Guotou Silver LOF Revelation

The Guotou Silver LOF (Listing of Fund) provides an insightful overview of the current state and future prospects of the silver market. This report covers market trends, investment strategies, and risk assessments to help investors make informed decisions.

*Image: Silver bars representing investment assets*

In this guide, we analyze the factors influencing silver prices, including economic indicators, geopolitical events, and supply-demand dynamics. We also explore the advantages of investing in silver through LOF products, such as liquidity, transparency, and regulatory protections.

### Key Highlights:
- Market analysis and forecasts for the next quarter
- Investment strategies tailored for different risk appetites
- Regulatory updates affecting silver investments
- Tips for managing investment risks effectively

Whether you are a seasoned investor or new to precious metals, this report aims to equip you with the knowledge needed to navigate the silver market confidently.

This time, the on-exchange Guotou Silver LOF has given investors a profound and brutal lesson in risk education.

In the past, when discussing this fund, we often approached it from an arbitrage perspective. My stance has always been clear: for arbitrageurs, it’s a feast—30% or even 50% premium rates sustained for nearly two months. I’ve never seen such premiums in my five or six years of arbitrage career. But for on-exchange speculators, some have indeed made money, though I’ve always emphasized that the risks here are extremely high.

Last night, Guotou Silver LOF announced its net value, which plummeted by over 30%. Think about it—who has seen an off-exchange fund drop 30% in a single day? A 10% drop is a limit-down, but 30% is almost unheard of, yet it actually happened to this LOF. What does this mean? A net asset value of 3 yuan instantly drops to 2 yuan. Meanwhile, the on-exchange premium was originally 50% or 60%. Before the limit-down, the market price surged to 5 yuan, with the net value remaining at 2 yuan, leaving about 3 yuan of downward space—just thinking about it is terrifying.

Arbitrageurs have limited subscription amounts off-exchange—100 or 500 units—so they can’t buy much. The cost is low, and with a 3 yuan drop to 2 yuan, the maximum loss is about 30%. The amount involved is limited; but on-exchange speculators are different. Daily trading volume can reach 3 to 4 billion yuan, and with T+1 trading, many people entered at high prices around 5 yuan, risking their entire net worth. Falling from 5 yuan to 2 yuan, the losses are unimaginable.

We previously warned about two major risks: the risk of silver prices falling and the risk of sentiment retreat. Now, both risks have erupted simultaneously, with even more shocking volatility. A 30% drop in one day is impossible to escape. Sentiment retreat is instantaneous—buying power disappears immediately. I don’t know if these on-exchange investors were aware of these risks in advance. If they knew and accepted it, so be it. But if they entered blindly, it’s truly tragic.

It’s important to understand that this is completely different from investing in physical silver. Physical silver gains 30% and earns 30%, or loses 30% and loses 30%. But LOF funds involve premiums and discounts, which hide many pitfalls. As I always say, don’t gamble on things you don’t understand. Money earned by luck is likely to be lost overnight just as easily. This is vividly demonstrated with Guotou Silver LOF. On-exchange speculators should really reflect on their strategies.

Regarding the fund company’s operations, yesterday, when the net value was announced, they directly adjusted the valuation method, which is when the 30% plunge was revealed. We only then realized that the fund heavily invested in overseas silver futures. When futures drop 30%, the fund drops 30%. Currently, the fund is restricted from off-exchange subscriptions and can only be redeemed. After the net value fell 30%, off-exchange buyers were trapped, while on-exchange investors, who couldn’t redeem, saw the net value drop below 2 yuan—around 1.9 yuan—everyone was caught in the trap, and the fund shares stabilized somewhat.

Some want to buy more to dilute their costs, but sorry, that’s not possible now. Previously, the fund repeatedly suspended trading, imposed limits, and intervened in various ways. The result? The premium rate didn’t decrease—in fact, it rose to 130%, even higher than the previous 50%. On-exchange, panic dominates, and buying has dried up. Now, both on- and off-exchange investors are in a dilemma: off-exchange investors can’t buy more, and on-exchange investors can’t sell.

The fund company claims these interventions are for investor protection, and risk warnings are indeed necessary. But in terms of actual effectiveness, this series of operations has been a failure. Having worked in the industry for ten years, I want to be honest with everyone: don’t expect fund companies to have a strong sense of responsibility toward investors. The industry is pragmatic—if fund shares stabilize, they can comfortably collect management fees.

For us investors, it’s crucial to pay attention to official risk warnings, but also to distinguish between the opportunities and traps behind those warnings. Clearly, the opportunity lies with arbitrageurs, while the trap is in high-position buying on the on-exchange. The key is to understand your own capabilities and stick to your judgment.

Guotou Silver LOF is now completely in the spotlight—what’s burning is the heavy price speculators are paying. I have a friend who entered at 2.5 yuan, sold some at 3 yuan, and fully exited at 3.2 yuan. Later, when the fund rose to 5 yuan, he deeply regretted missing out on a big profit. But now, with the net value plunging, he won’t regret anymore. This shows that money outside your capacity or outside your circle of competence isn’t really a loss if missed; instead, it’s something to be grateful for.

That’s my reflection after reviewing the Guotou Silver LOF net value, shared here for everyone’s reference. I will also keep everyone updated on new opportunities or risk alerts in a timely manner.