Silver Stackers: "China Has Your Back" - Mike Maloney

Summary

The video analyzes a recent significant drop in silver prices, comparing it to gold and discussing the volatility and fundamentals of both metals. It emphasizes that while silver is highly leveraged to gold, the current market conditions, including Chinese buying and global central bank accumulation, suggest strong underlying support. The analysis covers futures contracts, trader positions, and historical trends, concluding that despite short-term fluctuations, silver remains a valuable investment for the long term, particularly when considering the gold-silver ratio and the anticipated rise in precious metal prices amid global economic uncertainty.

Takeaways

• 📉 The silver market experienced a significant drop, with the price falling from a high of 2943 to a low of 2781, which the speaker refers to as a 'big silver Smackdown'.
• 📊 Silver is described as 'leveraged gold,' meaning it can have more significant price movements in either direction compared to gold.
• 🏦 The Shanghai gold and silver futures are highlighted as indicators of Chinese market activity, showing increased open interest and trading volume.
• 📈 Despite the drop, the speaker suggests that silver investors should not panic, as the fundamentals of the market, including Chinese buying, remain strong.
• 📝 The Commitment of Traders (COT) report is discussed, showing a discrepancy between commercial and non-commercial traders' positions, which may influence market sentiment.
• 💼 The speaker emphasizes that long-term investors should not be concerned by short-term market fluctuations and should focus on the fundamentals.
• 📉 The gold market has been relatively stable over the past six months, with a price range between 2300 and nearly 2500, indicating potential for future growth.
• 🌐 Global silver production has been on a decline since peaking in 2016, suggesting a potential supply issue that could drive up silver prices.
• 📊 The gold-silver ratio is presented as a personal buying guide for the speaker, who believes that silver is currently undervalued compared to gold.
• 🛑 The speaker advises against selling during a pullback, instead suggesting it as an opportunity to accumulate more silver.
• 🏆 The long-term outlook for gold and silver is bullish, with the speaker expecting higher prices due to global instability and the precious metals' status as safe-haven assets.

Q & A

What happened to the silver price recently?

The silver price experienced a significant drop, falling from a high of 2943 to a low of 2781, which the speaker refers to as a 'big silver Smackdown.'

How does the speaker describe the typical reaction to a big down day in the market?

The speaker notes that people tend to panic on a down day, unlike on an up day, and emphasizes that this reaction is more common among traders rather than investors.

What is the relationship between gold and silver prices?

The speaker explains that silver is leveraged to gold, meaning that if gold prices increase, silver prices will increase by a multiple of that amount, and the same applies to decreases.

What is the significance of the Shanghai gold and silver futures in the context of the speaker's analysis?

The Shanghai gold and silver futures are highlighted as indicators of Chinese investment in these commodities, showing that the Chinese are buying when prices drop, which supports the market.

What does the speaker say about the open interest and volume in the Shanghai silver futures?

The speaker points out that the open interest and volume in the Shanghai silver futures have significantly increased in the past four months, indicating heightened activity in the silver market.

How does the speaker interpret the Commitment of Traders report?

The speaker uses the Commitment of Traders report to analyze the net positions of commercial and non-commercial traders, suggesting that a high net short position can indicate a potential bull market.

What is the speaker's view on the relationship between gold and silver as safe haven assets?

The speaker believes that gold and silver are ultimate safe haven assets, and that they are coupled in such a way that when gold prices rise, silver prices will follow.

What does the speaker suggest about the gold-silver ratio?

The speaker uses the gold-silver ratio as a personal buying guide, noting that a high ratio indicates that silver is more of a bargain compared to gold.

How does the speaker analyze the global annual silver production?

The speaker notes that global annual silver production peaked in 2016 and has been falling since, which is significant because silver is primarily an industrial metal with demand from various industries.

What is the speaker's strategy for investing in silver and gold?

The speaker plans to use market pullbacks to accumulate silver, converting it to gold at favorable prices, based on the belief that gold will continue to rise and drag silver prices along.

What historical perspective does the speaker provide on the gold-silver ratio?

The speaker mentions that historically, the natural ratio has averaged around 13 to 15, and that the current ratio of 85 indicates that silver is significantly undervalued compared to gold.