Mid-January Summary: Key Themes From David Mitchell’s Recent Market Commentary (6–12 January)
Overview
This mid-January summary consolidates the main insights from David Mitchell’s market commentary published between 6th and 12th January, covering geopolitics, commodity index rebalancing flows, paper-market leverage, and the evolving shift from paper claims toward physical ownership.
Two themes dominated the period:
- A full-scale global race for real resources and asset control
- The Bloomberg Commodity Index (BCOM) rebalancing and its impact on paper silver and gold
1) The Global Resource War: Why China Is Aggressively Accumulating Precious Metals
The widening gap between physical silver prices in China and Western paper silver markets is being driven by developments beneath the surface, where policymakers are injecting vast amounts of new currency into their financial systems, with China leading the process.
Key points highlighted include:
- China’s money supply recorded its largest annual increase on record, excluding post-COVID stimulus
- The expansion equates to approximately USD 4.5 trillion injected in a single year
- Precious metals, particularly silver and platinum, have moved aggressively due to enormous global supply-demand deficits
A similar direction of travel is emerging in the United States, where renewed Treasury purchases signal that emergency liquidity is once again required, confirming systemic stress remains embedded beneath the surface.
This backdrop supports a broader shift into a new geopolitical phase focused on resource security and asset control, where direct ownership of physical assets matters, alongside rising jurisdictional risk.
2) BCOM Rebalancing: A Paper Event That Failed to Break the Bull Market
A major focus through early January was the annual Bloomberg Commodity Index (BCOM) reweighting process, which forces mechanical reallocations by index-linked funds.
Key mechanics include:
- BCOM-linked assets represent over USD 110 billion
- The 2026 rebalance window began on 8th January
- Silver’s target weight is 3.94%, despite recent outperformance pushing it above 10%
- This implied more than USD 6 billion in mandated paper selling in silver
- Estimated outflows also included over USD 6 billion in gold
However, the fundamental point remained: this was a paper-driven adjustment, not a physical liquidation.
No physical silver is being sold.
Rather than weakening the market structure, these events were positioned as opportunities to rotate out of paper instruments into physical metal held off-balance-sheet, stored in fully segregated overseas vaults, particularly in jurisdictions such as Singapore.
3) Paper Selling Running Into a Wall of Buying
Despite substantial paper selling pressure, silver, gold, and platinum continued advancing strongly, with forced selling failing to produce meaningful damage to the underlying trend.
Silver’s price behaviour was a key signal:
- A brief test of USD 73.81
- A sharp reversal and recovery to above USD 78
- Strong and immediate demand returning on weakness
If markets held through New York sessions under thin liquidity conditions heading into the weekend, it further reinforced how robust and resilient the bid remained.
A controlled re-test of the USD 70–72 zone was framed as constructive, potentially forming a base for renewed momentum and an eventual drive through USD 90 and toward USD 100 and above.
4) “Buy the Dips”: Bullish Price Structure and Accelerating Recoveries
The market’s structure has been increasingly bullish, not only in direction but also in behaviour. Corrections have been resolving at an accelerating pace.
Two examples illustrate the shift:
- Mid-October peak: roughly two weeks of downside, over 16% decline, and nearly 20 trading days to reclaim the highs
- Late-December correction: two days of downside, over 16% decline, and highs reclaimed in just four days
Pullbacks are becoming shorter in timeframe and increasingly attractive accumulation windows. Momentum rebuilds faster after each correction, reinforcing the trend’s strength.
In short, demand continues to overwhelm supply, consistent with a structurally driven bull market.
5) Noise vs. Reality: Why the Bull Market Remains Intact Through 2032
Throughout the past two years of this precious-metals bull market, rallies have been repeatedly met with negative commentary and recurring theories forecasting collapse.
Despite this, gold, silver, and platinum have continued advancing in defiance of the noise.
The market remains supported by a powerful mix of macro-economic fundamentals. This cycle is framed not as a short-term phenomenon, but as part of a major trend expected to extend through to around 2032.
Volatility and sharp corrections are expected along the way, but until the cycle plays out, the overall trend remains intact.
6) Systemic Risk, Paper Leverage, and the UBS Question
The period also raised questions around systemic risk within Western banking and potential exposure tied to large silver short positions.
The specific exposure of any individual bank remains uncertain. However, one structural reality was repeatedly emphasised:
The overall system is leveraged well in excess of 400:1 in silver when all components are included, spanning:
- exchange structures
- derivative markets
- bank re-hypothecation
- shadow-banking exposures
Silver itself may not be systemically large by market size, but the degree of leverage built around it continues to create outsized risk.
Conclusion: The Mid-January Message
The combined commentary from 6–12 January reinforces a single, consistent conclusion:
Paper selling has not broken the bull market — it has highlighted its strength.
Forced flows were absorbed quickly, recoveries accelerated, physical premiums remained elevated, and macro conditions continued to favour real assets over paper claims.
Volatility remains part of the path, but the trend continues to reflect:
- accumulation during weakness
- migration away from paper instruments
- increasing preference for physical ownership and clear title
- a cycle expected to persist through to around 2032