Pierce through the fog of commodities to understand the real market [Dialogue with Peifengke, Part One]

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Dialogue with Peifengke Chen Dapeng Part I｜Clearing the Fog of Commodities, Understanding the Most Authentic Market

In recent years, the enthusiasm for investing in precious metals/non-ferrous metals has been rising. On March 15, 2026, the masterclass “Understanding Gold, Silver, Copper: New Paradigm of Global Metal Pricing”, jointly hosted by Wallstreetcn and Peifengke Chen Dapeng, received high reviews in the market. To help everyone better understand the underlying logic behind the commodity world, we have launched the annual column “Dapeng Talks” after friendly consultation with Professor Chen, accompanying users to see through the underlying truths of the commodity market, from industrial depth to financial logic.

This article is the dialogue recorded with Professor Chen Dapeng in March 2026, “Clearing the Fog of Commodities, Understanding the Most Authentic Market,” hoping to help everyone better understand this complex market.

The Puzzle Ten Years Ago: “Is Gold Too Expensive to Rise $50 in a Year?”

I first entered the commodity industry during 2015-2016, initially participating in some mining M&A projects. That period could be described as the lowest point of the industry.

I mentioned before on my public account: my first task was to try to convince a SOE leader that gold prices could rise by $50 in the coming year. At that time, gold was around $1050 or $1100, and everyone felt that gold couldn’t even rise 5% in a year. Saying this out loud seemed unbelievable, as the all-in sustaining cost (AISC) of gold production was about $700~800. Many people would ask: If production costs are only seven or eight hundred, how could gold prices reach 1100 or even 1200 ? These views now seem absurd, but back when my career started, almost nobody cared about the industry.

If you review the past, you’ll find Zijin Mining’s acquisition of the Kamoa copper mine was met with no market reaction for almost four or five years. People thought, so you spent 400 million to buy a mine, so what? This wasn’t seen as a good opportunity.

Later on, I was fortunate to join Zijin Mining, working on macro research and strategy research, as well as commodity investing and hedging advice. You could say, in commodities, I experienced everything from M&A, investment research, to looking at investments from hedging and proprietary trading perspectives. So although compared to many veteran investors, these 10 or 11 years of experience may not be particularly rich, I had the luck to participate in different institutions, different process steps, and look at the same product’s trading structure from different angles.

The Truth of Market Consensus: There Is No Single Trading Logic

My greatest realization is, every participant in this market is here to make money, but because everyone’s endowments and starting points differ, the ways and thoughts of making money are completely different. It’s very hard to understand the counterparty’s thinking from a single perspective.

We often hear people say they’re wondering what logic is being traded in the current copper market. But in my view, the so-called “unified logic” doesn’t really exist. We’ve never seen a time when all market players were trading the same thing.

Basically, everyone acts based on their market understanding, the indicators they observe, and the nature of their enterprise. At any given moment in the market, there are many different voices.

If there’s a main takeaway, it’s that you should communicate with as many different participants as possible to get everyone’s perspective on the same market. On that basis, you can look for any specific or final conclusions.

Industry Experience Helped Me a Lot, But Also Made Me Misjudge the Market 180 Degrees

Speaking of mistakes and experiences, I have many personal insights. In October 2022, I went to New York — Los Angeles and New York were still brightly lit, but due to poor US stock performance, everyone’s mood was low. The most popular saying at the time was “Federal Reserve hikes into recession.”

When making the 2023 gold outlook, I inevitably was influenced by this narrative. I thought, since rapid interest rate hikes would lead to a US recession, gold should be a good product. Also, I had excessive expectations for China’s post-reopening recovery, predicting 2023 would be “China recovery + US recession.” In hindsight, this prediction was totally off.

My mistake was over-relying on traditional economic cycle logic (like recession, recovery, or stagflation), while ignoring more fundamental structural drivers: On the US side, post-pandemic, the US continued with unexpectedly high fiscal deficits. In China, real estate remained in a structural quagmire—this wasn’t just a cyclical fluctuation, but a structural drag.

If you ignore structural drivers in today’s era and only focus on historical patterns of economic cycles, you’ll likely misjudge the market entirely.

Although my macro forecast for 2023 was totally wrong, luck was on my side. In the first half, RMB depreciation boosted gold performance; in the second half, the SVB crisis changed rate expectations, and gold price improved as well. But we must realize luck does not mean logic is correct. If you don’t distinguish between structural and cyclical issues, you’ll easily lose direction or control in commodity trading.

Looking back at early 2022, I thought the Fed’s rate hikes might not reach 5.25%; at the time, mainstream believed 2.25% was the limit. In 2023, when SVB blew up and the top 9 investment banks became 8, the atmosphere reminded people of the 2008 financial crisis, but the market’s performance was surprising.

A recent case was in Q4 2025. Shanghai silver’s volatility reached 40%—historically, this is usually a temporary high point. But I ignored the fact that positions and holdings in silver exceeded expectations. Positions and trading are often leading indicators of volatility; when leading indicators break expectations, volatility also exceeds expectations. In the end, silver prices jumped another 100% from that point.

This again confirmed my viewpoint: sometimes historical experience is wealth, sometimes it’s a huge burden . Whether it’s wealth or a shackle depends on whether you can accurately peel out paradigm-changing structural drivers from complex cyclical patterns.

The Truth of Gold, Silver, Copper Short Squeezes: Not So Mystical, Just “More Money Than Goods”

First, I should clarify, due to our professional background, I’m not the best person to answer “short squeeze” issues—in some areas, I might even be the worst.

Why do I say this? Because anyone wanting to squeeze will definitely avoid discussing with producers. I remember when copper prices rose, the boss asked if I could find out everyone’s thoughts on squeezing. I replied, I could ask, and it’s my duty; but I must warn you, anyone who wants a short squeeze won’t give producers—that is, those like us doing hedging—their true opinion.

But I can explain the basics. In the commodity market, put simply: money always exceeds goods .

In this world, fundamentally, for many types, it’s “more money than goods.” While I can’t say 100% for all, there are really few types where “goods exceed money.” When money exceeds goods, if someone can focus capital or take large long positions driven by unexpected events, it forces shorts to deliver. If the shorts can't come up with enough physicals, prices will spike dramatically in the short term.

In theory, after short-term price spikes, commodity supply should increase. But if accidents happen, or exchange delivery mechanisms limit supply increases, prices form a positive feedback of rising. These events usually end with everyone sitting down for a proper talk and resolving things smoothly.

So, if we explain a squeeze in four words, it’s “more money than goods.”

Frankly, I don’t recommend investors treat squeeze research as a routine strategy. I don’t deny it’s a good way to make money for familiar products, but it remains a high-volatility area with lots of regulatory policies and many factors to consider.

In this masterclass, we’ll discuss what we observed during the 2024 copper rally, and go over earlier squeeze cases with non-ferrous products. We saw that by 2024, copper market traders have become somewhat more mature.

I believe similar events will happen in the future, but I wouldn’t encourage people to make this a routine strategy. It’s certainly a way to make money if you’ve encountered, seen, and understand it—then it’s a good method; but for various reasons, we won’t encourage a wider range of investors to participate in such high-volatility trades.

Risk Warning and DisclaimerThe market contains risks, investment must be cautious. This article does not constitute personal investment advice, nor does it take into account individual users’ special investment goals, financial conditions, or needs. Users should consider whether any opinions, viewpoints, or conclusions in this article fit their specific situation. Invest accordingly at your own risk. ```