Manu Rishi Guptha@manurishiguptha
Is it the end of the Road for Silver and Gold?
Conviction is tested only in drawdowns but never in rallies.
And that forms the bedrock of the cliched statement - Buy when there is blood on the street, but the blood better not be yours.
I've been investing in precious metals since 2021. It took me six months of reading, tracking mine production, annual supply degrowth, and rising demand before I built my first real position on the 6th September 2021. Since then, I've followed the data closely every day.
My rule is simple:
Only take positions where your conviction is so strong that you could possibly go all-in. If it's not, you're just gambling, no matter how much you call it - "diversification."
Yesterday, Silver was down about 30% and gold 10% from recent highs. Here's the psychology everyone faces: We all dream of buying assets 30-40% cheaper. But deep down, we want prices to stay high forever. We crave the dip to buy low, and expect prices move up from the day we bought. That's human nature.
Gold and silver have been used as money and a store of value for over 6,000 years. Fiat currencies, on the other hand, are experiments backed by debt. The US moved away from the gold standard in 1933 domestically and 1971 internationally, because infinite debt could not coexist with monetary discipline. And therefore, the petrodollar came into being.
History is very clear on one thing: Every Fiat currency eventually collapses. (Ray Dalio’s take makes it very clear in one of his now very famous videos)
The only uncertainty is timing, whether the Fiat currencies will collapse slowly or suddenly.
And whether we are at the end of the Fiat system today or not - maybe not yet.
But are we moving towards it faster than ever before - Definitely Yes!!
So decisions to buy, hold, or sell precious metals should not be driven by daily price moves, but by your understanding of history, monetary systems, and your own temperament.
Retail investors can't slam prices like this. Over the last 10 years, big banks paid $1.3 billion in fines for spoofing Silver (data is all online).
Yesterday, with China closed and late LME trading, the "Big Boys" likely dumped to spook you out, clearing shorts or loading longs.
Its pertinent to ask a question:
When LME trading was thin and China was shut, who really slammed the price? It wasn’t retail. Price shocks often serve one purpose: scare weak hands, so that large players can exit shorts and quietly build long positions.
This fact is worth noting:
For every ounce of physical Silver available, there are about 400 ounces traded on paper. For Gold, it's around 200 paper ounces per physical one.
Inventories at metal exchanges around the world are depleting fast.
Those recent exchange outages? They're not about power failures or server cooling issues, but it's about the exchanges struggling to meet contractual obligations as paper contract holders are starting to demand physical delivery, and the system can't keep up with that.
Can prices fall more? Sure, they can. Position size is personal, tied to your conviction and biases.
But fast-forward 10 years: Gold at $10K, $15K, or $20K? Silver at $300 or $500? and y0u'll kick yourself for getting shaken out by “The Pros” who do this for a living.
Or keep buying the dip on Nvidia, Google, Amazon, Zomato, Trent, Polycab, all at unsustainable earnings (PE) ratios.
Eventually, your fortune will be the sum total of the choices you make today.
Fun Fact: Respectively, Silver and Gold are still up 270% and 140% in the last 2 years.
Silver Gold Nifty BankNifty Nasdaq DowJones
