Dieter Lüscher of Premium Strategy Partners AG, one of Switzerland’s most recognized wealth managers, has issued a stark and timely warning on gold and silver. Known for managing ultra-high-net-worth portfolios and repeatedly ranked among the best in conservative risk strategies, Lüscher argues that the current price weakness is not what it appears. In his latest interview, he outlines a scenario that suggests the market may be approaching a turning point.
» In Gold the sell-off that started from 5,598 levels is correcting the last parabolic phase of the uptrend. Previous resistance at 4,550 levels becomes the new support. Long-term uptrend is intact. In the short-term we are seeing consolidation and a drop in volatility. A risk off environment in Global Markets can result in a correction in Gold given its liquidity and appreciation over the past couple of months. It can be used as a source of cash. «
Lüscher’s core
message is that the current weakness may be a structurally driven
dislocation rather than a reflection of deteriorating fundamentals. If
his assessment holds, the present environment could represent a
transitional phase before stronger upward momentum resumes, potentially
alongside a longer-term shift in global pricing influence.
The Quarter-End Dynamic
According to Lüscher, commercial banks and short-position holders continue to carry substantial exposure in the futures and options markets, with a significant expiry window just days away. The incentive structure is straightforward: downward pressure into expiry maximizes the likelihood that these options expire out of the money, allowing institutions to retain premium income. While this pattern has repeated for over a decade, Lüscher suggests the current setup may represent a late-stage iteration rather than a routine cycle.
The latest CFTC COT report details an increase of 3,779 gold short contracts by non-commercial traders (hedge funds), representing 377,900 ounces or approximately $1.55 billion in new downside exposure. This positioning coincided with a 72-hour gold price decline from $4,520 to $4,100. Total hedge fund short exposure currently stands at 56,092 contracts (5.61 million ounces), valued at $23 billion. Market structure remains heavily leveraged, with large speculators holding 215,961 long positions against 284,832 commercial short positions. This data suggests price volatility is driven by technical positioning and liquidity pressure rather than fundamental shifts.
A Potential Near-Term Bottom
Lüscher
indicates that the market could be nearing a short-term bottom within
days. Despite ongoing geopolitical tensions, he emphasizes that recent
price action appears largely technical, driven more by derivatives
positioning than by fundamental demand. Once the expiry window closes,
he expects underlying demand dynamics to reassert themselves,
potentially leading to a sharp reversal.Shifting Pricing Power Toward Asia
Structural
changes in global pricing mechanisms are also accelerating. India is
moving toward pricing gold and silver ETFs based on domestic spot
benchmarks rather than traditional London references, while China
continues to promote yuan-denominated gold pricing in global markets. At
the same time, inventory trends highlight divergence: Western exchange
stocks have been declining, while Asian market dynamics are becoming
increasingly influential.
» Physical metal carries zero counterparty risk—exactly what investors and nations now demand. Wars
and exploding debt force massive new money printing that only gold and silver can truly absorb. «
and exploding debt force massive new money printing that only gold and silver can truly absorb. «
» Expect a low in Gold at the end of April near $3,600-3,700. «
The Physical Market Tightens
On the supply side, Lüscher points to increasing fragmentation in silver distribution, with more output moving directly from mines to industrial users, bypassing traditional exchanges. This reflects a broader shift toward physical ownership, where counterparty risk is minimized—an increasingly important consideration amid rising geopolitical and financial uncertainty. Expanding fiscal deficits and monetary pressures further reinforce the role of precious metals as absorbers of excess liquidity.
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