Transcription
Do not sell your silver this week. If you take one thing from the next 10 minutes, take that. Gold broke under 4,000. Silver crashed to 56. And let's be honest about what that actually means because the number alone hides the pain. Silver is down roughly 53% from its January high near 121. If you bought anywhere close to that top, about half your position is gone. And right now it feels like it's never coming back.
I know my desk is flooded with sell orders this morning, but I'm a dealer. I move metal every single day. And I'm telling you straight. The people dumping silver right now, I believe are making a mistake they will regret down the road. Here's why. And this is the whole video in one sentence. Silver didn't get less valuable this week. The dollar got stronger. And that is a completely different thing. This isn't a collapse in gold and silver. It's a spike in the dollar. And it's mostly mechanical. Stick with me and I'll prove it to you why this is happening. Why silver is falling twice as fast as gold and exactly what I'm doing with my own money instead of selling.
I'm Eric with Summit Metals. We do the work institutions do for themselves in a way people like you and me can actually use. And everything I'm walking through, the levels, drivers, premium numbers, and the four moves at the end is on our PDF this week. The first link in the description. Grab the PDF brief now and follow the numbers with me. All right. So, let's prove it.
Start with the dollar. The US dollar index just pushed above 100, even 101 for the first time in about a year. When the dollar rips, every asset priced in dollars, and that includes both metals, gets repriced lower almost automatically because it now it takes fewer of those stronger dollars to buy the same ounce of metal. That's not the market rejecting gold. That's the measuring stick getting longer.
Now, the reason the dollar is ripping the Fed under the new chair, the dot plot now shows roughly half the committee projecting at least one rate hike this year, and the market has run with it. Traders are now pricing as many as three quarter point hikes before year end. Think about what that does. Metals pay you, as we know, no interest. When the market suddenly believes cash and short-term treasuries are going to pay you more, the opportunity cost of holding metal goes up and the fast money, well, it rotates out. The rotation is what you're watching on the charts today.
Now, here's the piece most people actually miss, and it's the answer to why silver is getting hit roughly twice as hard as gold. Silver, as we know, wears two hats. It's a monetary metal like gold, but it's also an industrial metal. When the market starts pricing in higher rates and slower growth, that industrial half of silver gets marked down on growth fears. At the same time, the monetary half is fighting the strong dollar. So, silver takes the hit from both sides at once. That's why the gold to silver ratio is blown out. And it's why silver always falls faster and harder in a move like this. It's not a flaw in silver. It's the nature of silver.
And then there's the plumbing underneath all of it. A lot of this selling isn't anyone deciding silver is a bad investment. It's forced. We saw it, if you remember, earlier this year when the exchanges jacked up margin requirements and leverage players had to dump their most liquid holdings, gold and silver, just to raise cash. Leverage ETFs, rebalancing, margin calls, stop losses, tripping stop losses. That's mechanical selling. It's violent. It's fast. And here's the key. It will burn out. Force sellers eventually run out of the things they want to sell. Conviction buyers don't run out of conviction. So that's what's actually happening. A strong dollar, a hawkish Fed. Silver's industrial side getting double hit and a wave of forced leverage selling on top. Notice what is not on that list. The physical demand story.
Let me show you what my desk is seeing on that front. In my years between the Wall Street side of this and the counter, I've watched this exact kind of move more than once. The paper price gets shoved around by macro and margin, and the physical mark market quietly does its own thing underneath. Here's the tell though this week. When metal gets crushed on the screen, you'd expect a flood of people dumping physical. That is not mostly what's walking in the door. Yes, I'm getting capitulation sellers, the folks who bought the top and can't stomach it any longer, but I'm also seeing serious buyers stepping in with both hands because to them, a strong dollar selloff is a sale, not a verdict. The weak hands are handing their ounces to the strong hands. That's what a bottoming process actually looks like. It's ugly. It's supposed to be.
Now watch the premiums because they tell you the truth the spot price can't handle. In a real physical panic, two things can happen at once. Spotf falls while premiums on actual product hold firm and even rise because everyone wants the same thing at the cheaper number. If you only watch spot, you think the world is ending. If you watch the all-in price on a real coin, you see demand is alive and well.
Now, let me be straight with you because I'm not a perma bull and I won't insult you. If you put real money in near 121, you were down more than half. And that is a gut punch. I'm not going to dress it up or tell you this thing doesn't sting. This is a serious sell-off and it can absolutely get worse before it does get better. If the Fed actually delivers those hikes and the dollar keeps climbing, metals can stay heavy or grind lower for a while. What I'm telling you is that the reason we're falling are macro and mechanical. They are not the reason people own metal in the first place. The reasons you own it have not changed. The debt hasn't gone anywhere. Currency debasement over time has not gone anywhere. Central banks are still net buyers of gold. My long-term destination is still 5500 gold and 120 silver. This selloff doesn't erase this thesis. If anything, a strong dollar high rate squeeze is exactly the kind of environment that eventually breaks and sends the next leg higher. The timing belongs to the Fed. The direction over the long run belongs to the math.
So, here's exactly what I do this week. Four moves and you can finish every one of them before the weekend.
Move one, do not sell into this panic unless you genuinely need the cash inside the next two years. Pull up your real cost spaces and your time horizon this weekend. If you bought to protect purchasing power for five plus years, then a 12-week low driven by the dollar and the Fed is noise on your timeline. And selling here, just hand your ounces to the buyers I described at a discount. The only legitimate reason to sell into this is a real near-term liquidity need. If that's not you, close the app and walk away from the screen.
Now, move number two. If you genuinely must raise cash, sell in the right order. Liquidate things like generic rounds and bars first. They're closest to spot and cheapest to replace later. Protect your sovereign coin and anything inside your IRA because those carry the premium and the tax shelter you don't want to give back. Call my desk before you sell a single ounce so we can quote you the real number.
Move number three. If you're a long-term buyer, understand this is a sale, but watch the all-in price, not just spot. In a sell-off like this, spot drops, but premiums on real product can jump because everyone wants metal at the lower number. So, don't get anchored into the screen price. Ask what the coin actually costs you delivered. Ladder your buys and keep dry powder. Do not throw it all in one click trying to call the exact bottom because for selling can overshoot. I like to think of what I'm doing as dollar cost averaging down. That move can be hugely important and very valuable when the market turns and begins to move higher.
And now number four, stress test how you actually hold your battle. If you've got unallocated or we store it for you paper metal sitting in a big bank, a margin-driven sell-off is exactly the week to ask the hard question. Can I convert this to allocated segregated storage or take delivery? When the whole move is being driven by leverage and paper, the gap between a paper claim and a real ounce is the thing that matters most. Check your vaulting and look at whether an allocated IRA held position fits in your situation.
So here's where I come down. We move physical metal every single day. I have lived through the panic low capitulation and I've seen what those exact same ounces were worth a couple of years later. This is a hard week and I'm not going to dress it up. The dollar is strong. The Fed is leaning hawkish. and silver is getting hit from both sides. All of that is very real and all of it is the kind of thing that will change because it always has. The difference between a stacker and a seller was never how they feel when it's green. It's what they do when the red hits. And believe me, it does hurt. So before you hit that button, ask yourself one honest question. Do I actually need this money in the next 24 months? If the answer is no, then you are not escaping a collapse. You are, in my opinion, selling your insurance in the middle of the storm to the very people who will be happy to sell it back to you later at a much higher price. The metal did not change this week. The dollar did. Don't let a strong dollar and a scary headline talk you out of the one asset they cannot print.
Now, if you want the live levels, the premium guidance, and those four moves on our PDF, you can keep on the fridge, the Summit Metals PDF brief is linked in the description. Download it. And a quick note, nothing here is financial advice. Do your own research and consult a professional before making any investment decisions. Thank you for tuning in. I'll see you in the next one and happy stacking.