Guotai Junan Futures Analyst Feng Da: The gold bull market is expanding, silver will "collapse" after a short squeeze, and copper is the most undervalued strategic asset

Q1: What is the "super bull market logic" supporting gold prices? How far can it go?

Gu Fengda: My judgment is very clear: the upward trend in gold prices will continue until 2026. In the next 2-3 years, the structural bull market for gold has not only not ended but is further amplifying. There are three reasons:

First, this is an era where safety outweighs efficiency. Since 2022, the rift between the East and West has turned the primary principle of global capital allocation into "safety outweighs efficiency." Central banks outside of Europe and the U.S., represented by China, are indiscriminately selling U.S. Treasury bonds and other assets vulnerable to "financial weaponization," while gold is the best ballast they can find. A key data point is that the proportion of gold held by global central banks has historically surpassed that of U.S. dollar-denominated bonds for the first time.

Second, this is a rare resonance of funds between the East and West. Non-European and American central banks are buying, and funds within the West are also buying. Since Trump took office in 2025, the extreme uncertainty of his policies has led global capital to "vote with their feet," buying gold as a safe haven. Gold has become the greatest common divisor acceptable to all parties in geopolitical games.

Third, this is a tactical short squeeze under relaxed regulation. The Trump administration relaxed financial regulations, opening the door for market manipulation. What we are witnessing is a historically rare short squeeze formed by multiple parties, completely ignoring the sluggish downstream actual consumption.

Q2: Why did silver suddenly experience an "out-of-control surge" in the second half of 2025?

Gu Fengda: To make an inappropriate analogy, silver and platinum are the "two dogs" of gold. When the master (gold) is heading upwards, the smaller, more elastic "dog" (silver) naturally jumps higher.

It must be clarified that the driving force behind this round of silver's explosive rise is not industrial demand such as photovoltaics, but rather a rare overseas silver short squeeze manipulation in a century. The current price increase has surpassed the historical high point of silver manipulation by the Hunt brothers in the 1980s. Against the backdrop of the current U.S. Securities and Exchange Commission's tolerance and global chaos, major funds have launched this tactical short squeeze using the structural contradiction of "more money than goods."

Our research found that downstream jewelry stores are struggling to sell goods, but upstream raw silver is being bought up by speculators. This is a typical demand-driven short squeeze; as long as downstream industries like photovoltaics can still bear it, the upstream short squeeze will not stop.

Q3: Is the strength of silver sustainable? How will the bubble play out?

Gu Fengda: In the medium to long term, this will inevitably follow the script of "watch him build a tall building, watch it collapse." Such a drastic short squeeze rise, we believe, is unlikely to last more than two quarters, and we may see the tall building collapse within 2026.

However, this requires three prerequisites: first, the long positions must be satisfied and voluntarily exit; second, regulation (especially overseas regulation) must intervene forcefully; third, market funds must find a next better target Before these three conditions are met, the market will only take a brief respite and then brew the next wave of offensive. Therefore, in the short term, the short squeeze may continue.

Q4: Is the strength of industrial metals due to a cyclical recovery or "resource choke points"?

Gu Fengda: The issues facing copper are more severe than those for gold, namely the "choke points." A price increase of over 30% for copper by 2025 is not due to a significant rise, but rather a slow and limited increase.

Major global copper resource countries, such as Chile, Peru, and the Democratic Republic of the Congo, are experiencing intense geopolitical changes and "taking sides," heavily nationalizing resources, which directly threatens the stability of the global supply chain, especially China's resource security.

The most direct evidence is that the annual processing fee for copper concentrate long-term contracts in 2026 is the lowest in history, at zero, with spot prices even being negative! This means flour is more expensive than bread. China, with less than 3% of the world's copper resources, produces over 50% of the world's copper products, with more than 90% of the profits in the industrial chain being captured by upstream mining. Therefore, the strategic investment value of copper is no less than that of gold, and we are extremely optimistic about 2026; any pullback is an opportunity to enter.

Q5: In the context of multiple games, how should investors reconstruct their analytical framework?

Gu Fengda: I must first emphasize that currently, any investment decision that solely relies on fundamental analysis is akin to carving a boat to seek a sword.

We are in an era of multidimensional games. If fundamental supply and demand is one-dimensional, then macroeconomics is three-dimensional, while geopolitical factors, financial games, and supply chain reshaping are four-dimensional or even five-dimensional. Using a one-dimensional ruler to measure a four-dimensional space will inevitably lead to errors.

I suggest that investors pay attention to three indicators that better reflect the essence of the market:

The "speculative degree" and "real-to-virtual ratio" of the financial market: Focus on the ratio of speculative positions to real inventory in the futures market; when money far exceeds goods, prices lose their gravitational pull.

The "barometer" of overseas markets: For internationally priced commodities like copper and gold, the capital flow and short squeeze behavior in overseas markets (such as COMEX) serve as leading indicators for domestic spot markets.

The extreme distribution of industry chain profits: When the vast majority of profits in an industry are monopolized by upstream players, it indicates that the market has entered a stage dominated by games.

Q6: In the face of high volatility and high speculation, how should investors participate in this round of commodity markets?

Gu Fengda: I have observed that both retail investors and leading listed companies are entering the market at an unprecedented speed; the market only sees bulls and no bears.

In today's environment of high volatility and high speculation, my advice is: hold onto the trend, focus on the big picture while minimizing the small, and enjoy the current leverage, financialization, and bubble benefits of assets.

In playing Texas Hold'em, everyone can see the community cards (fundamentals), but the core of the game lies in the hole cards. The current market's hole cards are: scarce supply and sufficient global chaos. Therefore, I must repeat my advice three times: **Don't carve a boat to seek a sword, don't carve a boat to seek a sword, don't carve a boat to seek a sword! **

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