Clocktower Wang Kaiwen: Silver is currently the highest-conviction trade. If the Fed “dares” to cut rates while inflation is falling, then silver will “shoot to the moon” | Alpha Summit

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On December 24, spot silver surged strongly, not only breaking through the key psychological threshold of $70 per ounce in one go, but also reaching as high as $72 per ounce. Its sharp rise quickly became the market’s focal point. This trend confirms and extends the increasingly bullish expectations for silver seen in previous days.

On December 19, Clocktower chief strategist Wang Kaiwen clearly identified silver as the “highest conviction trade” at the current time during the “Alpha Summit,” making a bold prediction: global central banks will eventually have to intervene in the silver market and include it as a reserve asset.

Wang Kaiwen pointed out that although gold prices have repeatedly hit new highs, silver’s current valuation is extremely attractive when compared on a real price basis with inflation removed. He analyzed that the real price of gold has far surpassed its 1979 peak, while the real price of silver has only just broken out of a long-term downward channel. At the same time, the gold-silver ratio has recently broken out of a 15-year upward channel. This technical signal suggests that silver is likely to outperform gold in the current precious metals bull market.

In response to the traditional view that “central banks do not hold silver as reserves,” Wang Kaiwen offered a disruptive rebuttal. He believes that as developed Western countries’ bond markets face unprecedented turmoil, trillions of dollars in global wealth urgently need a new vehicle. With gold trading crowded and the platinum and palladium markets too small in scale, silver has become the only physical asset capable of absorbing the outflow of massive capital. This is not the central banks’ subjective intention, but an ‘inevitable choice’ when the credibility of fiat currency systems is shaken.

Additionally, Wang Kaiwen analyzed the macro policy catalysts for silver. He warned that if Trump, in his second term, adopts aggressive populist economic policies and pressures the Federal Reserve to cut interest rates despite high inflation, it would cause real interest rates to drop sharply. This scenario, where the Fed ‘lags behind the inflation curve,’ would recreate the precious metals frenzy of the 1970s and drive silver prices into an ‘acceleration phase.’

Valuation Depression: Dual Breakouts in Silver’s Real Price and the Gold-Silver Ratio

In his speech, Wang Kaiwen elaborated on the technical and valuation logic for being bullish on silver. He pointed out that while the nominal price of gold keeps hitting record highs, its “real price” after inflation adjustment is already at historical highs. In contrast, silver’s real price has only recently broken out of its long-term downward channel, indicating vast room for catch-up gains.

An even more critical signal comes from changes in the gold-silver ratio. As a core indicator of the relative value of the two precious metals, the gold-silver ratio has recently broken a 15-year upward trend.

Based on this, Wang Kaiwen judged that in the current market environment, the cost performance of allocating silver is significantly superior to gold. Clocktower regards going long silver as its highest conviction strategy. Although he does not recommend investors blindly chase silver at current levels, he firmly believes the rally in silver is far from over.

Ultimate Prediction: Central Bank Entry Is an "Inevitable" Result

In response to doubts over silver’s lack of central bank reserve value, Wang Kaiwen presented an in-depth deduction based on macro geopolitics.

He believes that since the collapse of the Bretton Woods system, the cornerstone of global wealth has rested on the credit of Western fiat currencies represented by U.S. Treasury bonds. However, in today’s “multipolar” geopolitical landscape, Western countries’ fiscal discipline is slack, and government debt is soaring, fundamentally challenging the safety of bonds as stores of wealth.

Wang Kaiwen explained that if the world’s government debt (about $150 trillion) plus massive private sector wealth seek safe havens due to bond market turmoil, they will face the problem of asset scarcity.

Gold prices are already high, while small metals such as palladium and platinum have markets that are too small to absorb massive capital flows. Therefore, silver becomes the only feasible wealth carrier besides gold. He emphasized that central banks buying silver is not out of preference, but an unavoidable choice to hedge risks to the fiat currency system.

Macro Catalyst: If the Fed Lags Behind the Inflation Curve, “Silver to the Moon”

When discussing future price catalysts, Wang Kaiwen specifically mentioned the impact of the U.S. political environment on monetary policy. He analyzed that if Trump displays “true populist” traits—similar to Turkish President Erdogan, prioritizing jobs and growth at the expense of high inflation and compelling the central bank to cut rates—then the Fed’s monetary policy will significantly lag behind the inflation curve.

Historical data shows that when real interest rates are negative and central bank policies lag inflation (such as from 1975 to 1979), precious metals typically experience a dramatic bull market. Wang Kaiwen said that once the market confirms the Fed is forced to cut rates even as inflation picks up, silver will gain its strongest upside momentum and see a real round of accelerated gains.

Risk Warning and DisclaimerThe market involves risks; investments must be made with caution. This article does not constitute personal investment advice and does not take into account the investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investment based on this is at your own risk. ```