Markets commentator Clem Chambers expects gold and silver to find their floor soon after a significant price correction. Speaking to Kitco News, the ADVFN founder suggested that while a rebound isn't immediate, the era of heavy selloffs is nearing its end.
The $3,500 gold floor and $40 silver basement
Clem Chambers, the founder of the financial website ADVFN, anticipates that the recent downward trend in precious metals is nearing its conclusion. According to Kitco News, Chambers expects gold to find its support level near $3,500 per ounce, while silver is projected to settle in a range between $40 and $50. This comes after a period of volatility where gold dropped from a January high of $5,600 to approximately $4,000, and silver fell from peaks exceeding $120.
Chambers intends to return to "stacking mode" later this year, utilizing a dollar-cost averaging strategy for gold, silver, platinum, and palladium. However, he cautioned that investors should not expect an immediate vertical explosion in prices.. Instead, he anticipates a period of sideways movement that could last for several years before the next significant upward trend begins.
From China-Taiwan tensions to the AI energy demand
The recent decline in metal prices can be partially attributed to a reduction in geopolitical risk, specifically regarding the perceived threat between China and Taiwan.. Clem Chambers noted that gold often serves as a wartime currency, and as these tensions eased earlier this year, one of the metal's primary drivers was removed.
Looking ahead, Chambers argues that the next major bull market will be fueled by a "seriously inflationary period" necessitated by the global buildout of artificial intelligence and the reshoring of Western industry. He believes these massive structural shifts will require significant money printing. Furthermore, Chambers posits that the real value in the AI sector lies in physical infrastructure—such as chips, cabling, and power—rather than software models. He specifically highlighted that AI is an energy-intensive industry,noting that China's energy generation capacity is 250% larger than that of the United States. Even with recent market volatility caused by the Chinese Moonshot Kimi K3 model, Chambers maintains that the physical requirements of AI remain the primary driver.
The 30% liquidity trap for physical silver holders
Retail investors holding physical silver must remain wary of the discrepancy between "screen prices" and actual liquidation value. Chambers warned that during the recent selloff, some silver holders found they could only receive 70% to 80% of the quoted market price.
This liquidity crunch occurs because dealers often become hesitant to buy metal during rapid market declines, fearing they will be stuck with depreciating assets.. To mitigate this risk, Chambers advises all physical metal owners to establish a clear exit strategy before they ever make a purchase . "Get your exit sorted," he emphasized, suggesting that knowing how to sell is just as vital as knowing when to buy.
Can the Federal Reserve's hawkishness be ignored?
While Chambers focuses on long-term inflationary drivers, the immediate market environment remains complicated by central bank policy. As reported by Kitco News, the Federal Reserve, under Chair Kevin Warsh, has adopted a hawkish stance, contributing to a rise in U.S. real yields. Higher yields typically act as a headwind for non-yielding assets like gold.
There is also a notable divergence in global market behavior that remains an open question for investors. While North American gold funds have been selling off significant quantities this year, the People's Bank of China has continued to add gold to its reserves for 20 consecutive months as of June. It remains to be seen whether this institutional buying in Asia can offset the selling pressure coming from Western funds.
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