Hi Again,
A few weeks ago in this newsletter I stated that silver rising at a higher rate than gold is a bad omen for all markets. Carley Garner is an American commodity market strategist and futures and options broker and the author of Trading Commodity Options with Creativity, Higher Probability Commodity Trading, and A Trader's First Book on Commodities, published by DT publishing an imprint of Wyatt-MacKenzie. On 1/27/26, Carly made the following comments
· Last time we saw such a bubble in silver was in 1979 when Hunt brothers tried to corner the silver market. It bankrupted them. Silver went from $5 to $50.
· This hyperbolic move in gold and silver is implying that our economy is ready to collapsing.
· Silver may peak between $110 and $125.
· Gold volatility matches to 2011 volatility.
· Silver could drop to $20.
· Gold could have a blowout top.
Thomas Jong Lee, commonly known as Tom Lee, is an American entrepreneur, financial analyst, strategist, investor, businessman, and full-time contributor on CNBC's Fast Money, Tech Check, Halftime Report, and Closing Bell shows. On 1/26/26, Tom stated that the gold/silver trade is sucking oxygen out of all trading. This indicates that the end of the bull market is close.
I too tried my hand at the gold/silver trade but I was too late. Initially I bought some long term put options (short selling) that expire in 2028 on gold and silver. Gold reached $5500/ounce but I am confident that gold will be less than $2000/ounce in 1 to 10 years. I have seen hundreds of experts say that gold reached a high in 1980 and inflation adjusted, it was equal to $3500 in 2025 but none of these experts said anything about what happened to gold after 1980. After that 1980 high, gold fell for decades and it fell all the way from $800 to $300. Now all over the world, price of gold rising is big news. They all say that the main reason is that central banks all over the world are moving away from US treasuries and building up gold reserves. Good luck with that! One of the gold analysts did a “deep dive” and found that assuming the total gold “market” is about a trillion USD, 30% is held by the central banks around the world (mainly China). Over the past 6 months, gold went up like 250% (GLD, gold etf went up from $308 to $500 but during the same time central bank purchases did not increase. It is estimated that 70% of the trillion dollars are held by hedge funds and other traders. That makes perfect sense. I too got in to the trade but I was too late. Silver was going up double the rate of gold so I got in to silver but I was alarmed at the hyperbolic rise in silver. So apart from 2028 put options, I also bought so 2027 put options as a hedge against my silver trade. Initially, my silver (SLV) went up from $75 to $109 in 18 days. On 1/29/26, SLV was the 3rd most traded stock/etf on NASDAQ. On 1/30/26, price of silver (SLV) fell by 34% in one day! But my silver hedge (2027 puts) went up by 50%! 1/30/26 was the worst day for silver since 1980. 1/29/26 was the best day for silver since 1979. I liquidated my silver (SLV) ETF and the 2027 puts and realized a very minor loss of $40. I still have my 2028 puts as I expect silver and gold to fall in the future. Hopefully the experts are wrong and this is not the start of economic Armageddon. But it is possible. I will try and be ready with my hedges. In 2020, we had a 35% correction and I turned $3,000 in to $40,000 as 99% of the people lost money.
Now let us talk about the other crash that just happened- Bitcoins and Cryptos. Bitcoins as given in ETF, IBIT hit a high of $72 on 10/5/25. On 2/5/26 it dropped to $34. Just prior to the 2024 election, Japan’s “yen carry” trade (traders borrowing from Japan at 0% and investing in technology) fell apart. Then on 9/7/24, I bought IBIT at $34. Then due to Trump support for Bitcoins, IBIT skyrocketed. Everyone (retail buyers and companies) bought in to Bitcoins assuming it will never crash again. When all the buyers are in, where can more money come from? It is like everyone sitting on one side of the boat. At the same time Gold kept going up in a straight line. Obviously traders started selling Bitcoins and Cryptos and buying gold/silver. Nothing last forever. When Bitcoins hit a post election high, I sold my IBIT with a 30% profit. It was a hard decision. Usually when the price goes lower, I buy more for the long run but with Bitcoins I have to be careful as it is used to having 90% corrections. I will watch the Bitcoins price and I might get back in the future. What you hear from experts change all the time. Many years ago, all the experts asked us to sell gold and hold Bitcoins as they termed it, “digital gold”. Now that narrative is upside down. Now the same experts say that gold is better than Bitcoins as it is something “real”. I do not buy that argument. However with quantum computing, crooks all over the world (i.e. North Korea) will be able to decode Bitcoins and other Cryptos. That is a real risk.
For years we were warned that AI will disrupt our lives. It is happening now. Bradley Thomas Gerstner is an American entrepreneur, investor, venture capitalist, hedge fund manager, and podcaster. He is the founder, chairman, and CEO of Altimeter Capital. Gerstner appeared on the 2022 Forbes Midas List after his firm's successful investments in Snowflake. Brad is one of the best tech analysts. On 1/6/26, Brad stated that 90% of software stocks will go down significantly due to AI. IGV (iShares Expanded Tech-Software Sector ETF) was at $115 on 9/15/25 and it fell to $79 on 2/1/26. On Wall Street there is a saying, ‘traders shoot first and ask questions later”. At times “babies get thrown out with the bath water”. With AI it is difficult to separate the babies from the bath water. AI is destroying jobs so companies that depend on annual licenses (i.e Salesforce) are at risk. Salesforce (CRM) was at $355 on 11/24/24. Now it is at $192 with a PE of 25. If it goes below $140, I will consider buying a little bit (nibbling).
What can we learn from these trades? If anything (stocks, metals, cryptos) go up 100%+ within a short period, that is an alarm bell that a crash is coming. A few years ago Blackrock had $7 trillion under management; and now it has gone up to $14 trillion. During the last year of the “dot com” bull market, those stocks rose 100%+ ! With the crash, some stocks lost 95% of its value and some never came back. Remember Yahoo with a PF of 1,00! History has repeated many times so beware.
I am cautiously bullish on Netflix and I have been increasing my exposure. Some experts are nervous; Josh Brown sold 85% of his Netflix holdings but he said that he hopes to get back in to Netflix in the future. In that industry, 28% of market share goes to Youtube and 18% to Netflix. They cater to two different types of consumers. Youtube is for content creators of short duration videos. On the mega side, Netflix dominates with EBIDA 8 times as Disney. With or without Warner Brothers, Netflix will be a winner in the long run. If you take all TV watching time done on last Christmas day (12/25/25), 54% of the time was spent on Netflix.
As I always suspected, private capital is getting a belly punch. Some say that those funds are down 50%-especially private credit. What is going up to the sky? Memory stocks like Sandisk (SNDK). SNDK was at $85 on 8/25/25. Now is at $600. I am temped to short sell. One piece of bad news and everyone will run towards the exit door. With gold/silver/bitcoins what was the biggest factor that led to the crash- “margin call selling”. Same old story for the past 100+ years. Some of these people lose everything they own. A margin call is a broker’s demand that an investor who has borrowed money to buy securities must deposit more money or securities into their account so it’s brought up a minimum value.
Who is the ultimate expert on AI? Without a doubt, it is Jensen Huang, CEO of Nvidia. This is what Jensen stated on 2/6/26:
· No one uses AI better than Meta.
· Cashflow will increase significantly in the future for the “hyperscalers” (mag7)
· In 2007/2008 people blamed Amazon for investing too much money in AWS but in 2025, it generated $127 Billion in revenue.
· It will take another 7 to 8 years for these companies to fully benefit from AI.
· GPU chips sold by Nividia 6 years ago are getting resold at higher prices-very surprising and uncommon.
· Amazon AWS is doing great.
· His competition does not bother him. As he stated, “We are on every platform”.
· AI is a 5 layer cake (ie. energy level, chip level, model level, application level).
· The US wins when all international AI runs of US technology but now most of the world uses cheaper Chinese technology that is freely available.
· Investing in AI is like having invested in companies like Google, Microsoft when they were first formed.
· In 2025 Google Cloud grew at 40%.
On 1/28/26, we had another Federal Reserve decision and the rates remained unchanged at 3.5% to 3.75%. Job gains were low but unemployment rate was stable. Inflation was elevated. Two governors dissented. Economy grew at a solid rate. The dollar went up a little bit. Consumer confidence is at a 12 year low. At the press conference, Powell made the following comments:
· Policy rate will remain unchanged as unemployment rate has stabilized.
· This will help both goals-controlling inflation and unemployment.
· Hosing is weak.
· Core inflation rate is at 3.2%.
· Disinflation in the service sector.
· Former Fed Chair Volker (respected by all economists as the best Fed Chair we ever had) appeared in a Supreme Court to defend the independence of the Federal Reserve so it was okay for him to do the same.
· Refused to talk about the US dollar as it is the job of the Treasury.
· All of the tariff effect on inflation is behind us. If not for tariffs, our inflation rate would be below 2%. Most of the tariffs were absorbed by US companies and not consumers.
· They do not see traders and countries moving away from the US dollar due to policy uncertainties.
· He did not believe that gold/silver prices reflected less confidence in the US economy.
Jeffrey Edward Gundlach is the founder, CEO, and CIO of DoubleLine Capital, a Los Angeles-based investment firm that specializes in debt securities and bonds. He's known as the "Bond King" and is recognized as an expert in fixed income and bond investments. As he does after each Fed decision, for the 41st time Jeffrey made the following comments on 1/28/26.
· On 1/28/26, silver went up by 8% and gold went up by 4.8%.
· Dollar is weakening so invest in foreign markets. People should have 30% of their assets in foreign markets. ( I do not agree-too risky!)
· Falling rates will lower the dollar.
· He stated that he favors “public markets” or “private markets”.
· Now US GDP is at 5.5%.
· We could have a violent rally in long end Treasuries due to government interventions.
· The US dollar is not a safe heaven anymore. Prefer gold and silver but not bullish on bitcoins.
·
Have a great month! Enjoy the ride!!
Fernando