Trump pumps TACO again, WTI crude oil retraces nearly 29% intraday, repeats the script of gold, silver, and Korean stocks

Source: Company Research Office

Trump has TACOed again. This time, his TACO has led us to witness three massive shocks in just over two months since the start of 2026.

At the end of January, spot gold plummeted more than 12% in a single day, and silver crashed 31.4%, both setting the largest one-day decline since 1980. Shortly after in early March, last year’s “global bull,” the Korean stock market, suffered a historic collapse; the KOSPI index plunged 12.06% in one day, hitting an all-time record.

Then, between March 9 and 10, international crude oil, which had been soaring due to the Middle East situation, abruptly dropped following President Trump's statement that “the war may end soon.” The intraday volatility exceeded 40%, mirroring the dramatic declines seen in gold, silver, and Korean stocks.

As a result, several oil and gas-themed LOF funds collectively fell. At the opening on March 10, Hua Bao Oil & Gas LOF (162411) dropped over 5%, and Harvest Crude Oil LOF (160723) once fell more than 7%.

Although precious metals, equities (Korean stocks), and energy commodities (crude oil) may seem entirely different asset classes, beneath the surface, the microstructure and underlying logic of these crashes are highly similar: extreme speculative frenzy, high leverage trading structures, all triggering panic selling amid external shocks.

This crude oil plunge is a reenactment of the previous collapses; the epic crashes in gold, silver, and Korean stocks had already written today’s script for the oil market crash.

Reviewing the super rally in gold and silver at the beginning of the year, gold surged from $4,300 to $5,600, with a single-month gain of nearly 30%. Silver soared from $71 to $121, a stunning 70% jump.

On the eve of the crash, the 14-day RSI (Relative Strength Index) and other key indicators soared above 85 and even 90, into extremely overbought levels; net speculative long positions on COMEX hit historic highs. As Reuters warned then, “Going long on gold” became the world’s most crowded trade.

The Korean stock crash resulted from a toxic combination of AI fever and retail investors using high leverage. Riding the global AI craze, and with Samsung Electronics and SK Hynix leading the way, the KOSPI soared 75% last year and continued to jump nearly 50% in the first two months of this year.

Before the March meltdown, the Korean market was dubbed “the world’s hottest casino” by foreign media; stock trading became a national pastime, and the balance of margin trading (leveraged funds) hit a record high. 

In Korea, a country with only 52 million people, about one-third engage in stock trading, and the total number of stock accounts surpassed 100 million—meaning each person, on average, held two trading accounts.

Foreign and retail investors crowded into the mega-cap tech stocks that had already soared. The marketplace became extremely congested. When everyone is fully leveraged and all-in, the market effectively loses its liquidity for new buyers.

Last week’s crude oil market followed almost the exact script as gold, silver, and Korean stocks.

Pushed by factors like the actual closure of the Strait of Hormuz, oil saw a historic rally: last week, WTI crude soared over 35%, marking the biggest weekly gain since futures trading began in 1983. During Asian trading on March 9, WTI crude hit $119.48 per barrel, a new high since 2022, and option market implied volatility for call options spiked to extremes.

Amid this frenzy, funds poured into the energy sector: LSEG Lipper data shows global energy sector funds saw a massive net inflow of $1.21 billion last week, domestic “three oil giants” hit consecutive daily limits, and PetroChina reached an 11-year high.

Yet, just as the market was immersed in the illusion of a one-sided rally, with news that the G7 was discussing the release of oil reserves, international oil prices fell sharply. Crucially, on March 9 (US time), President Trump said the Iran war had essentially ended. This comment caused a $14 plunge in oil prices in a short time, with intraday volatility of up to 41.95% for WTI crude.

Many may ask: given that market volatility is normal, why did a typical asset correction turn into such epic, extreme collapses?

The core answer: During these plunges, the market’s micro trading structure suffered “systemic failure.” High leverage, liquidity drought, and panic selling interwove to form an inescapable death spiral.

In the precious metals market, the amplifiers were extremely high nominal leverage and hikes in exchange margin requirements.

On the eve of the crash, core institutions like CME raised gold and silver futures margin requirements multiple times (e.g., silver margin up more than 20% in a short period) to control risk. For highly leveraged long positions, this was like pulling the rug out from under them—they faced a margin call and were forced to unwind their positions, triggering a stampede among longs.

In China, Guotou Silver LOF (SZ161226) hit the daily limit down for five consecutive sessions, with many investors finding themselves unable to sell.

Korean investors are known for their aggressive style—this "gambling" trait serves as an engine during uptrends but becomes explosive dynamite during downtrends.

Data show that the margin balance in the Korean stock market soared from 65 trillion KRW in March 2025 to 158 trillion KRW by December—a 143% increase; the share of margin trading rose from 18% to 35%, with 78% contributed by retail investors. The margin requirement dropped to 30%, meaning 1 million KRW could control a position worth 3.33 million KRW. Retail positions in 3x leveraged ETFs climbed from 5.1% to 12.8%.

When everyone is fully loaded and levered, the market effectively loses liquidity for new buyers. Crude oil futures, by nature, are also highly dangerous leveraged derivatives.

Take the world’s most traded contract, the NYMEX WTI crude oil main contract: one standard contract represents 1,000 barrels. When oil hit $119 per barrel this week, one contract became nominally worth $119,000.

However, the required initial margin by the exchange is often around $7,200, meaning participants were typically trading at 15-16x leverage. With 16x leverage, theoretically, if the oil price pulled back just 6% from its peak (about $7 drop), the long-side margin would be wiped out.

On March 9, after the news that G7 countries planned to jointly release strategic oil reserves, WTI oil’s gain collapsed from almost 30% to just 14% intraday, easily breaching the 6% “death line” for highly leveraged longs. Those high-leverage participants who entered the market above $110, driven by FOMO sentiment, were wiped out by forced liquidations in mere hours.

In capital markets, leverage is always a double-edged sword; it amplifies gains during uptrends and becomes deadly during declines.

What’s worth deeper reflection is that in the crashes of gold, silver, Korean stocks, and this oil plunge, none involved substantial deterioration in the asset fundamentals. Instead, what collapsed was speculative froth built atop overcrowded, leveraged positions that unraveled after external shocks. The underlying assets held up; what fell was the market’s greed, frenzy, and overstretched speculation and leverage.

During the gold and silver crashes, physical silver premiums in places like Shanghai and Dubai rose rather than fell, reflecting that real hedging and industrial demand for precious metals remained robust. What crashed were overleveraged, highly speculative derivative bets.

In the Korean stock crash, global demand for memory chips was still strong. There was no substantial deterioration in the fundamentals of Samsung Electronics or SK Hynix. What collapsed was financial leverage and a false boom built on optimistic expectations.

The same goes for this crude oil drop: the plunge was mainly triggered by Trump’s statement about the war ending, flipping expectations around geopolitical risks, not by changes in the global oil supply-demand fundamentals.

Earlier, the surge in oil prices was supported by supply fears due to the closure of the Strait of Hormuz. The expectation of war ending shattered that support, yet the global oil supply-demand structure, industrial needs, and consumer demand did not undergo overnight changes.

Even with news of the G7 planning to release 300-400 million barrels of strategic reserves, this has not yet materialized. Moreover, Trump stated that the US has sufficient oil reserves and is not considering tapping into emergency reserves yet; the fundamentals of crude oil remain essentially intact.

The real cause of this plunge is the concentrated exit of high-leveraged speculative positions after a reversal in expectations—this is a bubble bursting, not an implosion of asset fundamentals.

The iron law of capital markets: excessive gains are, in themselves, the biggest risk. When an asset reaches the “everyone is making money” illusion, even the smallest shock can be the straw that breaks the camel’s back, triggering panic profit-taking.

Whether it is a flash crash in gold and silver, an avalanche in Korean stocks, or a plunge in crude oil, when an asset rises parabolically, it is often a precursor to a violent reversal. The sharper the rally, the harsher the fall.

The plunges in gold, silver, and the Korean stock market never meant the underlying assets were flawed, but exposed the market’s greed, irrational exuberance, and overextended speculative leverage.

The three major shocks at the start of 2026 have offered a bloody lesson in risk to global investors. The strikingly similar crash trajectories in gold, silver, Korean equities, and crude oil carry particularly potent warnings for trading commodities and equities:

1. Profits and losses stem from the same source—an overstretched rally is always the biggest risk. Never chase a hot trade blindly, and if you don’t understand the underlying asset, don’t jump on the bandwagon.

2. Don’t blindly trust in “safe-haven assets”—in a liquidity crisis, no asset is safe. Even recognized safe havens like gold can still crash 10% in a day amid panic selling and liquidity crunches. 

3. Stay away from leverage, especially at market highs. Leverage and forced liquidation were the key amplifiers in the two previous crashes. Retail investors should never use high leverage to bet on geopolitical events. 

4. Respect the market and always put risk control first. In capital markets, survival is more important than making a quick buck.

Editor: Zhu Henan