay for a financial system built on bailouts and can protect part of their surplus by holding bitcoin. Tanguma runs a bitcoin custody company, so his argument also serves his business.

The largest corporate holder of bitcoin is borrowing more against it. On Strategy's third-quarter call, executive chairman Michael Saylor and chief executive Phong Le answered analysts' questions about what they call "digital credit": preferred shares, including the Stretch (STRC) security trading at par, that pay fixed dividends funded by a bitcoin treasury. Those securities add a layer of leverage to the bitcoin price.