I’m undertaking a 1000-day reinvention project, blogging here daily to track my progress. In Sunday Planning, I plan for the week ahead.
Last week was a crazy week, as I dove into the silver market, and learned all about paper silver vs physical, about silver futures, about $PSLV vs $SLV, and more.
I believe we’re entering a so-called “commodity supercycle” — a long, multi-year period in which commodity prices stay structurally elevated, driven not by short-term speculation but by deep, slow-moving imbalances between supply and demand. It happens when the world needs a lot more energy, metals, and food faster than it can be produced. It generally occurs after a period of under-investment in commodity production as we’ve seen as all the capital in the world flowed towards technology companies like Google, Meta, Microsoft, and Amazon.
I’m working to tilt my portfolio towards commodity plays (e.g., physical metal trusts like $PSLV and $PHYS, mining stocks, energy stocks, some agricultural-related stocks) as well as to international equities and bonds.
Commodity exchanges around the world
I want to understand a little better about the major commodity exchanges around the world.
Here are the main ones:
- London Bullion Market Association (LBMA) in London – The global hub for spot trading and clearing in physical gold and silver. Not a futures exchange. Sets good delivery standards for gold and silver bars.
- Commodity Exchange (COMEX) in New York – Primary futures market for gold, silver, copper, and other metals in the U.S. A part of CME Group. Heavy use of leverage and paper contracts.
- Multi Commodity Exchange (MCX) in Mumbai – India’s largest commodity derivatives exchange. Trading of gold, silver, energy, and agricultural commodities. India is one of the largest physical gold consumers in the world.
- Shanghai Gold Exchange (SGE) in Shanghai – China’s primary physical gold exchange. Physical delivery is central, not just paper contracts. State-aligned.
- Shanghai Futures Exchange (SHFE) in Shanghai – China’s major futures market for metals and commodities. China’s analogue to COMEX.
Interestingly, MCX in India is holding a rare Sunday session today because India’s Union Budget for 2026-27 is being presented. Exchanges sometimes open special sessions around major economic events so traders can react in real time to policy news and expectations. Silver dropped around 9%, hitting the lower circuit indicating a cascading crash around the globe. Like COMEX, MCX had recently imposed higher margins recently for precious metals.
Tonight at 6 pm the China SHFE Monday session opens (9 am China Standard Time). Last week, China’s Shenzhen Stock Exchange suspended trading for the entire day on January 30th in the UBS SDIC Silver Futures Fund LOF. This was an effort at risk control, similar to the margin hikes that COMEX implemented to rein in speculative trading in silver.
I will be interested to see what happens at the open of SHFE. I expect a gap down immediately. And what after that? A continued drop? A stabilization at some price less than $120 an ounce, maybe around $85, where the silver continuous contract closed last Friday? A move back up?
A supply-demand imbalance in silver
Silver is both a precious and an industrial metal, but these days it is more valued for its use in industry. It’s used in solar panels, weapons systems, electric vehicles, and, crucially, AI data center components. It’s the best electrical conductor of any metal.
I didn’t get this until I researched it: the bubble in silver is related to the AI bubble. That doesn’t mean if the AI bubble bursts there won’t be demand for silver. But it is something that brings additional caution for current and would-be silver investors.
Medium- and long-term I believe the silver price will go up based on an apparent supply-demand imbalance. Critically, by January 8th of this year, month-to-date physical delivery notices on COMEX had already reached 6,690 contracts (33.45 million ounces), representing a withdrawal of roughly 26% of COMEX’s registered inventory in a single week. The notional — dollar-based — value of silver deliveries in January 2026 was nearly 10 times higher than any previous January on record.
March poses a problem for COMEX. There is open interest of approximately 490 million ounces (98,000 contracts representing 5,000 ounces a piece) in the futures market for silver. But COMEX has less than 115 million ounces of registered silver inventory available. If even 22% of March futures holders demand physical delivery, that would exceed the available silver.
I wrote about this and more in yesterday’s blog post.
thinking of a new painting series
Given my fascination with precious metals lately, I’ve decided to start a new painting series with metallic paints (which I love!) I tried doing something like the Motion Memory series, inspired by Franz Kline’s work, but it didn’t engage me or work for me.
Meanwhile I’ve been reading a wonderful dark folklore fantasy book Uprooted by Naomi Novik. The villain in the story is the Wood, a malevolent forest that is overtaking towns and turning people into monsters. I am going to try some metallic abstract forests.
Here’s what ChatGPT came up with as a direction:
My general plan is this:
- Draw an area that will be the lightest area of the background – the light through the forest and where it lands on the forest floor.
- Use modeling paste or other texture medium to create texture for leaves on forest floor and leaves on trees.
- Prime all around it with my dark forest brown (burnt umber + mars black mix). Prime the light area with Sherwin Williams High Reflective White (I have a sample quart of it).
- Build out background layer. Add mid-tone neutrals around the light area (gray or ochre).
- Glaze over the light area e.g. with gold or silver.
- Add trees with dark forest brown mix.
- Build up layers of stippled leaves using metallics.
- Refine with an area of sunlight.
I also plan to try this with different color schemes, e.g., a foggy light day in a birch tree forest, autumn with aspen color, a snowy day with evergreen trees.
It’s February!
I’m excited for a new month to start. I like February. It has Valentine’s Day and good skiing (usually but maybe not this year). I’m excited for the Wuthering Heights movie coming out. It’s my oldest child’s birthday month.
Happy February!