Clocktower Wang Kaiwen: Silver is the highest conviction trade at present. If the Federal Reserve "dares" to cut interest rates while inflation is declining, then silver will be "seen in the sky" | Alpha Summit

On December 24th, spot silver surged strongly, not only breaking through the key psychological barrier of $70 per ounce but also reaching a high of $72 per ounce, quickly becoming the market focus. This trend confirms and continues the bullish expectations for silver that have been rising in the market over the past few days.

Just on December 19th, Clocktower Chief Strategist Kevin Wang clearly listed silver as the current "highest conviction trade" at the "Alpha Summit," making a bold prediction: global central banks will have to intervene in the silver market in the future and include it in their reserve assets.

Kevin Wang pointed out that although gold prices have repeatedly hit new highs, the actual price comparison after excluding inflation factors shows that silver's current valuation is extremely attractive. He analyzed that the real price of gold has far exceeded the peak of 1979, while the real price of silver has just broken through a long-term downward channel. Meanwhile, the gold-silver ratio has recently broken through a 15-year upward channel, and this technical signal indicates that silver is likely to outperform gold in the current bull market for precious metals.

In response to the traditional view in the market that "central banks do not hold silver as reserves," Kevin Wang proposed a disruptive rebuttal. He believes that as the bond markets in developed Western countries face unprecedented turmoil, the hundreds of trillions of dollars in existing wealth urgently need to find new carriers. In the reality of crowded gold trading and the small market capacity for platinum and palladium, silver has become the only physical asset capable of absorbing massive capital outflows. This is not a subjective will of central banks, but an "inevitable choice" when the credibility of fiat currency systems is shaken.

Additionally, Kevin Wang analyzed the catalytic effect of macro policies on silver. He warned that if Trump adopts aggressive populist economic policies during his second term, pressuring the Federal Reserve to cut interest rates amid high inflation, it will lead to a significant decline in real interest rates. This situation of the Federal Reserve "falling behind the inflation curve" will replicate the precious metals frenzy of the 1970s, pushing silver prices into an "acceleration phase."

Valuation Low Point: Dual Breakthrough of Silver's Real Price and Gold-Silver Ratio

In his speech, Kevin Wang elaborated on the technical and valuation logic for being bullish on silver. He pointed out that although nominal gold prices continue to set historical records, from the perspective of "real prices" adjusted for inflation, gold is already at historical highs. In contrast, silver's real price has only recently completed a breakthrough of the long-term downward channel, indicating significant room for catch-up.

A more critical signal comes from the change in the gold-silver ratio. As a core indicator measuring the relative value of the two precious metals, the gold-silver ratio has recently broken the upward trend that has lasted for 15 years Wang Kaiwen judges that in the current market environment, the cost-effectiveness of allocating silver is significantly better than that of gold. Clocktower views going long on silver as the most confident strategy, although it does not currently recommend investors to blindly chase high prices at this point, he firmly believes that the upward trend of silver is far from over.

Ultimate Prediction: Central Bank Involvement is an "Inevitability"

In response to the skepticism regarding the lack of reserve value of silver by central banks, Wang Kaiwen proposed a deep analysis based on macro geopolitical factors.

He believes that since the collapse of the Bretton Woods system, the cornerstone of global wealth has been built on the credit of Western fiat currencies represented by U.S. Treasury bonds. However, under the current "multipolar" geopolitical landscape, the fiscal discipline of Western countries has weakened, and government debt has surged, fundamentally challenging the safety of the bond market as a wealth storage tool.

Wang Kaiwen analyzes that the global government debt (approximately $150 trillion) combined with the vast wealth of the private sector will face a dilemma of asset scarcity when seeking safe havens due to turmoil in the bond market.

Gold prices are already high, while the market capitalization of small metals such as palladium and platinum is too small to accommodate large amounts of capital. Therefore, silver has become the only viable wealth carrier besides gold. He emphasized that central banks buying silver is not based on preference, but rather a choice made out of necessity to hedge against the risks of the fiat currency system.

Macro Catalyst: If the Federal Reserve Falls Behind the Inflation Curve, "Silver Will Soar"

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 exhibits traits of a "true populist"—that is, like Turkish President Erdogan, demanding the central bank to cut interest rates regardless of high inflation pressures for the sake of employment and growth—then the Federal Reserve's monetary policy will lag significantly behind the inflation curve.

Historical data shows that during periods when real interest rates are negative and central bank policies lag behind inflation (such as from 1975 to 1979), precious metals often experience spectacular bull markets. Wang Kaiwen stated that once the market confirms that the Federal Reserve is still forced to cut interest rates against the backdrop of rising inflation, silver will gain the strongest upward momentum, leading to a truly significant acceleration in its price