we are heading towards a situation where there is a risk not a certainty but there's a risk that it spirals out of control and people are starting to see that so



 what they're doing is rather than say I'm buying gold for the keep pace with inflation a rather dull boring asset you know Warren Buffett has said it's a pet rock which just sits there and looks at you they're now starting to say what if what if this does go horribly wrong what if the government doesn't cut spending what if the government doesn't raise taxes what if the situation just gets worse and worse as seems to be happening. Well, you know, we're we're at 5 minutes. It looks like we're at 5 minutes to midnight. What's what's my plan B? Well, I'll get some gold because I know the gold will be there when we get to the other side. >> The perception of gold is undergoing a radical transformation. No longer viewed merely as a dull inflation hedging pet rock, a criticism famously leveled by Warren Buffett. The metal is rapidly becoming the ultimate insurance policy against systemic collapse. As government spending spirals out of control and the political will to raise taxes or cut deficits evaporates, the financial clock feels increasingly like it is ticking toward 5 minutes to midnight. Investors are moving beyond simple portfolio diversification. They are actively preparing for a scenario where the current economic system potentially fractures, seeking an asset that is mathematically certain to exist on the other side of a crisis. Clive Thompson, a retired Swiss private banker and wealth management expert, articulates this urgent psychological shift among global investors. This plan B mentality is driven by the realization that fiscal mismanagement is not a certainty but a growing probability. Rather than waiting for the government to fix a deteriorating situation, smart money is securing physical gold as a verified store of wealth that operates outside the banking system. If you found this gold and silver market analysis valuable, smash that like button. Share it with fellow investors and subscribe now to stay ahead with the latest precious metals updates and insights. Precious metals didn't play much of a role in the portfolios because the general view over the last few decades really has been all you could expect from precious metals is that they'll keep pace with inflation. They'll maintain their buying power over over the long term over centuries. And the general view was you could get a better return in other things like equities or um even government bonds or or deposits at least if you were not paying taxes. that is um so it wasn't much of an asset class uh over the last few decades. I mean when I started in Switzerland we did have that's 40 40 odd years ago um we did have uh about 5% as a standard exposure to gold in most discretionary portfolios but that number went down down down over the years. So by the time I'd retired um that's about four years ago at 65 years old the exposure to gold in portfolio was across the board very close to zero unless you the bank had had a discussion with a client and said you should put gold in the portfolio as as I actually did so there was probably not one of my clients who hadn't agreed that we should have some gold which now I think about it as probably served them very well um but it was you know if you look at the official asset allocation of the banks in general when I retired it was mostly zero in gold. In fact, it wasn't even featured. It wasn't there. Um, now banks and uh financial institutions are starting to add gold as an asset allocation and we're seeing it coming back a bit. Uh, but it doesn't mean to say that most portfolios have gold in them. Uh, I don't know what percentage of global portfolios have asset have gold in them, but perhaps the ones which are allowed to have gold because don't forget many portfolios couldn't. Perhaps the ones which are permitted to have gold have an average of maybe 1%. It's just that's just a guess. I don't have a hard statistic on that. Um, but many portfolios can't own gold. For example, if you have an u an ETF tracking a particular equity index, it can't own gold. Um, if you have a uh a trust or a foundation which has got some bylaws which specify how the money is going to be invested, it can't have gold. Um, so there's many uh many types of uh if you have a Luxembourg insurance policy for example, it's not allowed to have gold by law. So there's many types of um portfolios which can't have gold but those which could have gold I still think the figure is pretty low with exceptions where some will be at five or 10%. Um but what one of the things which been driving the gold price apart from the uh ongoing central buying bank buying I think has been the change of attitude amongst the man in the street Joe public people have started to realize that the days of low inflation fiat currencies and I come back to my definition of inflation before not the CPI those days of low inflation are numbered and we might be going into a very high inflation environment because of the levels of government debt The problem with government debt being that it is expanding and continues to expand much faster than the economy is expanding. It's expanding faster than GDP in absolute amount and the interest burden on that debt is expanding considerably faster than the debt is expanding because not only are they piling interest upon interest in terms of what they have to borrow, but the interest rates they're having to pay are generally much higher than the interest rates that they were paying over the last 10 or 15 years since the global financial crisis. Now don't forget after the global financial crisis interest rates around the world effectively went to zero or pretty close to zero which mean meant the governments were borrowing at very low interest rates. Uh but as that debt matures uh that low interest rate debt still has to be refreshed but it can't be refreshed at that same interest rate they have to borrow the new money at a much higher rate. So we've got the interest burden rising rapidly. We've got the debt rising faster than GDP. Um and so we are heading towards a situation where there is a risk, not a certainty, but there's a risk that it spirals out of control. And people are starting to see that. So what they're doing is rather than say I'm buying gold for the uh keep pace with inflation, a rather dull, boring asset. You know, Warren Buffett has said it's a pet rock which just sits there and looks at you. They're now starting to say, "What if what if this does go horribly wrong? What if the government doesn't cut spending? What if the government doesn't raise taxes? What if the situation just gets worse and worse as seems to be happening? Well, you know, we're we're at five minutes. It looks like we're at 5 minutes to midnight. What's what's my plan B? Well, I'll get some gold because I know the gold will be there when we get to the other side of whatever's coming. Don't know what's coming. It could be, you know, could be a bailin. It could be a hyperinflation. It could be uh just high inflation. It could be um is unlikely to be a default. Uh it could be some capital controls. It could be uh an alternative currency being issued. It could be Russian coupons. There's many potential scenarios where um some rather drastic action might be taken uh to re in the uh re in let's say a financial crisis for the government. >> For decades, gold was effectively purged from institutional portfolios, falling from a standard 5% allocation to near zero. Financial advisers prioritized equities for growth, dismissing precious metals as stagnant assets that merely tracked inflation. However, a profound shift is underway as the public recognizes the mathematical inevitability of a sovereign debt crisis. With national debt expanding faster than GDP and interest service costs exploding as cheap bonds mature into higher rates, the fiscal situation is spiraling out of control. Consequently, gold is transitioning from a speculative investment into an essential plan B. Investors are accumulating bullion not for yield, but as an immutable insurance policy against systemic failures, ranging from hyperinflation and capital controls to bank bailins. As the financial clock nears 5 minutes to midnight, possessing assets outside the banking system provides the only certainty of weathering the coming storm. Let's get back to the interview. As the price of silver especially rose rapidly, a lot of people entered the market using uh CFDs. That's contracts for difference which obviously lay off their risk in comx and other places like that. But when you'd use CFDs, you typically have a 10:1 leverage ratio. Um you can use more or less depending on where you where you do the business. Uh which means that the CFD provider and this would apply also to people trading futures but in a slightly different way. The CFD provider is going to put in place an automatic stop-loss whether you like it or not. That stop loss might be adjusted according to uh how leveraged you are to how much money you've got the account and other fact. But in general when people are trading CFDs they're trading for on a leveraged basis and we had people all around the world doing that and ultimately those risks are laid off via comx and other places with what's called stop- losses. Stop losses are trigger points, price levels at which a a position will be automatically closed. And if we're talking about someone who's long, closed means they sell their position if the price goes below a certain level. And the reason the CFD companies or betting companies do this is to make sure they never get into a situation of a loss. So as the price starts to decline a little bit towards the level where the CFD company could lose money or on COMX where the broker could lose money because his client has has uh got a a position they will say either to the client stump up more money and that's uh and typically you have to stump it up immediately to make sure you're covered for the after the price decline or more likely especially in the case of the contract for different sites uh it's a stop-loss which is a hard one uh which will be automatically TR triggered at let's say five or 7% away from the uh let's say you've got you got 7% running and the price has gone down by a couple of percent you're immediately getting too close to the point where you're losing money and it'll automatically trigger the stop loss. So each stop loss as it's triggered causes an instant sale. Now that sale doesn't automatically happen at the stop-loss price. It happens at the next price traded after the stop loss has been touched by somebody else. Now, in a normal market, that often means you get the stop-loss price because there's an army of people willing to sell a certain price and the first one sells at the stop- loss price, but an army of people willing to buy at the stop loss. So, it touches that, but you can come in second, third, fourth, and get the stop-loss price, too. But in a fastmoving market, especially the one we've seen, there won't be so many buyers sitting there to absorb your order. So when you your order goes through, someone touches, let's say, $110, which was your stop loss. Your next trade, you'll get the next trade, which might not be at $110. It might be $109.95. But of course, there's going to be another person with a stop loss at $109.95. So his stop loss gets triggered, and he gets traded at, let's say, $109.85. And guess what? There's another person behind that with a stop loss of $1985. And so it goes off. So we then have this cascading series of stop losses, each one creating a sale, driving the price a little bit lower, which then triggers the next one below and so on. And of course, there would have been millions of these stop losses sitting around in different places all around the world there. The the money they had in their CFD accounts effectively mostly wiped out by that fall. And of course, they're all sitting there burned. Uh so what we're doing now, we're we're sort of we I think the price went down to I can't remember where how low it got there. Was it 60 or something at one point? 70 I don't know where it was because it was so such a fastmoving market nobody really watched it and we're sitting in the mid80s now. Um so when we're we're well below the the top which was like $123 on silver and we're somewhat above the bottom of the range although I would say we're closer to the bottom of the range than top of the range at the moment. So what's going to happen is that the silver will trade in that inside that band of the top and bottom for a while and then at some point it will break out to one side or the other. Uh and if it breaks out to the downside I think we probably go as low as 50 probably and that's just a guess. I don't know that. And if we break out to the upside, I think it's uh on the way to well much higher levels. I would say $15, maybe even $200. As the price of silver especially rose rapidly, a lot of people entered the market using uh CFDs. That's contracts for difference, which obviously lay off their risk in comx and other places like that. But when you use CFDs, you typically have a 10:1 leverage ratio. um you can use more or less depending on where you where you do the business. Uh which means that the CFD provider and this would apply also to people trading futures but in a slightly different way. The CFD provider is going to put in place an automatic stop-loss whether you like it or not. That stop loss might be adjusted according to uh how leveraged you are, how much money you've got the account and other fact. But in general when people are trading CFDs, they're trading for on a lever basis. And we had people all around the world doing that. And ultimately those risks are laid off via COMX and other places with what's called stop- losses. Stop losses are trigger points, price levels at which a a position will be automatically closed. And if we're talking about someone who's long, closed means they sell their position if the price goes below a certain level. And the reason the CFD companies or betting companies do this is to make sure they never get into a situation of a loss. So as the price starts to decline a little bit towards the level where the CFD company could lose money or on COMX where the broker could lose money because his client has has uh got a a position they will say either to the client stump up more money and that's uh and typically you have to stump it up immediately to make sure you're covered for the after the price decline or more likely especially in the case of the contract for different sites uh it's a stop loss which is a hard one uh which will be automatically TR triggered at let's say five or 7% away from the uh let's say you've got you got 7% running and the price has gone down by a couple of percent. You're immediately getting too close to the point where you're losing money and it'll automatically trigger the stop loss. So each stop loss as it's triggered causes an instant sale. Now that sale doesn't automatically happen at the stop-loss price. It happens at the next price traded after the stop loss has been touched by somebody else. Now, in a normal market, that often means you get the stop-loss price because there's an army of people willing to sell a certain price and the first one sells at the stop loss price and an army of people willing to buy at the stop loss. So, it touches that, but you can come in second, third, fourth, and get the stop-loss price too. But in a fastmoving market, especially the one we've seen, there won't be so many buyers sitting there to absorb your order. So, when you your order goes through, someone touches, let's say, $110, which was your stop loss, your next trade, you'll get the next trade, which might not be at $110. It might be $109.95, but of course, there's going to be another person with a stop loss at $19.95. So, his stop loss gets triggered and he gets traded at, let's say, $10985. And guess what? There's another person behind that with a stop loss of $1985. And so, it goes off. So, we then have this cascading series of stop- losses, each one creating a sale, driving the price a little bit lower, which then triggers the next one below, and so on. And of course there would have been millions of these stop losses sitting around in different places all around the world and uh obviously a lot of people got their the the money they had in their CFD accounts effectively mostly wiped out by that fall and of course they're all sitting there burned. Uh so what we're doing now we're we're sort of we I think the price went down to I can't remember where how low it got there. Was it 60 or something at one point or 70? I don't know where it was because it was so such a fastmoving market nobody really watched it. We're sitting in the mid80s now. Um, so when we're we're well below the the top which was like $123 on silver and we're somewhat above the bottom of the range although I would say we're closer to the bottom of the range than top of the range at the moment. So what's going to happen is that silver will trade in that inside that band of the top and bottom for a while and then at some point it will break out to one side or the other. Uh, and if it breaks out to the downside, I I think we probably go as low as 50 probably. And that's just a guess. I don't know that. And if we break out to the upside, I think it's uh on the way to m much higher levels. I would say 150, maybe even $200. >> The silver market's recent volatility highlights the hidden dangers of high leverage trading through contracts for difference, CFDs. When retail investors enter the market with 10:1 leverage, they inadvertently create a liquidity trap. Because CFD providers must protect themselves from losses, they enforce automatic hard stop losses that trigger instant sales if the price dips even slightly. In a fast-moving market, these orders lack sufficient buyers, leading to a cascading effect. One stop-loss triggers a sale at a lower price, which hits the next person's stop-loss, and so on. This chain reaction can wipe out entire accounts in minutes, driving prices far lower than fundamental data would suggest. Currently, silver is stabilizing in a consolidation band between its recent $123 peak and the volatile lows near $60 to $70. This waiting period is a battle for the next trend direction. A break below the current support could see silver tumble back to $50, while a successful breakout to the upside builds a launch pad toward targets of $150 or even $200. Traders must remain cautious of leverage as the next move will likely be just as explosive as the last. Enjoyed this update? If this analysis helped you, smash that like, share with other investors, and subscribe for the next big precious metals update.