This is an audio transcript of the Unhedged podcast episode: ‘Gold, silver and crypto’
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Katie Martin
This has been a big year for shiny stuff. Gold, of course, has had a spectacular run higher, cruising to $4,000 an ounce and beyond. But stand aside, gold, because your scrappy little cousin, silver, would like a word. What a year it has been for silver. So gold’s up like 60-ish per cent, silver’s up a 120 per cent this year.
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Silver fever, boys and girls get on board. So is the rise in the price of silver a sign of fear in markets or a sign that bubbly exuberance is taking hold. And what does this all have to do with gold? And also, I hate to say it, but with bitcoin. Today on the show, fear, greed and slightly wacky paranoid world views.
This is Unhedged, the markets and finance podcast from the Financial Times and Pushkin. I’m Katie Martin, a markets economist here at the FT and very Christmassy London. Have some hard yards of Christmas drinks ahead of me this week. Remember folks, this is why we train, and I’m joined down the line from New York City by the big man, Rob Armstrong, president of the Unhedged newsletter. Rob, how’s it going?
Robert Armstrong
It’s going incredibly well (Laughter) because of the price of silver. I want to describe to you a happy coincidence in the life of the Armstrong family.
Katie Martin
Yeah.
Robert Armstrong
My beloved mother Katherine, moved this week with some help from me into a retirement community. Very nice place, but the downsizing means there has been a big shake out of family silver, and it’s all going straight to the pawnshop and selling at record high prices.
Katie Martin
How much silver are we talking here? Are you a silver bajillionaire now?
Robert Armstrong
It is two strange Victorian teapots, a set of teaspoons and a ladle or something like that. So I’m rolling around in my hundreds here, Katie.
Katie Martin
The beers are on you. So Rob, you’ve ridden the wave effectively, almost unwittingly in silver prices, and now you are a seller. But generally speaking.
Robert Armstrong
Yes.
Katie Martin
Trading silver is for weirdos. Am I wrong?
Robert Armstrong
It is, and I think the crucial fact is. It’s a thinner market than gold. Gold has this huge global apparatus set up for moving it around, trading it, owning it, speculating on it. Whereas silver is a much thinner market, so when the speculative bug or the shadow of Fomo falls over the silver market, that market is gonna react a lot more strongly because it’s less liquid and therefore more sensitive to incremental demand.
Katie Martin
And hell yeah, it is certainly moving. So in your kind of hierarchy of like asset classes that tend to attract unorthodox people. I’m going to say like gold has always historically attracted a fairly deep bench of slightly strange people. It’s gone more mainstream now in part, because of central bank purchases and then a kind of speculative rush.
But so there’s gold, there’s bitcoin, which is almost entirely a thing that exists for opportunists and the conspiracy minded, please do not bother emailing me. Again, if you’re one of those people, please, rest assured you are already blocked. (Laughter) But silver is right up there, right? It’s like if you look at like wackadoodle websites that are convinced there’s a shadowy cabal of elites who are rigging the financial system and you should buy like guns and tin food and a shack in the woods, they always have adverts on them for silver. This is like a thing. It’s always been a thing and it’s just never been quite as kind of cool or as mainstream as either of the others.
Robert Armstrong
But we did see it spike in a way, not dissimilar to what it’s doing now back in 2011. When gold had its last moment of great excitement when we were kind of reeling from the great financial crisis and we weren’t sure if we could trust paper assets. And silver did catch a bit of a fire back then too. So this current situation is not unprecedented in kind, but it’s definitely unprecedented in level. I mean, we’re at a price we’ve never seen before.
Katie Martin
In terms of the jump so far this year, so we’re up about 120 per cent on silver this year, taking the price to about $64 an ounce. Gold has jumped about half that, but it’s currently worth about $4,300 an ounce. So they’re kind of, they’re sort of different beasts, but it’s funny, right?
Because like I talk to big investment firms every day and institutional investors, people who run like pension money and insurance money and that sort of thing. They really don’t care about bitcoin, honestly. They think it’s a useful kind of measure of general market exuberance, but they don’t care about it that much.
They do care about gold now in a way that they haven’t for years that is working out as a very nice hedge for a bunch of different things. But silver, never ever comes up in conversation with investors and suddenly it’s just jumped so much that it’s like, OK, fine. We’re gonna have to pay a bit of attention to this thing.
Robert Armstrong
I mean, it’s just the fact that it is a fraction of the price for the same unit of weight just makes it a lot less convenient. You move a couple of pounds of gold around, you’re talking real money. Right.
Katie Martin
Yeah.
Robert Armstrong
Not so much silver, so it’s just not as portable and convenient an asset. But as you said, it does have industrial use, and from what I understand, demand from that quarter is pretty solid right now. So that helps.
Katie Martin
Yes. So, you know, it’s not that gold has no industrial uses. I get grumpy emails from people when they think that’s what I’ve suggested, which it isn’t, but like silver is a bit more of an industrial metal.
It’s useful in the solar sector, for example. You know, for solar panels and for electronics and all that sort of stuff. And actually the fact that it’s a bit more of an industrial metal than gold. It does mean it’s got a different relationship with markets in general because gold moves up and down.
Oh God. We could get into this, but like one of the reasons why it does it is when people are feeling kind of nervous about the state of the world. That doesn’t quite work when you’ve got something that’s a bit more of a sort of cyclical metal and that has more of a kind of industrial flavour to it. But, so . . .
Robert Armstrong
It’s probably worth mentioning. If I might do one of my trademark interruptions here, Katie.
Katie Martin
Sure.
Robert Armstrong
It is probably worth mentioning in this context that copper is on a bit of a rip right now too. Dr. Copper, as they say, which is called Dr. Copper because of its PhD in economics, meaning the price.
The price is supposed to tell you a lot about. The economy getting better and I got quite excited about when I noticed the price of copper going on a tear and called a bunch of copper experts last week and asked them, does this mean the industrial economy is reviving? And they were like, no, not really. (Laughter)
Katie Martin
Good chat. Thanks.
Robert Armstrong
Good chat. (Laughter)
Katie Martin
Thanks, copper people.
Robert Armstrong
I mean demand is fine for copper. China, which is the great consumer, is OK, but the recent spike seems to have as much to do with supply as it does with demand. Copper comes from a relatively small number of places around the world where it is mined. And if like one mine goes down because of some horrible industrial accident, it changes the price quite quickly so that it’s more of a supply story.
And in general, there’s been a rally in commodities, from food to natural gas, everything basically, but oil. But most of it seems to be supply rather than demand-oriented, primarily.
Katie Martin
Yeah, so with silver, apparently there is strong physical demand at the moment from Indian consumers and you’ve got this whole like, demand from the solar sector but like people keep pointing out, like that’s kind of been a thing for a while. And the market’s been in like deficit for like most of the past five years. So like why has the price suddenly accelerated now?
So there’s a bunch of reasons people are putting on this. One is that there’s a big stockpile of silver. Our colleague, Leslie Hook, was pointing this out in a piece the other day. She was noting that the big stockpile silver is built up in the US as a result of fears of potential US tariffs on silver, which have compounded a shortage elsewhere.
Robert Armstrong
I had not heard that. That is interesting.
Katie Martin
No, so apparently, silver inventories are about three times the size of their historic average because people are stocking up on silver just in case they fall in scope of tariffs. And we will know for sure in a few months whether that will happen. So that’s kind of one of the reasons why this is happening.
The big difference from gold is that the thing that really started the . . . like kicked off the ascent and gold prices was a huge and we’ve talked about this on the show before but that this huge accumulation of demand from central banks who didn’t want dollars because they saw what happened to Russia’s dollars after it invaded Ukraine.
And lots of countries are thinking, well, just in case I do something incredibly stupid and aggressive, I better move some of my money out of dollars as well and park it in gold or something else.
Robert Armstrong
Yes, gold, the despot’s friend.
Katie Martin
It’s the despot’s friend. It’s not clear that a similar thing is going on with silver. We might not necessarily know whether a similar thing is going on in silver because you don’t have to report it in the same way. But I caught up earlier with a very helpful chap called Hamad Hussain, who’s from Capital Economics, who was saying, yeah, we don’t think that central bank reserve buying is a big factor here.
So I think there’s a couple of things going on. One is when I talk to big investors, they talk about, look, we feel pretty positive about 2026. We think there’s a lot of things that are gonna go right for risky assets but if we do want somewhere to hide in case things go wrong, the dollar doesn’t work quite like it used to. The yen doesn’t work in the same way as it used to. The Japanese yen always used to go up in times of stress. It doesn’t seem to do that anymore. Swiss Franc has a bit problematic so gold is right up there at the top of people’s shopping lists as something to just, you know, stock up on for a rainy day.
We have got this sort of shrinking pool of safe assets kicking around in the world. And so when that pushes the gold price higher, it’s almost like silver just moves up into . . .
Robert Armstrong
Tag along.
Katie Martin
Sympathy.
Robert Armstrong
Yeah, I think that’s right. And it may just be good old fashioned retail and hedge fund, speculative frenzy. Line go up, get online and off we go. Ride line.
Katie Martin
I mean I think ride line is a really underrated factor here. I’ve been banging on about this this year in relation to the gold price.
So I wrote a piece of a couple of months back about there was so much demand for buying gold on the Royal Mint website in the UK. Just like on a Saturday night while strictly come dancing was on TV. The website was so round of people wanting to buy gold that they had to institute a queueing system for the website on like a random Saturday evening.
This is not people sitting around thinking about fiat currency debasement. This is like ordinary people who can see a line going up and thinking, I’ll have a bit of that. Thanks very much.
Robert Armstrong
And it’s not just ordinary people. I mean, there’s a whole class of professional investor who is a momentum investor and we know, it is a fact that prices have momentum. Prices that are rising tend to keep rising. And so you play it, right? And that all makes sense.
But all of this, Katie, raises an important question. If speculative frenzy is stalking the land, why isn’t bitcoin rising? That should be the one. If silver is kooky and gets a case of the cookies, bitcoin should be going twice as kooky. Don’t you agree?
Katie Martin
I think bitcoin has sort of run out of people to keep on buying it, you know? So, OK. Gold is like a historically important asset. Silver has some industrial uses. Bitcoin just goes up and down. When it goes up and down, it’s like a more buyers and sellers thing. If you have a more intellectual reason for this, Rob, please do share it with the class.
Robert Armstrong
Well, so just to give the context here, October 5, bitcoin, 125 grand. Most recent price, 87 grand. Pretty big swoon there. And here is a complete guess for the difference with silver and gold. Perhaps the bitcoin trades are more leveraged so it had a blip and somebody got a margin call or a bunch of people got margin calls on their bitcoin. And once that starts happening, it’s kind of off to the races.
Katie Martin
Yeah, so leveraged for the uninitiated is where you borrow money to buy something. This is generally a very, very, very, very, very bad idea, by the way . . .
Robert Armstrong
But you gotta be careful. Yeah, people do it. People do it.
Katie Martin
Careful now it’s all well and good when it works and then when it doesn’t work. Yeah, you get in very hot water very quickly.
Robert Armstrong
And there’s only so many, you know, in the face of perhaps a large community of bitcoin holders who have received margin calls, which means whoever lent you the money, rings you up and says, I can’t help but notice that your position is going south and I would like my money back, please. Against a large community of people who are getting phone calls like that, there’s only so much that, what’s his name over at Strategy can do buying the things. (Laughter), you know.
Katie Martin
Michael Saylor from Strategy, this is the beast, formerly known as MicroStrategy, that used to be a software company about a million years ago and now the only thing it does is buy bitcoin.
Robert Armstrong
And they have been buying it. I think they bought some, again in into the weakness. The argument was that they wouldn’t be able to buy into the weakness and they are buying down here.
Katie Martin
Yeah, but they’ve got some debts to repay and they might need to do that in actual money. And they’re talking about having to also build up reserves of actual money rather than pretend internet money.
And he’s also . . . Michael Saylor has publicly acknowledged the concept that at some point, he may have to sell some bitcoin. And previously he has been, you know, you take this bitcoin from my cold dead hands, I will never, ever, ever sell. And just a suggestion that he might sell in certain circumstances has been enough to help depress the price of bitcoin.
Robert Armstrong
It does show you what an emotional asset bitcoin is. And speaking of emotion, a slightly clunky segue from silver to the broader market. I like to look at Citi group’s sentiment measure, which bundles together a whole bunch of things like short interest, investor surveys and put-call ratios and you know, all this kind of stuff. And they put the index together and they call it the Levkovich index. And I like it because a very broad index of sentiment and that has broken above what they call the euphoria level recently.
Katie Martin
What’s after euphoria? What like . . . (Laughter)
Robert Armstrong
I don’t know, I mean, I should context it. Sentiment is not as completely bonkers as it was on this Citigroup index. It’s not as completely bonkers as it was in 2021, right? When it was like the great post-Covid madness, right? When everybody was buying everything that wasn’t nailed down, but it’s pretty darn high by historical standards.
Katie Martin
Yeah. I mean, this is the other thing that like convinces me that the jump in the price of silver is a sort of, it’s a symptom of widespread exuberance in markets is, so you like the Levkovich index?
I like looking at the Bank of America fund manager survey that just came out today, the latest one. It turned out that fund managers have a 3.3 per cent allocation in their portfolios to cash, which is like, you know, your super, super safe kind of deposits, money market funds, that sort of thing. That is a record low. So people are seeking safety at a vanishing rate. So people are all in on risky assets.
Robert Armstrong
Couldn’t it be that they just like cash less well now? Is there some inflation risk price in there? Now I’m just reaching, of course.
Katie Martin
I think you are reaching, I think there’s just huge levels of exuberance that are out there. And I think that is sweeping up all sorts of different assets. OK, so like bitcoin is a bit of a fly in the ointment in this overarching theory that I have here. But everything else it’s just like, well hey, let’s go, you know . . .
Robert Armstrong
Yeah. It’s really impressive.
Katie Martin
Gold and silver off the races. Stocks are doing like pretty well. You never had some patches of wobbles, but it’s doing pretty well. The bond market is like, pretty well behaved. So . . .
Robert Armstrong
I have another exception, Katie.
Katie Martin
You do?
Robert Armstrong
The eager student raising his hand at the back of the class here. I have one. Another exception is at the periphery of the AI bubble. Some stocks are getting in a little bit of trouble. So Oracle, which is a kind of Mag 7 AI wannabe. CoreWeave, which is a very speculative AI name. Broadcom . . .
Katie Martin
I don’t understand CoreWeave.
Robert Armstrong
Which is, yeah, it’s warehouses full of computers in the desert somewhere or something. Anyway, these things are struggling, so I would say it is not a totally unqualified. Let’s go crazy.
Katie Martin
True, true.
Robert Armstrong
You know, 1999 style party out there. There are little bits, but on broad measures, there’s no question. Sentiment is suddenly running very high, which is of course, a contrary indicator. It’s not a timing mechanism, but as a general rule, sentiment is a contrary indicator. And it makes sense that it should be.
Katie Martin
Yeah, everyone is miserable. That’s when you should buy, that’s when everyone is like . . .
Robert Armstrong
That’s when you should buy. Exactly.
Katie Martin
And when everyone is like too, too, too, too happy, that’s when you should sell.
Robert Armstrong
Because everybody already owns everything already. There’s nobody left to be the incremental buyer because already everybody bought already. Right, so, I think this is a slightly. You know, we are often accused by listeners of being a little grouchy on the show, and that is fair. We are financial journalists. It is a disease we suffer from.
But I think sentiment, you know, as you know, my attitude towards the market coming into 2026 is pretty good. I’m optimistic overall about next year but this sentiment thing I don’t love. I wish people were feeling worse so that they could change their, so that they could change their minds and feel better later.
Katie Martin
Merry Christmas everyone. Please be a tiny bit more miserable for Rob.
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Listeners, if you have any more deeper meaningful theories here around what’s happening to silver or to risk sentiment in general, then unhedged@ft.com is the email address for you. We are gonna be back in just one second with Long/Short.
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Okey-dokey. It’s time for Long/Short, that part of the show where we go long a thing we love or short a thing we hate. Rob, what you saying?
Robert Armstrong
I am gonna be seasonally appropriate, Katie. I’m going to be long the Christmas goose. I was actually fed goose at Christmas as a child when we would have Christmas at my uncle’s house.
Katie Martin
With your silver platters.
Robert Armstrong
On these strange silver platters, and I remember goose, which I have not eaten in, I don’t know, 25 years, as being quite good. That may be the, the lens of nostalgia there. But I’m thinking maybe it’s time to try goose again. Maybe I can just go grab one in Prospect Park somewhere.
Katie Martin
Don’t think it works like that. But have you ordered it already though? Because like you’ve gotta be on it.
Robert Armstrong
Oh God, I’ve probably blown it already.
Katie Martin
I’m also longer Christmassy thing. I am long sweet pastry. So if you work with me or you know me at all, you’ll know that I make a large number of minced pies . . .
Robert Armstrong
Minced pies.
Katie Martin
. . . every December for Christmas. And I’m normally a pastry purist. Do not mess with it. It’s just butter and flour and that’s it. But I have had my head turned by my friend (inaudible) who said, if you add sugar and eggs and booze. Booze in your pastry, boys and girls. It’s even more delicious and I’ve gotta say they are very, very fine.
Robert Armstrong
And you tried it and confirmed it. It works.
Katie Martin
I can confirm that if you add booze to already boozy minced pies then they are improved in quality. Speaking of booze, I’m heading outta here shortly for one of my many drinking appointments of the week. Rob, I really feel like, by the way, you could be quite a good father Christmas, so I think you should, because you’ve got the beard, you go and get yourself a red suit. Listeners, we will be back in your ears on Thursday, so listen up then.
Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher Forhecz is the FT’s acting co-head of audio. Special thanks to Laura Clarke, Alastair Mackie, Gretta Cohn and Natalie Sadler. FT premium subscribers can get the Unhedged newsletter for free. A 30-day free trial is available to everyone else. Just go to ft.com/unhedgedoffer.
I’m Katie Martin. Thanks for listening.
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