On December 24, spot silver surged aggressively, not only breaking through the key psychological barrier of $70 per ounce but also reaching a high of $72/oz, quickly becoming the market's focal point. This rally confirmed and extended the increasingly bullish sentiment toward silver in recent days.
On December 19, Kevin Wang, Chief Strategist at Clocktower, explicitly labeled silver as the current "highest conviction trade" at the Alpha Summit and made a bold prediction: global central banks will eventually have to intervene in the silver market, incorporating it into reserve assets.
Wang pointed out that while gold prices have repeatedly hit record highs, silver's valuation remains highly attractive when adjusted for inflation. He noted that real gold prices have far exceeded their 1979 peak, whereas real silver prices have only just broken out of a long-term downtrend. Additionally, the gold-silver ratio recently breached a 15-year upward trendline—a technical signal suggesting silver is likely to outperform gold in the current precious metals bull market.
Challenging the traditional view that "central banks don’t hold silver," Wang presented a contrarian argument. He argued that as Western sovereign bond markets face unprecedented turmoil, the global wealth pool—worth hundreds of trillions—urgently needs alternative stores of value. With gold overcrowded and platinum/palladium markets too small, silver stands as the only physical asset capable of absorbing massive capital outflows. This isn’t a matter of central bank preference but a "necessary choice" amid a faltering fiat currency system.
Wang also highlighted macro policy as a potential catalyst for silver. He warned that if a second-term Trump administration pushes populist economic policies—pressuring the Fed to cut rates despite high inflation—real rates would plunge. Such a scenario, where the Fed "falls behind the inflation curve," could mirror the 1970s precious metals frenzy, propelling silver into a "parabolic phase."
**Valuation Gap: Dual Breakouts in Silver’s Real Price and Gold-Silver Ratio** Wang elaborated on silver’s technical and valuation upside. While nominal gold prices hit records, inflation-adjusted "real" gold is already at historic highs. In contrast, silver’s real price has only recently broken out of its long-term downtrend, signaling significant catch-up potential.
The gold-silver ratio’s breakdown is even more critical. As a core gauge of relative value, its 15-year uptrend reversal suggests silver now offers far better risk-reward than gold. Clocktower views long silver as its highest-conviction play, though Wang cautioned against chasing the rally at current levels, emphasizing that the uptrend is far from over.
**Ultimate Forecast: Central Bank Entry as a "No-Choice" Outcome** Addressing skepticism over silver’s reserve status, Wang offered a macro-geopolitical thesis. Since Bretton Woods, global wealth has relied on fiat credit (e.g., U.S. Treasuries). Yet, in today’s multipolar world, eroding fiscal discipline and soaring debt undermine bonds as safe stores of value.
With ~$150 trillion in global debt and private wealth seeking havens amid bond market instability, Wang noted gold is already expensive, while platinum/palladium markets are too small. Thus, silver emerges as the only viable alternative. Central banks buying silver, he stressed, isn’t optional—it’s a hedge against systemic fiat risks.
**Macro Catalyst: If the Fed Lags Inflation, "Silver Goes to the Moon"** On future price drivers, Wang singled out U.S. political risks. Should Trump emulate Turkey’s Erdogan—forcing rate cuts despite inflation to prioritize growth—the Fed’s delayed response would echo the 1975–1979 stagflation era, when negative real rates ignited historic metals rallies. Once markets confirm the Fed is cutting amid rising inflation, Wang said, silver would enter its strongest acceleration phase.
