How Low Will Gold & Silver Go? | Andy Schectman

New physically deliverable gold and silver contracts (kilo bars and 1,000‑oz silver) are being rolled out across Singapore, Shanghai, Dubai and Mumbai and — when combined with persistent Shanghai premiums and VAT/outbound incentives — are sucking metal eastward via alternative payment rails (CIPS and Enbridge) that already enable oil‑for‑yuan‑for‑gold flows; speakers warn that if Western authorities disrupted shipping/payment rails physical trade could stop and global gold prices would spike sharply.

The Iran war has produced a strong inverse oil‑vs‑precious‑metals relationship as higher oil costs forced some countries to sell liquid assets (Russia sold roughly 900,000 oz in the first four months), while much of the recent buying is attributed to large institutions — creating a tug‑of‑war where public/retail selling funds large buyers and amplifies price dislocations.

Invoking Gibson's paradox, speakers argue that prolonged suppression of real (not nominal) interest rates has artificially restrained gold prices, and point to a 69‑month drawdown in the US Treasury total‑return index to claim the dollar/treasury safe‑haven narrative is weakening and algorithmic narratives tying gold only to falling nominal rates are misleading.

Market mechanics — refiners and dealers hedge physical purchases by shorting futures, and sharp margin increases (example cited: ~300% hike into an ETF rebalancing) have forced margin‑call cascades that turn routine hedges into forced selling, a dynamic that helped produce silver's rapid retrace from near $89 to just under $75.

Observable physical tightness — meaningful COMEX deliveries (hundreds of gold contracts, thousands of silver contracts and hundreds of millions of ounces withdrawn year‑to‑date) plus double‑digit Shanghai premiums — underpins the view that substantive downside is limited: speakers would be 'pretty shocked' to see gold below $4,000 for more than a brief moment and expect silver to find a bottom around $65.