Asks what really caused the crash in precious metals.
Paul Allen
Geoffrey Christian
Several factors contributed: macroeconomic (Kevin Warsh nomination, dollar tick up), political issues, and specific technical factors in gold and silver markets.
Geoffrey Christian
A large open interest in the February COMEX gold contract was rolled forward into April, pushing prices up to record levels on Thursday, then the roll was behind the market on Friday and prices came down.
Geoffrey Christian
The run-up was driven by short-term, opportunistic, momentum-based speculators, not traditional long-term physical investors.
Asks if the sell-off is over or if this is a buying dip.
Paul Allen
Geoffrey Christian
The sell-off is mostly over but not completely. There is some downside left, and markets will remain extremely volatile in the short term.
Geoffrey Christian
The core long-term driver is the economic and political environment, which is getting worse, not better, and will continue to drive investors to buy gold and silver, supporting higher long-term prices.
Asks about sustained demand from China, India, and Southeast Asia.
Paul Allen
Geoffrey Christian
Strong global investment demand for physical metal exists because people are worried about local economies and politics and want to diversify wealth away from local currencies or the US dollar.
Asks where money leaving precious metals is going.
Paul Allen
Geoffrey Christian
It's only been two days of declines. Silver is still up 40% from two months ago. Money may be coming out to meet margin calls in other assets.