Silver Cratered 6.7% in a Day and I'm a Happy Long-Term Metals Investor — Here's Why

The bottom line: short the short term, buy the long term — I like the same drop twice

Silver fell 6.7% in a single session. Gold was down 2.5%, and the dollar was strong the same day. As a trader, I'm watching my silver short run into profit; as a long-term investor, I see a chance to buy metals cheaper coming into view. Both of those can be true at once.

Why metals are breaking down: the macro is the enemy

Gold and silver love chaos. They shine when unemployment is rising, when the economy looks shaky, when there's systemic stress. Right now it's the opposite.

• Jobs came in strong at 172K versus an 85K forecast
• Inflation is rising again
• Economic growth is better than expected

Economic security is not a great backdrop for gold and silver. On top of that, strong jobs give the Fed room to hike rates to fight inflation. When rates stay high and the dollar strengthens, non-yielding metals look relatively less attractive. EdgeFinder has had a strong bullish reading on the dollar since mid-May, and that call has been excellent.

Why I shorted silver instead of gold

I was originally looking at gold but shifted to silver, for two reasons.

First, EdgeFinder's downside reading was stronger on silver than on gold. Second, there's simply far more gain in a silver short than a gold short — silver is more volatile, so it moves more under the same macro wind. The same-day split of gold -2.5% versus silver -6.7% shows exactly that.

And yet — I'm actually a metals fan

Some people have been upset with me for shorting silver because they love precious metals. So do I. I genuinely like holding some metals in a long-term portfolio. If we ever get a national debt crisis, gold and silver will look like champions.

But that doesn't mean being unfailingly bullish every single day. I try not to be a permabull on anything. As an active trader, I keep an open mind to what the market is actually showing right now — and right now the dollar is on a strengthening run, which keeps me in the camp of trading metals to the downside in the short term.

Not a contradiction — two different timeframes

The trick is to separate the timeframes.

• Short term (the trader): dollar strength → manage the silver short, lock in gains
• Long term (the investor): the lower metals go, the cheaper I can accumulate

So the lower this goes, the happier I am as a long-term investor, and the happier I am as a trader managing a silver short. The further these fall, the more I want to slowly start a long-term position I can hold passively over the years.

To be clear, I'm not telling you to copy what I do. If you copy someone online without your own reason, you'll regret it. There are times I'm dead wrong, and the blame — and the credit — is all yours.

This is for informational purposes only and is not financial advice.