Here’s a small riddle: Suppose that I painted a single pixel on the screen black, and then doubled the number of black pixels every second. First there would be 2 pixels, then 4, then 8, and so on. How many seconds would it take for the entire screen to turn black? If it helps, a full HD screen contains 2,073,600 pixels.

The answer is 21 seconds. Did you guess correctly? Don’t feel too bad if the number that you picked was a lot higher than 21. The amount of black pixels was growing at an exponential rate, and human beings are not very good at assessing exponential processes. We are more accustomed to linear processes, that change at a constant pace. This is why when it comes to economics, we often get things wrong. We see some number growing and we don’t think much of it, because it doesn’t appear to have any negative consequences. But then it suddenly explodes, and turns out to be far more problematic than we imagined. This is exactly what happened to this number - the US national debt, that just reached $40T. Just like the number of black pixels on your screen, it is growing at an exponential rate. Until now, it didn’t have any negative impact on the economy, and politicians thought that it could grow forever. But there are strong indications that this is about to change, and that the ever growing debt is about to hurt us very seriously.

Let’s start by asking - why is the debt constantly growing? Is it just because American politicians can’t stop spending? The answer is more complicated than that. Since the US dollar is the global reserve currency, there’s a constant demand for it abroad. Corporations borrow dollars, so that they may invest in plant equipment and produce goods. If for some reason there’s a shortage of dollars overseas, they won’t be able to recoup their investment and pay back these loans, and the global economy may enter a recession. So one of the reasons that American politicians spend so much, is to keep the global economy going, by constantly flooding it with dollars.

This is why they don’t seem to care how the money is being spent. Whether it is used to protect the mountain gorillas in Congo, or to fund a transgender opera in Colombia, as long as the dollars keep rolling, they’re happy. For decades and decades, they convinced themselves that the size of the debt doesn’t matter, because they will never have to pay it back. Whenever a bond reaches maturity, they will simply issue a new one instead, and there will always be demand for US debt. All they have to do is to service the debt, and since interest rates were very low, that didn’t seem like much of a problem. But then inflation came along, and changed everything.

In the wake of the COVID pandemic, inflation erupted all across the world. Bond investors started demanding higher rates, to compensate them for the falling purchasing power of the dollar. As a result, the cost of servicing the national debt has exploded. Right now, the US pays over a trillion dollars per year just as interest on the debt. This is the third largest line item on the budget, after social security and health. Since the federal government continues to spend every year about 2 trillion dollars more than it collects in taxes, this figure is only expected to grow. In theory, the federal government could cut its budget, generate a surplus and reduce the size of the debt. But in practice, government spending is such a huge part of the GDP nowadays, that any attempt to cut it would lead to a recession. This would reduce the tax revenue dramatically, and could end up increasing the deficit rather than reducing it.

So the federal government is trapped. The more it spends, the bigger the debt. The bigger the debt, the more it costs to service it. The more it costs to service it, the more it needs to spend. It’s a doom loop, which is spiraling out of control. Its only hope is to grow out of debt. If the GDP were to rise substantially, the tax revenue would increase accordingly, making it easier to handle the debt. The advent of artificial intelligence has indeed given everyone hope, that robust growth is just around the corner. Unfortunately, unlike previous technological breakthroughs, AI has the potential to destroy more jobs than it creates. AI can easily replace many high paying white collar professions, such as lawyers and accountants. It can also reduce the demand for computer programmers, architects, designers, et cetera. Corporations that replace their human employees with AI may enjoy a dramatic cut to their costs, but unemployment will skyrocket and consumer spending will take a huge hit. This is why I’m doubtful, that AI can rescue the finances of the US government.

We should also point out, that the construction of AI data centers is proving to be extremely costly. In recent years, leading tech companies have invested 1.5 trillion dollars in it. You won’t find that debt on their balance sheets, because it was done through subsidiaries called SPVs. But I can assure you that they are still on the hook for it. These companies are reporting record demand for AI services, and claim to have a backlog of orders worth hundreds of billions of dollars. But from what I hear, the demand is not coming from end users. The demand mainly comes from other tech companies, who are using AI to develop technologies that are related to AI themselves. In other words, it’s a circular scheme, which is funded by an enormous amount of debt, relying on a shrinking base of end users, in a rising interest rate environment. Odds are, that the cost of servicing this debt will far exceed any revenue they may ultimately generate. I believe that tech CEOs are well aware of how dangerous this is to the future of their companies. But since they believe that dominating the field of AI is essential to their survival, they are forced to take this gamble.

I’m not too worried about the tech CEOs. They will be fine no matter what happens. But if the AI bubble pops, the rest of us are screwed. The US economy will enter a recession and the stock market will experience a sharp selloff. With unemployment rising and tax revenue collapsing, the fiscal deficit will explode. Contrary to mainstream view, I believe that this time there will be no flight to the “safety of bonds”. Bond yields will continue to rise, signaling a growing mistrust in the federal government’s ability to manage its debt. At that point, the Federal Reserve will be forced to intervene and cap long term interest rates. They will resume QE, and purchase all the bonds that no one else wants. This will prevent the default of the federal government, but it will also confirm investors’ fears, that the US intends to monetize its entire debt and that the dollar is doomed. They will begin to dump their dollars in exchange for any tangible commodity they can find. The prices of all commodities will skyrocket, but the prime beneficiaries will be gold and silver. This will be the equivalent of the screen turning black in the riddle we mentioned earlier - an exponential process going vertical. I can’t say for sure how long this will take, whether this will be weeks, days, or perhaps only a few hours. What I do know is that the vast majority of people won’t know what hit them, and will lose their wealth at a breathtaking speed.

The morning after we will wake up to a completely different world. The dollar will cease to be, and only tangible goods will maintain their value. Global trade will be paralyzed, until a new monetary system is negotiated. Since no national currency will be trusted, it will have to be based on a neutral asset, such as gold and silver. To prevent extreme deflation, they will have to be revalued much higher. The federal government will lose much of its power, because it won’t be able to spend as much as it does today. It will be forced to balance its budget, or else lose its gold reserves. The number of government employees will drop, and its encroachment on our lives will be curtailed.

The average person will be impoverished. Their house will still be there and their car will still be running, but most of their financial wealth will be gone. Bonds will lose all value. Stocks of certain companies may recover, provided that they own tangible assets and can produce useful commodities. Only those who own some physical gold and silver will escape with their capital intact. Government benefits will be gone, or paid in a worthless currency. The only upside will be that government taxes and regulations will be greatly reduced, and people will be free to start again without their heavy burden. Those who have a useful trade and can deliver value to others will thrive, and they will form the basis of the new economy. Life may become much simpler than it is today, but it may also become healthier and more wholesome. As you can see, not all is dark. We still have some good things to look forward to.

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People think of inflation as a force of nature, like a storm or a drought - an annoying phenomenon that makes everything more expensive, but can’t be avoided, and we just have to accept. That is simply not true. Inflation is a government policy. It is a sneaky way in which the government taxes you, not by taking away your money, but by reducing its purchasing power. Unfortunately, the inflationary period we have entered in 2021 is probably just beginning. Here are 8 reasons to believe that inflation is here to stay:

1. Government spending is out of control - in the past few decades, governments across the world have given up any semblance of fiscal responsibility. They adopted this crazy Neo-Keynesian belief, as though the more they spend, the better it is for the economy, because it somehow stimulates growth. They spent a ton of money after the 2008 financial crisis, and they spent even more during the COVID pandemic. This is how every major economy in the Western world nowadays has a debt to GDP ratio of over 100%. In reality, government spending can indeed temporarily boost the GDP, but it doesn’t have a lasting effect. Since most of it isn’t used to fund infrastructure projects, and instead is either wasted or stolen, once they stop spending, the economy tends to shrink back to its original size. But the accrued debt still needs to be serviced, raising the government’s interest expenses.

   

   In the US, the annual interest payments on the debt have reached $1.2T. They are the third largest line item on the budget, after social security and health. If nothing is done to rein in the spending, these interest expenses will eventually bankrupt the federal government. This is where inflation comes in. Inflation has the ability to gradually erode the value of the debt and make it smaller compared to the GDP. This is the sneaky way in which the governments intend to reduce their debt burden, and they have no intention of stopping until it becomes worthless.
   Wait a minute, you may say. That government debt, in the form of government bonds, is a large chunk of our retirement savings. We rely on the government to pay back that debt so that we may retire in peace and comfort. If the government erodes the value of that debt through inflation, that means we won’t be able to retire. Correct! The governments of the world see you and me as their piggy bank. They intend to raid our retirement savings in order to bail themselves out, and this is exactly why you must protect yourself from inflation.

2. Central bank policy has been extremely inflationary - After the 2008 financial crisis, central bank policy across the world became extremely accommodating. Short term interest rates were kept close to zero, and long term interest rates were suppressed as well, through the controversial tool called QE. During this period, the Federal Reserve printed tens of billions of dollars every month, and used them to purchase mortgage-backed securities and government bonds. This policy was ramped up during COVID, to the tune of 5 trillion dollars, and was only stopped in 2022, as the rate of inflation in the US reached 9%.

   

   To this day, Fed officials deny that their policy was inflationary, and blame the inflation on “supply chain disruptions”. But the data speaks for itself. The rate of inflation peaked in June of that year, only two months after the Fed stopped expanding its balance sheet. Since then, the Federal Reserve embarked on an aggressive rate hiking campaign, and managed to reduce its balance sheet by about $2.5T. But right now they’re cutting rates again, and their balance sheet is again growing. Combined with the war in Iran and the breakout in the price of oil, I suspect that this will unleash another wave of inflation.

3. Inflation has a long lag time - what most economists fail to understand, is that inflation has a very long lag time. When you print a bunch of dollars, they don’t necessarily find their way to consumer goods. They may end up inflating the prices of real estate, or the prices of financial assets such as stocks and bonds. These assets are not included in the CPI, and therefore you get the impression as though there is no inflation. But the added liquidity remains in the system for a very long time, and eventually it does leak into the commodity sector, generating inflation (the way mainstream economists define it). This is why money printing is so dangerous. At first, it gives the appearance as though it is stimulating the economy and generating growth. The damage is only visible many years later. Once the Federal Reserve realizes what a blunder it has made, it is too late to do anything about it. It can’t drain all that liquidity out, because that would lead to a huge deflationary crisis, a bit like the great depression. It has no choice but to allow commodity prices to rise, in order to catch up with the increase in the money supply. Even if it stops the printing right now, we will still have inflation, because we are paying for their past mistakes.

4. Inflation is a long term phenomenon - history shows that once inflation begins, it tends to persist for many years. The great inflation of the 1970s, for instance, started as a matter of fact in 1965, and lasted for 17 whole years, until 1982. Compare that to today, when the inflationary cycle is just 5 years old, and you realize that it has plenty of room to run.

5. Inflation tends to come in waves - When the rate of inflation is rising, central banks are under pressure to do something about it. They usually raise interest rates and inflation tends to subside. But this slows down the economy, perhaps even inducing a recession. So the central bank is again under pressure, this time to cut rates and give the economy some reprieve. If they do that too soon, before inflation has been defeated, it tends to flare up again. This is how we get this pattern of waves. During the 1970s, the US experienced three consecutive waves of inflation, each worse than the one before. Nowadays, we’ve only had one wave, which suggests to me that we could be facing several more.

   

6. Commodities are dirt cheap - in spite of all the gains commodities have had since 2020, they are still very cheap compared to other asset classes, such as stocks or bonds. As you can see, the ratio between the Bloomberg commodity index and the S&P500 is close to an all time low. The total market cap of all stock markets in the world is estimated at over $120T, and the total market cap of all bond markets - at over $140T. Commodity markets are tiny in comparison, and if only a small percentage of that capital shifts towards commodities, this could lead to an outsized move in their prices. Such a process would be self reinforcing. The higher the prices of commodities go, the more lucrative they would seem to the average investor. Unfortunately, this would also pour more fuel on the inflationary fire, pushing up the cost of living.

   

7. A breakout in the 10-year treasury yield - Since 1980, we’ve been living in a falling interest rate environment, as can be seen by this falling trend line on the 10-year Treasury yield chart. This was an environment of low inflation and high growth, which was beneficial both for the stock market and the bond market. Anyone who invested in this period looked like a genius, because essentially everything went up and up and up! But as you can see, that paradigm ended in 2022, when bond yields broke out of that trend, indicating a transition to a rising rate environment as far as the eye can see.

   

   Thus far, the stock market has held up pretty nicely, compensating investors for any losses they may have had in the bond market. But if rates continue to rise, I expect that to change dramatically. For the first time in many years, the stock market will enter a prolonged bear market, or simply move sideways, just like it did during the 1970s. The bond market will do even worse, as both governments and corporations have to offer higher and higher yields, in order to compensate investors for the high inflation. Even if you don’t fully understand this chart, I want you to remember it, because in my view it is the best predictor of a lot more inflation to come.

8. Public perception - finally, we need to point out that inflation is not only a monetary phenomenon, but also a psychological one. As long as the public is willing to endure the rising cost of living, inflation can remain under control. It is only when the public panics, that it gets out of hand. People begin to hoard consumer goods in preparation for future inflation, pushing their prices higher. This is what we call a self-fulfilling prophecy. The rush towards commodities has the potential to accelerate inflation and turn it into a hyper-inflation. In this case, the inflationary cycle will intensify and reach incredible levels of 50% per month or more. It will also end a lot quicker, as the currency collapses, and the government has no choice but to issue a new currency, perhaps one which is backed by gold or silver.

Needless to say, that anyone who is invested in commodities during such a period can make a killing. The two commodities that tend to perform best are gold and silver. Thanks to their unique properties, they are most suitable to safeguard your savings, until a new and more stable currency is issued, and the economy begins to recover. Most people nowadays have no exposure to precious metals, but the magnificent rally they’ve had in 2025 has already alerted the public to their existence. I suspect that once we get another wave of inflation, their prices will really explode.

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Since their January highs, the prices of gold and silver experienced a sharp correction. Gold lost 27% of its value. Silver, which is always more volatile, lost close to 50%. Investors who are new to this sector were quite shocked, especially since the war in Iran was expected to boost the demand for safe haven assets. There are several possible explanations for this move, such as a liquidity crunch, a rotation from precious metals to crude oil, and the usual suspicion of manipulation. But regardless of the explanation, this is normal behavior for precious metals during a burgeoning bull market.

Take for instance the price action during the early 1970s. After the US got off the gold standard, the price of gold leaped higher in three powerful thrusts. Each one of them was followed by a 15-30% correction. Nowadays, these drawdowns look like nothing but tiny squiggles on the price chart, but in real time they must have been quite painful. Investors must have wondered whether the bull market is over, and whether they should sell. But at less than $200 an ounce, the answer was a resounding no. Within a few short years, gold would advance to no less than $800 an ounce, as the dollar lost much of its purchasing power, and other asset classes tread water.

Today, we are in a similar situation. Inflation broke out in 2020, during the COVID pandemic. Since then, the prices of all commodities increased significantly, but not nearly enough to account for the rampant growth of the money supply during the previous decade. Compared to stocks, bonds or real-estate, they are still extremely undervalued. Right now, everyone is certain that inflation is behind us, and that the Federal Reserve was able to defeat it with an aggressive rate hiking campaign. But history shows that inflation tends to come in waves. The recent breakout in the price of oil, due to the closing of the Strait of Hormuz, is the perfect trigger for a second wave of inflation.

Once investors finally come to terms with the fact that inflation is not a one-off event, but a long term phenomenon, they will need to adjust their portfolios accordingly. This will probably be the greatest reallocation of capital we’ve ever seen, and the prime beneficiaries of it will be gold and silver. As I’ve pointed out many times, these are the only commodities that have an unlimited shelf life, are not dangerous to store and are compact enough to fit into a home safe. For many people of modest means, owning a few gold or silver coins will be the easiest, most practical way to get an exposure to the commodity market. The only reason this hasn’t happened yet, is because the public is slow to change its habits and relearn what it has long forgotten - that during an inflationary period, gold and silver are the place to be.

If I had to find the best analogy to the current situation in the precious metals market, it would go like this: you are playing a round of poker, and you have a pair of aces in your hand. One is gold and the other is silver. The house has nothing, but it does have an unlimited amount of cash, so it keeps raising the bet, hoping you’ll get scared and fold. If you fall for the bluff, you will lose everything. But if you manage to stay in the game till the end, you will be rewarded handsomely.

You see, inflation is not an accident. For the governments of the world, inflation is a necessity. After the 2008 financial crisis these governments bet big, that through monetary and fiscal stimulus they could generate enough growth, to keep the public happy and to pay down their debt. But the long-awaited growth never came, and most of the nominal GDP growth since then was in fact inflation. No doubt, we’ve had a few pockets of growth, for instance in the high-tech industry. But the vast majority of the population did not benefit from it at all, and in real terms they are worse off than they were twenty years ago. But the debt still needs to be paid, and as inflation is getting worse, and long term interest rates are inching upward, servicing this debt is getting more and more expensive.

For the governments, the only way out is through a massive devaluation of their currencies, which will erode the value of their debt and make it manageable again. This is tantamount to a huge tax on our retirement savings, that each of us will be forced to pay. The governments would like this devaluation to take place very slowly, so that as few people as possible realize what is happening. But they can easily lose control of the process, in which case it will accelerate rapidly. Whenever you see the prices of gold and silver racing ahead, it means that the governments are losing control. Whenever their prices correct sharply as they recently did, the governments are attempting to slow the process down. But quickly or slowly, the ultimate destination has already been set. Gold and silver must rise in price, to account for all the currency creation of the past decades.

This is as close to a sure bet as you’ll ever have. And yet betting on gold and silver is not easy, because you need to endure the extreme volatility. Most people are not equipped to see their portfolio cut in half in a matter of days, even if it tripled just recently. Most people will panic and sell at the bottom. It takes a bit of character and knowledge to hang in there. The more you learn about precious metals, the more confident you will become, that you made the right choice. In this wild game of poker, gold and silver are your aces. For god’s sake, don’t let go of them too easily.

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There’s this thing they do on Wall Street, when they invent a story that serves their interests, and no matter how irrational it is, everyone goes along with it. Since the large investment banks carry so much weight, their coordinated action can sway the market in any direction they wish, giving their narrative some credibility. Even money managers who don’t buy the narrative are forced to acquiesce, because they expect everyone else to do so, and they don’t want to stand in the way of a large capital movement. Usually, bullshit narratives don’t stand the test of time. Basic economic principles are stronger than any fairy tale, and eventually they assert themselves. But in the short term, these narratives are extremely powerful.

A good example of such a narrative is the notion that inflation is somehow bad for the price of gold and silver. According to this narrative, an uptick in inflation will force the Federal Reserve to tighten monetary policy, which is good for the dollar and bad for precious metals. Well, first of all, inflation is the reason people invest in gold and silver to begin with. Historically speaking, this is the best way for the average person to protect themselves against inflation, and to argue that their price should fall due to rising inflation is ridiculous. On top of that, under the current conditions, there is no chance in hell that the Federal Reserve will raise interest rates. As a result of the war in Iran and the closure of the Strait of Hormuz to the passage of oil tankers, the price of crude oil recently spiked as high as $120 a barrel. Since oil is such an important input to so many industries, it is widely expected to lead to a surge in inflation. But as we’ve seen during this week’s FOMC meeting, the Federal Reserve made no change to its policy. I believe that this is a sign of things to come, that the Fed has essentially given up on its fight against inflation, and that it’s willing to allow it to run hot. Therefore, the Wall Street narrative doesn’t make any sense.

And yet we’ve seen the prices of gold and silver take a huge hit. The price of gold fell this week by about 10%, and the price of silver by no less than 15%. As a result, the sentiment regarding precious metals is once again abysmal. The RSI (relative strength indicator) reading for gold is now below 30, something we haven’t seen since the depths of the COVID pandemic. This is the exact opposite of what you would expect during a time of war and uncertainty, when the demand for safe-haven assets such as gold usually rises. This is why the move feels so unnatural and counter-intuitive. Those of us who have a conspiratorial mindset cannot help but think that certain banks, who were caught on the wrong side of the rally in precious metals last year, may have taken advantage of the situation, in order to knock the price down and offload some of their shorts.

From a technical viewpoint, the price of gold and silver doesn’t look too good. Gold broke down from its primary rising trend line, which started after the summer 2025 consolidation. This could easily send it back to $4,000 an ounce. Silver seems to have entered a steep falling wedge, which is threatening to take it down to $55 an ounce. In doing so, it will have retraced its entire move from the November 2025 breakout (1). There is also a possibility that it will find support on its primary trend line at around $64 an ounce (2). Such a setback means that the entire timeline for precious metals has been postponed, that they will spend the rest of the year bottoming and consolidating, and that the bull market will only resume towards the end of 2026.

The fundamentals, however, are as strong as ever. Rising energy prices are likely to usher in a second wave of inflation. Due to the weakness of the economy and the size of the national debt, the Fed won’t be able to stop it. It will allow inflation to run amok, decimating the purchasing power of our savings. Mainstream economists will finally acknowledge that we are in stagflation. Investment demand for precious metals will steadily increase, more than offsetting any decline in industrial demand. Supply, on the other hand, won’t increase substantially. In the face of such extreme price volatility, mining companies are unlikely to expand their operations. The next leg up in gold and silver may not be as exhilarating and dramatic as the previous one, but it will be more sustained, and take their prices further than anyone can imagine right now. In hindsight, this scenario should have been expected, since it is reminiscent of the first half of the 1970s.

So please, don’t buy the Wall Street narrative. Investment bankers don’t want you to own any physical assets, which they can’t charge any fees for. They want you to stay in paper assets like stocks and bonds, which are under their full control. To achieve that they will use every trick in the book, including the spread of false information in the financial media. Your job is to stay calm and think rationally. Is the national debt getting bigger or smaller? Is inflation still here, or has it gone away? Once you answer these questions correctly, you will see through their bullshit, and keep your gold and silver.

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Those who support the current war in Iran argue that the Ayatollah regime is a menace, that it is sponsoring terrorism all across the Middle East, seeking nuclear weapons, and guilty of murdering tens of thousands of its own people. Those who oppose this war are fearful of another “forever war”, like those in Iraq and Afghanistan, which will cost the lives of countless American troops and increase the national debt. But whether you support this war or not, I’m afraid it will affect you financially. This war is likely to usher in a second wave of inflation, and drive up the cost of living for all of us.

Last week, as the Strait of Hormuz was closed to the movement of ships, we saw the price of crude oil break out from a four-year-long consolidation pattern. In the past twenty years or so crude oil traded in a range, between $40 and $120 a barrel. At $90 a barrel, the current price is still within this range, and therefore hasn’t attracted much attention. But those of us who follow technical analysis realize how significant this breakout is, and that it is likely a precursor for the entire commodity complex.

Consider the setup for a moment. In 2021, inflation erupted with an intensity we haven’t seen since 1980. But the Federal Reserve managed to contain it with an aggressive rate hiking campaign. Although it was painful, and eroded the value of our savings, most investors made no change to their strategy. They were certain that this was a one-off event, due to the COVID lockdowns and the disruption which they caused to the global supply chains. They kept buying the same tech stocks and government bonds, and did not allocate any funds to inflation hedges, such as commodities. This is why the price of oil topped in 2022 and has been trending lower ever since, in what we call “a falling wedge”. This is also why the Federal Reserve felt confident enough to start cutting interest rates again, even though the rate of inflation in the US is still above its long term target.

As we all know, oil is an important input in the cost of manufacturing and transportation of most products. A breakout in the price of oil will probably lead to a resurgence of inflation, and dispel the myth that it was an isolated event. Still hurting from the previous round, investors are liable to panic and start shifting funds to the commodity market. Compared to the market cap of the US stock market (roughly 70 trillion dollars) and the US bond market (another 50 trillion dollars), the commodity market is relatively small. The global annual production of crude oil is worth about 3 trillion dollars, and the market cap of all publicly traded oil producing companies is another 8 trillion dollars. If funds begin to shift from one asset class to another, they can lead to a huge price increase.

This time, the Fed won’t be able to fight the inflation. It cannot tighten monetary policy into an environment of a falling bond market. Raising its benchmark rate and shrinking its balance sheet will only exacerbate the situation, and lead to a spike in long term interest rates. As a result, the federal government may have difficulty servicing the national debt. In order to save the bond market, the Federal Reserve will have no choice but to print trillions of dollars, and purchase all the bonds which no one else wants. The increase in the money supply will pour more gasoline on the inflationary fire, encouraging even more investors to move their capital to the commodity sector. In my opinion, this could lead to a multi-year commodity super-cycle.

Such a super-cycle will take the prices of all commodities higher, but particularly those whose supply is naturally limited, such as crude oil, copper and precious metals. In theory, you can always grow more wheat or rice, but drilling an oil well or constructing a mine is a far more difficult process. Gold and silver are expected to be the stars of this super-cycle. As monetary metals, which the public can own directly, without the aid of a broker or a commodity exchange, they are the easiest way to get an exposure to this sector.

I must admit, since late 2024 I’ve been bearish on commodities which are strictly industrial, such as crude oil and copper. The reason for that was the fear of a looming recession, which would slash industrial demand, and tank the prices of those commodities. During this period I recommended only gold and silver, which thanks to their monetary role are at least partially immune to such an eventuality. But as the long-awaited recession refuses to materialize and the price of crude oil is breaking out, I have no choice but to flip bullish on industrial commodities as well. I still believe that precious metals will outperform, but there should be room in your portfolio for other commodities as well.

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There’s a clip of Tom Lee talking about gold that is circulating on social media, which got the precious metals community annoyed. In that clip he says a few things which are technically correct, but incredibly misleading. I wanted to clear up these misconceptions, so I looked up the original video, and to my surprise it was quite interesting. The clip was taken from a panel discussion with Michael Lewis, the author of “the big short”. It was sponsored by SoFi and hosted by their head of investment strategy, Liz Thomas. The main topic was the AI bubble, and yet the conversation drifted towards gold, demonstrating how it’s on everyone’s mind right now. I would define all three speakers on stage as “normies”, people who belong to the mainstream. Listening to them trying to explain this phenomenon gives you an idea of how clueless Wall Street is about precious metals.

Let’s begin with the obvious mistake, that so many people on Wall Street make. Even when they finally get bullish on gold, they buy it through an ETF rather than owning the physical metal. This demonstrates that they don’t think of gold as money, nor are they trying to hedge themselves against currency debasement. Their only purpose is to make more dollars. The idea that the dollar may one day lose all value and cease to exist hasn’t even entered their mind. The only exception is Michael Lewis, who admits to owning physical gold, thanks to the influence of his friend Bobby Klein, a fund manager. “Four years ago, I was in his house and he was showing me his coin collection of old Roman coins... And he showed me the way the emperors debased the currency over time. And the silver content was less and less and less. And then he gave me a long argument for buying gold... I don’t do that. I don’t buy gold. It seems insane. But I couldn’t get it out of my head. And so finally three years ago I bought a bunch of gold and it’s just gone up and up and up”.

So Michael Lewis appears to be hooked, because he actually owns some physical gold and has already seen what it could do. But even he wasn’t knowledgeable enough about gold to push back, when Tom Lee made his egregious comments: “There’s a couple of what I’d call black swan risks to gold. One is there’s a million times more gold underground than above ground today. And so if gold gets too expensive... the Mag 7 companies are just going to get into the gold mining business, right? Because you might as well just dig for gold. It’s more valuable than anything.” It’s true that there is a lot of gold underground. This is the gold which existed on earth when it was formed, 4.5 billion years ago. But since gold is so heavy, it immediately sunk to its core, and is therefore completely inaccessible. There are over 6,000 kilometers of molten rock between us and that gold. Even the most advanced technology companies could not dig it up, because there are no materials that can sustain a temperature of up to 5,000 degrees Celsius, which exists at the earth’s core. For all intents and purposes, that gold doesn’t exist, and there is no point mentioning it, even as a “black swan risk”. There is of course some gold in the earth’s crust that hasn’t been mined yet, but it is a much smaller amount, and it is getting more and more difficult to extract, since all the easily accessible deposits have already been mined.

Next, he says “the second is that gold is all extraterrestrial... So SpaceX might do a mission to Mars and then run into a gold asteroid. And Elon Musk... he would own all the gold. He would become the new central bank and that gold could be, you know, a hundred billion ounces.” I’ll admit that mining asteroids is more realistic than mining the earth’s core. Still, this is a technology that is probably decades away. The asteroids that may contain large amounts of gold are not “on the way to Mars”. They are located in the asteroid belt, between the orbits of Mars and Jupiter. This belt is about 200 million kilometers away, and using current propulsion methods it takes about two years to get there. Thanks to the advent of robotics and AI, we don’t have to send human beings on such a long and dangerous mission, and can settle for autonomous mining vehicles. But mining requires heavy duty equipment, which is subject to a lot of wear and tear. Even with SpaceX’s newest technology, lifting such equipment to orbit will be extremely expensive. Therefore, the price of gold would need to reach many multiples of its current price before such a mission becomes economically feasible. As for Elon Musk becoming the new central bank of the world, I’m not sure that’s such a bad idea. I think he’s going to do a better job managing the money supply than the Federal Reserve.

Then he says “the third is of course alchemy, because if someone has discovered a way to knock an atom off lead to make it gold... they won’t tell anybody, and there’s just a whole bunch of gold supply coming, because all the lead is disappearing and becoming gold.” That is an egregious statement. Again, in theory it is true that you can turn lead into gold in a nuclear reactor or a particle accelerator. You do that by knocking out three protons, by the way, not an atom. But the amount of energy which is needed to produce meaningful amounts of gold in this method is astronomical, and the resulting material will contain radioactive isotopes of gold, lead, and other elements. Same goes for a similar process, which turns mercury-198 to gold by knocking out a neutron. In order to use this gold you would first need to put it in safe storage for several years, and allow it to “cool down”. Thus far, humanity has only been able to create minuscule amounts of gold this way. Scaling it up would require vast amounts of energy, and is therefore uneconomical. Fusion reactors may one day supply us with such an abundance of energy, but they are still under development, and it would take decades for them to enter commercial use. Tom Lee strikes me as an intelligent person. I wonder why he doesn’t bother mentioning these facts. Is it because he doesn’t want the listeners to invest in gold?

Finally, he claims that “On January 30th gold fell by 9%... There are only three other times gold had a single day decline of more than 9%, and three out of three times it marked a top for gold... If history is a guide it probably topped.” Here I cannot argue with Tom Lee, because it’s a matter of personal opinion. It is perfectly possible that gold has indeed topped on January 30th this year, and will need to consolidate its gains for years to come. But there are good reasons to believe that this is not the case, and that gold still has a lot of potential to appreciate. The debt to GDP in the US currently stands at an all time high of 125%. The difficulty servicing this debt threatens to bankrupt the federal government. This forces the Fed to keep interest rates relatively low, and prevents it from effectively fighting inflation. Historically, inflation tends to come in waves. Now that the Fed is cutting rates and its balance sheet is growing again, we are likely to experience a second wave of inflation. Anxious to protect their savings, retail investors will probably flock to gold and silver, and their prices will continue to surge.

So please take whatever Wall Street insiders are telling you with a grain of salt. It is evident that they don’t understand precious metals, and that they find them quite intimidating. If investors can outperform the S&P 500 by simply purchasing a few gold coins, then they are no longer needed, and the lavish lifestyle that they have grown accustomed to is at risk. We are much more likely to see the dollar collapse by the end of this decade, than to see the price of gold falling due to space mining or nuclear transmutation. The clear and present danger that we face today is that of a global hyperinflation, and the only way to protect ourselves against it is through owning physical precious metals.

PS - Here’s another incredible quote by Tom Lee from the same discussion. It has nothing to do with gold, but it is still amazing to read: “When I started in the business, institutional investors used to have a one-year time horizon, and that was considered long-term. Today, most institutional investors have 30 days as their time horizon. And as you know, the average stock is held for like 40 seconds. So for most of these large hedge funds... 1 second or 5 seconds is considered a long holding period. So a lot of funds are literally just churning through stocks.” This to me is the ultimate indictment of Wall Street. These people are not investing. They’re gambling.

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There’s an analyst I follow, who is bullish on crude oil. He thinks it can go to $150 a barrel in short order. He may be correct, but there is no practical way you can benefit from that, other than to purchase futures contracts, or the stocks of the companies that produce it. In both cases, you do not own the oil directly. You own some kind of certificate, through some kind of broker, which is supposed to reflect the rising price of oil. But if the government decides to confiscate that asset, or to tax it heavily, you will have no recourse. There is no way to hide those certificates from the eyes of the state.

This is no longer a theoretical risk. The Dutch parliament, for instance, recently approved a 36% tax on unrealized gains. Under the new law, Dutch residents will pay a heavy tax on the annual increase in the value of their stocks, bonds, or cryptocurrencies, even if they did not sell them. This law is widely criticized as draconian and damaging to the economy. Nevertheless, lawmakers are moving ahead with it. Given the increasing levels of debt all across the western world, and the lack of will to cut spending, politicians are looking for new ways to tax their citizens, and stock portfolios are their next target.

The desire to conceal assets from the government used to belong only to criminals. Law abiding citizens never concerned themselves with such matters. If there was a tax to pay, they paid it willingly. This was considered as the cost of doing business, and there was still plenty of profit to be made. But in recent years, growth is not as robust as it used to be. The share of government spending in the GDP is growing, crowding out entrepreneurs. Inflation has erupted in 2021, pushing up the cost of living. Even in so called rich countries, citizens are finding it more and more difficult to make ends meet. The need to protect what little savings they have left from confiscatory taxes is becoming very real.

What options do they have to do so? As we’ve already established, both stocks and bonds are fully exposed to the risk of seizure. In theory, they can be transferred to a different broker, in a more favorable jurisdiction. But there is always a paper trail which connects them to their owner. Real-estate is even worse, because it cannot be moved at all. Cryptocurrencies are supposedly immune to confiscation, but that is no longer the case. Since most of them are purchased through regulated exchanges, which implement “know your customer” policies, the government knows exactly who owns them. Next we have works of art and other collectibles. This is a legitimate way of holding value away from the public eye, but it is not particularly liquid. It can sometimes be difficult to find an appropriate buyer for an artwork, and sellers may have to settle for a fraction of its true value. Artwork is also not very durable, and may require special storage conditions, which most of us cannot afford.

What are we left with? Raw commodities and finished goods. Naturally, this excludes materials that are dangerous to store, such as barrels of oil, or have a limited shelf life, such as bags of wheat. But even those that are durable and safe to store, such as copper wire, usually require a huge storage space, in order to keep a meaningful amount. Most people don’t have a warehouse in their backyard, and are therefore unable to store large amounts of commodities. This is why throughout history, again and again, humanity ended up using gold and silver as a store of value.

These precious metals both have industrial uses, ensuring that there will always be demand for them. They are extremely durable, allowing us to store them for extended periods of time, even in harsh conditions. Most importantly, they are scarce, allowing us to preserve a great deal of purchasing power in a very small space. This also means that they are portable, and can easily be carried across great distances. Granted, they’re not as portable as Bitcoin, but in most cases they are portable enough. Their greatest advantage is that they leave behind no paper trail. They can be exchanged for other goods and services, without the government being aware. This is how gold and silver promote liberty, and help us escape government tyranny.

Right now, gold is becoming too expensive for the average person to own. At $5,000 an ounce, a single gold coin costs more than most people earn in a month. Therefore, for the average person, silver is the only alternative. At $80 an ounce, silver is still affordable. This is why its popularity is growing. As more and more people look for ways to protect themselves against inflation, I expect retail demand for silver bullion to grow. In an era of government overreach, silver offers us a practical way to reclaim our financial freedom.

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Suppose you bought some silver a year ago, when it was trading for $30 an ounce, and then turned off your smartphone and didn’t look at the price for an entire year. You would be pleasantly surprised to discover that it is now trading for $85 an ounce, a 183% increase. But of course, whoever follows this market closely knows that it had already traded for $120 an ounce earlier this month, and therefore $85 an ounce represents a crash event, which is probably not over yet, and may take the price much lower before it stabilizes. Right now, a retest of the $50 an ounce level seems plausible, because that was the previous all time high.

This is the price we have to pay for investing in the most undervalued asset in history. As silver emerges from a 45 year long slumber, it is expected to display extreme volatility, both to the upside and the downside. This is not a market for the faint of heart, and only those with a strong character can endure it. But even in this context, Friday’s event seems to stand out. It does not appear to be a natural selloff, in a market that got overheated. It looks more like an orchestrated liquidation event, meant to allow insiders to offload their short positions. Stay with me, as we explore the dark side of silver.

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The silver market is opaque. This means that we only have partial data about who owns how much of it, who is long and who is short. There are analysts out there who have made an entire career out of reading the tea leaves, trying to discern silver movements based on this partial data. They have my utmost respect, but I do not follow their methodology. I like to focus on the big picture - the fundamentals of silver, plus some technical analysis. It is my assumption that sooner or later the COMEX and the LBMA will become irrelevant. The pricing power will move to the East, where actual metal changes hands and not just paper promises. Therefore I have little interest in their silly reports.

But even I, who doesn’t look at the COT data on a weekly basis, can tell that there is something seriously wrong with the commodities exchange. For instance, the peculiar habit of the price to collapse at exactly 10 o’clock New York time. In a free market, this type of waterfall decline should not occur again and again at precisely the same time of day. Whoever is selling his silver this way is clearly not trying to get the best price for it. If he wanted to maximize his gains, he would sell it gradually over the day, and not dump it all at once, overwhelming the liquidity. And even if there were such a clumsy trader, who didn’t care too much about the price, buyers would quickly identify this pattern and place their orders at the exact same time, in order to benefit from the discount. Ultimately, this would cancel out the phenomenon altogether. The fact that we have such persistent sell-offs is a strong indication that the COMEX is a managed market.

What happened on Friday is simply a supersized version of the infamous 10 o’clock smash. It is not difficult to engineer such a decline. All you need to do is to dump enough contracts on the market, preferably in the early morning, when volume is thin. The initial drop in the price will trigger automatic stop-loss orders, which will push the price even lower. With a bit of luck, you can generate a cascade of selling, which will do most of the heavy lifting for you. I have seen this happening many times, but never on such a magnitude. The price dropped by as much as 37%, the largest single-day decline on record. This is of course considered illegal, but as prior events have shown, the regulator never bothers to investigate. The CFTC is either woefully incompetent, or deliberately looking the other way.

Why would they do such a thing? Well, due to silver’s meteoric rally since December, large financial institutions were probably caught short, and were facing enormous losses. This type of crash gives them the perfect opportunity to offload these positions at a much lower price. How will we know that this is the case? If the price recovers very quickly (what we call a V-shape recovery), this will be an indication that the banks are buying aggressively, eliminating those short positions. Once each and every bank has successfully flipped from short to long, there will be no impediment to the price rising, and silver will finally be free.

But for now, we must assume that powerful forces are still controlling the price from behind the scenes, and that retail investors are mere pawns in this game. This is the dark side of silver. As a former monetary metal, it is a constant threat to the fiat monetary system. If its price rises too dramatically and too conspicuously, the public will begin to hoard it. And if enough people own it, they may also begin to use it as money again, abandoning the national currencies. This is what the powers that be fear the most, because it will put an end to their ability to print money out of nothing. Once this ability is lost, most of their power will be gone.

There is only one thing that retail investors can do to speed up this process - purchase physical silver. With every ounce that you own, you deprive the banks of an ounce. The less silver that they have as collateral, the less manipulations they can perform at the COMEX. The inverted pyramid of derivatives that they have constructed sits on a smaller and smaller base, becoming more and more precarious. Until that happens, silver investment should be approached with caution. Its price is subject to the whims of governments and banks, and as such, it may betray us at any given moment.

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It is not easy to be a silver investor. The government hates you, because you are the one who exposes the true rate of inflation, and endangers the stability of their fiat currency. Investment banks hate you, because they can’t charge fees on the physical silver which sits in your vault. Industrial consumers hate you, because you make silver more expensive for them. The financial media hates you, because you’re not like everyone else and you don’t trust their advice. The price of your favorite asset is suppressed for decades and decades, and when it finally breaks out, everyone do their best to stop the rally in its tracks.

Yesterday, they outdid themselves. With 307 thousand futures contracts exchanging hands, a record not seen since the 2021 silversqueeze event, the price was smashed down by no less than 37%. None of the support levels held, as a cascade of stop-loss orders was triggered. Mind you, this volume represents over 1.5 billion ounces, almost twice the annual mine supply. As soon as the Comex closed the price recovered somewhat, closing the month of January at $85.3 an ounce. This was the largest single day drop since the 1980 collapse, and just like in 1980, it had all the hallmarks of a forced liquidation event.

The official excuse for this crash is the nomination of Kevin Warsh as the next Fed chair. Warsh is supposedly a hawk, who will tighten monetary policy, protect the value of the US dollar, and make silver irrelevant as an investment. Don’t make me laugh. At this point, even Paul Volcker himself could not save the US dollar. The national debt is now so enormous, that without artificially low interest rates it could bankrupt the Federal government. The constant expansion of the money supply is the only thing keeping the American economy afloat. Whether he likes it or not, Kevin Warsh will print trillions of dollars to bail out the system, like all his predecessors.

I must admit that this collapse caught me by surprise. Mainstream analysts would tell you that it was inevitable, that the price ran too far too quickly, and that it was bound to correct. This is true in principal. But according to my analysis the move was not complete, and silver had plenty more room to run. The main indicator I relied on was the gold to silver ratio, which I expected to fall at least to 38, a value which is derived by connecting the 1980 and the 2011 lows. Its lowest value this week was 43.4, similar to 1987, 1998 and 2006. All three occasions marked local tops in the price of silver, which are not commensurate with today’s historic bull run.

Another indicator which made me bullish was the fact that silver miners did not outperform the price of silver, something that you would expect to see in the later stages of a bull market. In spite of their recent gains, when compared to the price of silver, these companies are still hovering at their lowest valuations ever. As a matter of fact, this is the silver lining of this dark cloud. Since the silver miners did not price in the recent gains in silver, their decline is expected to be less severe. They may actually rally in the coming weeks, as they begin to report exceptionally good results for 2025, and investors realize how profitable they have become.

We must remember, that the fundamental bull case for silver hasn’t changed. Due to rising industrial demand and declining mine supply, there is still a global shortage of silver, which will not be resolved any time soon. It takes years to locate new deposits and develop new mines, and due to the extreme price volatility, producers are not keen to expand their operations. Increased recycling can’t solve the problem either, because the global refining capacity is limited. The US government has finally acknowledged this situation by declaring silver as a critical mineral, and may soon begin to horde it, adding more pressure to this market. And of course, inflation is constantly acting in the background, pushing up the prices of all commodities. Due to rising interest rates, government bonds are performing very badly and investors are in desperate need of alternative safe haven assets.

Therefore I urge you not to give up hope. The paper games which are played at the COMEX do not reflect the real world supply and demand imbalance. They are destined to end, because they are too disruptive to the mining sector and to the economy as a whole. If you followed my advice and bought physical silver, you are largely protected from these manipulations, because you will not face margin calls and you cannot be shaken out of your position. Right now, it is difficult to say what will happen on Monday, when the markets reopen. The price may rebound sharply. But given that the commodity exchange has just hiked margin requirements again, this time to 15% of the value of the contract, the selling may continue. This depends in large part on what happens in China. Unlike in 1980, the Shanghai Gold Exchange stands as a counterbalance to the COMEX and the LBMA. It is the arbitrage between the West and the East which pushed the price of silver this high to begin with. If it persists, then silver may yet rise from the ashes and resume its bull market.

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Have you noticed how everyone on social media suddenly became a precious metals expert? They all seem to think that silver is in a bubble, that its recent meteoric rise is unsustainable, and that it’s about to collapse. Some of them are even trying to short it, with leverage. Mind you, these are the same analysts who never thought that tech stocks were overbought, or that there was anything excessive about Bitcoin’s exponential rise. Only when silver is concerned, do they become so conservative. Why are they so bearish on silver? Well, they obviously look at its previous rallies, and expect it to behave the same. In 1979, for instance, silver had a similar parabolic run, which took it from $6 all the way to $50 an ounce. This rally, however, ended with a crash and with a 20 year long bear market. By looking only at the price chart and ignoring silver’s fundamentals, you could easily be persuaded that the current rally will end the same way. But this is not 1980, and the conditions we have today are not similar at all.

The main driving force behind the price of precious metals is inflation. It pushes up the prices of all commodities and erodes the purchasing power of our savings. The only way you can protect yourself against it is by owning commodities, and the only two commodities which you can own directly, without the help of a broker or an ETF, are gold and silver. Therefore, they are the prime beneficiaries of this insidious process. In 1979, the global economy was at the end of a brutal inflationary cycle, which started in 1965. After 15 years of battling with the rising prices, American citizens grew accustomed to owning precious metals. No wonder then that when a third wave of inflation hit, they started buying them hand over fist. This is how we got the dramatic surge in the prices of both metals. But that was the wrong thing to do. At that stage, US treasuries lost so much of their value, that they were undervalued. Gold and silver, on the other hand, were becoming overvalued. This is why the rally eventually reversed itself, leading to that famous crash of 1980.

Today we are in an entirely different situation. Inflation broke out just five years ago, in 2021, and the inflationary cycle is probably far from over. Thus far we’ve experienced only one wave of inflation, and the population in the Western world hasn’t yet learned how to protect itself from it. This is why precious metals are still considered fringe assets, and very few people own them. The surge we are witnessing right now in gold and silver is probably just the opening salvo of a bull market which will last for many years.

Another important difference between the 1970s and today is that back then the United States wasn’t so heavily in debt. In 1979, the federal debt was only 31% of the annual GDP, and interest expenses on that debt were a small part of the budget. This meant that Fed chair Paul Volcker could jack up interest rates to 20% in order to battle inflation, without putting the federal government at risk of default. Contrast that with today, when the debt to GDP ratio stands at 120%, and interest payments on the debt exceed $1.2 trillion per year. The Federal Reserve cannot set interest rates much higher than 5%, out of fear of bankrupting the federal government. This is why it cannot defeat inflation, and we expect it to return in full force once they cut rates again and restart QE. As long as inflation is not defeated, the rally in gold and silver is likely to continue.

Finally, the greatest difference between the 1970s and today is that back then the fiat US dollar was a new phenomenon. The final link between the dollar and gold was only severed in 1971, nine years before the prices of gold and silver peaked. The global economy had little experience operating with a fiat currency as its reserve asset, and wasn’t fully aware how corrosive it would turn out to be. Many of the negative consequences of this system, such as the dual deficit which the US economy must constantly generate, were not understood at the time. This is how the US was able to maintain faith in the dollar. In 2011 we had a similar phenomenon - an inflationary scare, which came as a response to the QE programs, but did not manifest itself, because the newly printed money took years to propagate through the financial system. This is no longer the case. Today, the global community is well aware of the consequences of using fiat currencies, and inflation is no longer a hypothetical risk, but a painful reality. The BRICS nations are openly discussing the creation of a new monetary system, and de-dollarization is their stated goal.

In such an environment, the total collapse of the dollar is no longer a conspiracy theory, but a very real possibility. The rally in gold and silver must be viewed in this context. It is perhaps not greed which is driving this bull market, but the fear of hyperinflation and the need to exit a failing monetary system. Once you take this into account, the price action in silver makes a lot more sense. When a huge amount of capital tries to seek refuge in such a tiny market, outsized moves should be expected.

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Right now, it is absolutely nerve-racking to invest in silver. On one hand, its price is rising rapidly. Those who bought it in early 2024, when I first recommended it, have already quadrupled their money. But on the other hand, we keep hearing warnings from mainstream analysts, that silver is over-extended, that its price may suddenly collapse, and that all those gains will be lost. What should you do in such a situation? Should you sell your silver and walk away? Or should you hold on to it no matter what happens? Can you take the risk of a sharp correction, followed by a long consolidation? Can you take the risk that it continues flying to the stratosphere after you’ve already sold? These are the questions we will try to answer today.

There is something very scary about a price which goes vertical. It reminds us of the final stages of speculative bubbles, and the collapse which tends to happen once those bubbles pop. This is exactly why mainstream analysts think that silver is in a bubble. They only look at its price, ignoring its fundamentals. But those of us who have studied silver in depth know that this is not a bubble. There are good fundamental reasons for the price of silver to rise. Among them we can count the rising industrial demand, the falling mine supply, and the fact that we are in an inflationary environment, which exerts pressure on the prices of all commodities to rise. Another reason which is now coming to light is that major governments consider silver as a critical mineral and may soon begin to hoard it. On top of that, we suspect that the price of silver has been artificially suppressed for decades, and that this manipulation is in the process of breaking down. This means that it has a lot of catching up to do, before it reaches its fair market price. Due to all these reasons, what we’re seeing is probably a repricing of silver, rather than a speculative bubble.

Furthermore, all of the familiar hallmarks of bubbles are missing - the positive news coverage, the widespread public participation, and the consensus among analysts that the price can only go up. As far as I can tell, silver is hardly mentioned on the financial news, and whenever it is mentioned, it’s with a negative bias. The fact that bullion dealers are still fully stocked, and retail investors have no problem acquiring silver is proof that the public hasn’t yet joined the rally. I can assure you that once the public becomes interested in silver, the shelves of these bullion dealers will be wiped clean. Last but not least, you would be hard pressed to find an analyst outside of the stacking community, who is bullish on silver. They all seem to think that silver is overextended, and that its price is due to fall.

Now, don’t get me wrong. From a purely technical perspective, silver is indeed overbought, and therefore could experience a sharp correction. But unlike mainstream analysts, I don’t believe that this would be the end of the rally. Once this correction is over, I expect it to continue marching higher. Apart from the fundamental reasons that I mentioned, there is technical evidence to support it as well. The most obvious one is the gold to silver ratio. Although this ratio has fallen dramatically in recent weeks, it is still nowhere near its previous bottoms from 1980 and 2011. If we connect these two lows, we will get a trend line, which currently stands at around 38. I don’t expect this rally to end before we reach this value, which means that it still has room to run. As a matter of fact, I don’t expect a significant correction in silver until we touch that trend line. Assuming that the price of gold stays around $5000 an ounce, this implies a silver price of no less than $130 an ounce. If the price of gold rallies as well, for instance to $6,000 an ounce, then silver can reach no less than $157 an ounce. And of course, nothing prevents the gold to silver ratio from falling even further, for instance to its historic value of 1:15. In that case, we could be looking at a much higher price of silver, one which mainstream analysts can’t even imagine right now.

A common misunderstanding regarding precious metals, is the expectation that their prices would follow the rate of inflation. Since inflation in the US currently stands at only 2.7%, mainstream economists are having trouble understanding why the prices of gold and silver are skyrocketing. What they fail to see is that precious metals don’t track inflation in real time. Once in a generation, they “wake up” from their slumber, and do the accounting of all the inflation that took place in years prior. This is why you get such outsized moves in gold and silver, in a relatively short span of time. This happens because the public tends to ignore inflation when it is relatively low. Only after a long period of time in which inflation runs hot, people start looking for ways to protect themselves and rediscover precious metals. This has happened so many times throughout history, that it should have been common knowledge by now. But for some reason, very few people are aware of that.

Therefore, you should not be frightened by the extreme volatility that we’re seeing in gold and silver. As a matter of fact, they are behaving exactly as you would expect, given that the Federal Reserve has kept interest rates near zero for an entire decade, printed trillions of dollars, and is now again in the process of cutting rates, even though the inflation is still above its target. In my opinion, you should not be selling any physical bullion right now. You should hold on to it until we get some kind of a currency reset, and the new currency proves to be more stable than the old one. Only then will it be safe to deploy your savings and invest them in income producing assets such as real estate, stocks or bonds. As for mining stocks, which are more risky and volatile than the metals themselves, you may sell some, if you believe that gold and silver are approaching a local top. If possible, you should rotate that money into physical bullion, and this way lock in your gains.

What most people fail to realize, is that a correction in gold and silver is not the greatest risk that we face. In such a bull market, sharp corrections are quite standard, and after a period of consolidation, they should give way to new all time highs. The greater risk ahead of us, is that we sell our gold and silver prematurely, and their prices continue to surge. In that case, we may lose a large portion of our savings to inflation, even though we initially did the right thing and owned some gold and silver bullion. Remember, in an extreme scenario, the rate of inflation can exceed our wildest expectations. To avoid such an unfortunate thing, we should never sell all of our gold and silver at once. We should sell them very gradually. This way, even if inflation continues, we will remain protected.

Good luck to all!

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Silver is on a tear. After closing last week above $90 an ounce, it is now within reach of triple digit prices. Many in the investment community argue that it is overbought and due for a severe correction. However, there are multiple technical indicators which suggest that silver could run a lot further before such a correction takes place. Here is the path which could take silver as high as $130 an ounce in short order.

The first hint we should look at is the price of gold. Unlike silver, gold has been rather stagnant since October, and although it set new all time highs since then, it is only marginally higher. But now there are signs that gold itself is about to accelerate. It has recently broken out of a cup and handle formation, and successfully retested the neckline. Such a breakout should take it to the $5,000 region, and I believe this could happen rather quickly.

Since the price of gold sets the tone for the entire sector, it is reasonable to assume that silver will continue its ascent as well. How high can it go? We can estimate that by looking at the gold to silver ratio. Right now, this ratio is about 50. Given its rapid descent in recent months, it stands to reason that it will only stop at the trend line which connects the 1980 and the 2011 lows. This trend line currently stands at 38. With a gold price of $5,000 an ounce, a gold to silver ratio indicates that silver should reach $130 an ounce. Another indicator which confirms this target comes from the silver chart itself. A measured move from Silver’s October correction to its December high would take the price to about $129 an ounce, very close to what the gold to ratio implies.

And now comes the interesting bit. Although the price of silver has rallied tremendously, the shares of the companies producing it haven’t done so at all. They have gone up considerably since their 2023 lows, but not enough to account for the current price of silver, much less triple digit prices. We can see that by comparing the price of the popular SILJ ETF, which invests in mid-tier silver miners, with the price of silver. Amazingly, the ratio between the two is almost as low as in late 2015, after a brutal bear market in the price of the white metal, and as in March of 2020, when the entire global economy shut down due to COVID, and the price of silver fell as low as 11 dollars an ounce.

In my view, this is simply a reflection of how unpopular the mining sector has become in recent years. Right now, everyone is still busy chasing tech stocks and cryptocurrencies. But once silver mining companies begin reporting record profits, Wall Street will no longer be able to ignore them. That is especially true if the price of silver continues to rally. For this ratio to return to its all time high, which was set in the summer of 2016, silver miners would need to outperform the price of silver by 170%! But I don’t expect that to happen immediately. This ratio has some strong horizontal resistance at about 0.7, which corresponds with an outperformance of 100%. If silver is destined to reach a temporary high of $130 an ounce, I bet that this will coincide with the SILJ to silver ratio reaching this midpoint. In other words, if the price of silver is about to surge by 40%, and silver miners are about to double that gain, then we expect them to surge by no less than 180%. In that case, we expect the SILJ ETF to reach $88 per share.

As always, we seek confirmation for such predictions. Looking at the chart of SILJ, we can see that since its very inception in 2013, it was moving sideways in a pennant formation. The breakout we saw in August 2025 should lead to a price increase which is equal to the amplitude of that pennant. Since this process took no less than 12 years, we may as well analyze it on a log scale. This gives us a target of $87, similar to what is anticipated by the SILJ to silver ratio.

What happens once we get there? It is difficult to say, but my guess is a sharp correction, which will perhaps take silver back to $100 an ounce. After some consolidation, I do expect silver to rally even higher. But that will probably only happen after the summer doldrums. As they always do, the mining shares will correct even more sharply than silver itself. This is why unlike physical bullion, which I recommend you keep for many years to come, you should try to sell some of your mining shares close to the top, and redeploy that capital once their prices stabilize again. Good luck!

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This is Jack. Jack likes to invest in precious metals. Every month, after paying his bills, Jack takes some of his savings to the coin shop and converts them to physical gold or silver. This is Jill. Jill likes to invest in precious metals as well. But apart from some jewelry, she doesn’t own any physical gold or silver. She invests in precious metals ETFs. And to spice things up a little, she even bought some futures contracts, with leverage. Theoretically speaking, Jack and Jill are both precious metals investors. But they are not the same, and one of them has a high risk of losing their investment. Would you care to guess who?

In the past couple of years, the prices of gold and silver have gone up dramatically. The price of gold has more than doubled, and the price of silver has more than tripled. This attracted the attention of many investors, who now want a piece of the action. But unlike Indian or Chinese investors, who are used to holding tangible assets, Western investors prefer the convenience of ETFs. They don’t want to pay the premium associated with physical bullion, or to go through the hassle of transporting and storing it. They want maximum liquidity, and the ability to sell it at a moment’s notice. However, investing in an ETF is not the same as owning physical gold and silver, and the convenience which they offer comes at a cost.

The popular precious metals ETFs claim to be fully backed by physical bullion. If that is truly the case, there shouldn’t be any difference between owning them and holding actual coins and bars. As a matter of fact, due to economies of scale, they are able to reduce the costs and make the transaction a lot smoother. But using ETFs defeats the entire purpose of investing in precious metals, by introducing counter-party risk. If for some reason the custodian of these ETFs goes bankrupt, your investment may be lost, or unavailable for a very long while. In normal times, there is only a small chance of that happening. But we invest in precious metals precisely because we believe that these are not normal times, and that there is an elevated risk of a financial crisis, which will wipe out many financial institutions. If you own gold and silver through an ETF, they may not be available to you, right when you need them most.

When it comes to buying futures contracts, particularly on margin, the risk is much higher. The commodities exchange allows its participants to deposit only a small fraction of the value of the contract that they are trading. For instance, you can purchase a 5,000 ounce silver futures contract, currently worth about $400,000, with a margin of only $32,000. This represents a leverage ratio of 1:12. When the price is rising, this allows you to compound your gains significantly. But when the price is falling, this could wipe you out very easily. A sudden price drop of 8.5% will prompt a margin call, in which the exchange will demand that you post additional funds. If you are unable to do so, your contract will be liquidated, and your entire investment will be lost. Even if the price of silver recovers very quickly, you will not be able to reap the rewards. This is why we call futures contract traders “the weak hands”. They are quick to join a rising market, but just as quick to leave it once volatility hits.

Furthermore, in order to curb the enthusiasm of speculators, the exchange may occasionally hike margin requirements, effective immediately. Again, traders who don’t have sufficient funds in their account will face margin calls, and if they are unable to produce more cash their positions will be liquidated. The forced liquidation of futures contracts may generate a cascade of selling, and the price may fall precipitously. This is exactly what happened on December 26th, leading to the current correction in silver. As a result we’ve seen a price swing of over 15% on an intraday basis. As you can see, using futures contracts for speculation makes the market a lot more volatile than it needs to be, and scares away potential investors, who otherwise would already be buying silver.

Very well, you may think to yourself, I can trade futures contracts with a lower degree of leverage. By keeping more funds on my account than the bare minimum, I can avoid the risk of forced liquidation. That is indeed true, and many professional traders actually do that. But again, this defeats the purpose of investing in precious metals. Most traders on the commodity exchange engage in this market in order to make more dollars, and not to acquire physical metal. If you believe that the dollar is constantly losing value, and that only precious metals can protect you from currency debasement, then playing the futures market accomplishes nothing. Theoretically, owners of futures contracts can stand for physical delivery. But this is an expensive and cumbersome process which only the big players can successfully navigate. Most traders will end up settling in cash. If your goal is to protect yourself from inflation, this is not the correct path.

Finally, we must address the ultimate risk that futures traders are facing, which is the default of the commodity exchange itself. If the market becomes tight, and too many traders decide to stand for delivery, the exchange will not be able to supply the physical metal. After all, the volume of trading which takes place there far exceeds the amount of metal which is stored in its vaults. Normally, less than 1% of the contracts end with physical delivery, and the exchange is able to meet its obligations. But if there’s a sudden rush to acquire physical metal, it will no longer be able to do so. In that case, the rules allow the exchange to force the participants to settle in cash. Officially, there will be no default. But in practice, this will alert the entire world that the commodity exchange can no longer be trusted to deliver the physical metal. It will instantly lose its credibility, and the authority to determine the price. In such a scenario, futures contracts may become worthless pieces of paper, and only physical bullion will retain its value.

So who has the higher risk of losing their investment? Jill, with her leveraged futures contracts, faces the very real possibility of margin calls, forced liquidations, and the loss of her entire investment. As a matter of fact, it is more accurate to describe her as a gambler than as an investor. Jack, on the other hand, is a stacker. He simply owns physical gold and silver, with no leverage and no counter-party risk. He does need to deal with the risk of theft, but that can be mitigated by using a good safe. He can’t sell his investment at a moment’s notice, but in most cases that is a good thing, which prevents rash decisions. His wealth is durable, portable, and immune to the whims of exchanges or custodians. He is what we call “the strong hands” - he can withstand the volatility and ride this bull market all the way to the top.

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2025 has been an amazing year for silver stackers. The price of silver has gone up by about 150%, outperforming any other asset. As someone who has been pounding the table for over two years now, urging people to invest in silver, I believe I deserve some credit. Unfortunately, this spectacular rally has been halted in recent days by a sharp correction. The timing is not random. This correction was instigated by the commodity exchange, which in the past week has hiked margin requirements twice.

For those of you who don’t know, a margin requirement is the minimal sum of money that a market participant needs to have in their account in order to purchase a futures contract. Usually, it is much smaller than the notional value of that contract, allowing participants to use leverage, and command many more ounces of silver than they can physically buy. This can multiply their gains when the price is rising, but also multiply their losses when it is falling. In addition, it allows the exchange to “shake” these players out of their positions. Whenever margin requirements are hiked, participants need to produce more money in short order, or suffer a forced liquidation. If many participants are liquidated at once, this can create a selling cascade, which is exactly what we are seeing right now. The fact that this is the holiday season and many people are away from work is only exacerbating the selling.

But please don’t allow this correction to frighten you off. The fundamentals of silver are still extremely strong, and there are good reasons to believe that once all the speculative excess is drained out of this market, the rally will resume. The major development we’ve seen in 2025 is the realization by governments that silver is a vital resource for industry and national defence. The US federal government, for instance, has entered silver into its critical minerals list, paving the way for the creation of a new national stockpile. The Chinese government has recently introduced restrictions on the export of silver articles, potentially reducing the global supply. The Russian government has added silver to its reserves alongside gold, recognizing its monetary role for the first time in decades. The emergence of governments as silver consumers is destined to tilt this market into a perpetual state of deficit. There simply isn’t enough of it to satisfy everyone’s demand.

Equally important is the fact that the large banks are attempting to exit their short positions on silver. We suspect that for decades the price of silver has been suppressed, through the systematic shorting of futures contracts at the commodity exchange. This illegal activity was only possible because the vast majority of investors chose to settle in cash instead of standing for physical delivery. Now that the physical metal is in short supply, these banks are forced to retreat. The rapid move from $40 to $80 an ounce was probably the result of financial institutions frantically trying to exit these positions. Since the only way to do so is by purchasing the underlying asset, they were forced to chase the price higher. This is the silver squeeze we have been warning about for so long, or at least the initial stages of it. It is not yet over, because some of the banks are still trapped inside this trade. As long as they are, there will be added pressure on the price of silver to rise.

The last factor driving the rally in silver is the industrial demand, which is only expected to increase. Silver is widely used in the manufacture of electronics, which thanks to the AI revolution is seeing tremendous growth. The same goes for solar energy, which is becoming more and more widespread. A new source of demand for silver comes from the introduction of solid state batteries for electric vehicles, which are vastly superior to lithium-ion batteries. Unless the global economy enters a recession in 2026 and industrial demand contracts, high-tech industries will continue to consume the white metal at an ever increasing pace.

Let me remind you that silver has just recently broken out of a 45-year-long cup and handle formation. Such an epic breakout should lead to a sustained rally, and not peter out after a couple of months. Those who are calling the recent high “a blow off top” are underestimating the magnitude of this move. Even if we do get a substantial correction, this bull market is probably far from over, and after a period of consolidation I expect it to resume. The lack of participation by the retail investor is a telltale sign that this is just the beginning, and that silver has a lot further to go. Therefore I recommend that you don’t sell your silver. If you followed my advice and bought it without any debt or leverage, you should be able to endure the volatility, and ride it all the way to the top. If the price action is too scary for you to handle, just turn off your computer and go do something else. Silver has maintained its value for five thousand years. It is safe to assume that it will continue to do so while you are away.

I wish you all a happy New Year!

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It is not every day that you see a 15 year old trend line break down. But last Friday it happened! The gold to silver ratio, which was stubbornly high in recent years, finally broke down. I believe that this historic event marks the beginning of the bull market in precious metals. Yes, you’ve heard me correctly. Everything we’ve seen thus far in 2024 and 2025 has been nothing but a prelude to the real bull market, which is yet to come. And if you don’t believe me, stick around and I’ll prove it to you.

During our lifetime, the gold to silver ratio has fluctuated mainly between 50 and 80. In recent years it went even higher than that, going as high as 126 in March of 2020. But historically speaking, this is a very rare event. During most of recorded history, the gold to silver ratio fluctuated around 1:15. This makes sense, because that is the ratio between the concentration of these two metals in the earth’s crust. As I’ve explained in the past, the unusually high ratio we’ve seen during the 20th century is probably the result of a continuous manipulation by the governments of the world, who suppressed the price of silver in order to prevent the public from hoarding it, and force them to use their fiat currencies instead. This was possible due to the fact that silver is produced primarily as a by-product of the mining of copper, lead and zinc. Since the revenue from silver is just a small fraction of the overall revenue of these mines, they continued producing it all these years, even though its price was suppressed.

But all manipulations are doomed to fail. The abnormally low price of silver discouraged production, and encouraged consumption, until a deficit developed. It took many years for this to happen, but here we are, about to begin the sixth year of a structural deficit in silver. We call this a deficit rather than a shortage, because we still have some above ground inventories of the white metal, which can bridge the gap between supply and demand. But these inventories are rapidly dwindling, forcing the bullion banks who have been instrumental in this manipulation to back down from their short positions, and allow its price to run. Last Friday, we saw the price of silver explode higher by no less than 6%, closing the month at an all time high of $56.4 an ounce. This was likely the result of a short squeeze. Some entity was forced to close its short position on silver, and the only way to do so is by buying the underlying asset at any price.

This is not the first time that the silver market comes under pressure. There were two prior instances in which the manipulation was almost broken. The first took place in 1979, as a response to the inflation of the 1970s, and the second one in 2011, in the aftermath of the 2008 financial crisis and the introduction of QE. In both of these instances, policy makers were able to contain the price and extend the life of the fiat monetary system. But there is still much to learn from these two “test runs”. As you can see from the chart, in both cases the rally in precious metals entered its manic phase only after the ratio broke down, and silver started to outperform gold. In 1979 it resulted in a bull run from $14 an ounce all the way to $48 an ounce (a 240% increase), and in 2011 - from $30 an ounce to $50 an ounce (a 66% increase). The breakdown of the ratio marked the moment in time in which the rally in precious metals became public, and ordinary citizens started chasing them. This is also the moment in which silver started threatening the stability of the monetary system, and the government was forced to react.

I believe that this time it’s going to be different. I believe that this time the powers that be will not be able to stop the rally in its tracks. First of all because the pool of potential investors across the world is far larger today than it used to be in 1980 or in 2011. Even if Americans and Europeans don’t want any silver, there is plenty of demand in China and in India. Another reason is that the Comex and the LBMA are no longer the only centers in which precious metals are traded. Nowadays we also have the Shanghai Gold Exchange, which allows for more honest price discovery. If a large enough arbitrage develops between these centers, metal will naturally flow to the East, exposing any attempt to manipulate the price in the West.

The breakdown in the gold to silver ratio is in my view a watershed moment, which very few people can appreciate right now. As the rally gains momentum, people will get more and more excited about precious metals. Sure, some of them may decide that it’s a good time to sell their father’s coin collection, or their grandmother’s silver spoons. But for every new seller, there will be two new buyers, who never owned any bullion and until recently didn’t even know that it exists. We tend to forget just how tiny the retail silver market is, and that if every adult person in the US wanted to purchase just one ounce of silver, that alone would triple the annual demand. If silver becomes a cultural phenomenon, a bit like Bitcoin has been in the past decade, there simply isn’t enough to go around. The price would have to rise dramatically, and eventually, I believe that this would bring an end to the fiat dollar.

Just how high the price could go? It is difficult to put an exact number on it. But I can tell you that according to technical analysis, we can calculate a target for the gold to silver ratio, by subtracting the amplitude of its pennant formation at its highest point, which is about 66, from the breakdown level, which is 78. Believe it or not, but this gives us a target of 12, which is very similar to what was accepted in ancient times, when gold and silver were used as money. I don’t expect that to happen any time soon. Even if this prediction eventually comes true, it will take the ratio several years to get there. In the interim we may see several counter trend rallies, in which the prices of gold and silver will experience sharp corrections, and give people a scare. Since gold is currently traded for about $4,200 an ounce, that would imply a silver price of $350 an ounce. But since the price of gold itself is expected to rally during that period, there is no telling how high the price of silver could go. What we’ve seen on Friday is probably just the beginning.

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A few days ago, the secretary of the treasury Scott Bessent tweeted in favor of Bitcoin. He marked the 17th anniversary of the release of the famous “white paper”, by praising Bitcoin’s resiliency. In my view, this was a reckless thing to say. Mind you, this is the man who is in charge of managing the finances of the Federal Government. If he is promoting an alternative to the US dollar, what does that tell us about the future of the US dollar?

In July this year, president Trump signed into law the GENIUS Act, which approves and regulates the use of “stable coins”. These digital tokens are supposed to maintain a one to one parity with the dollar, and facilitate transactions in cryptocurrencies. They are meant to be fully backed by assets such as US treasuries. To my understanding, the whole purpose of the GENIUS Act is to create a new source of demand for US treasuries, allowing the Federal Government to service its monstrous debt more easily. But in order for that to work, the demand for Bitcoin must remain strong. As we’ve seen in the past, whenever the price of Bitcoin is falling, the entire crypto sphere tends to collapse. No demand for crypto means no demand for stable coins, and no demand for US treasuries either.

To me, this is the most plausible explanation for Bessent’s remarks regarding Bitcoin. This is also the most plausible explanation for senator Cynthia Lummis’ recent proposal, that the Federal Government borrow money against its gold, and use it to buy Bitcoin. They must be promoting Bitcoin, because they are counting on it to fix America’s fiscal woes. But in doing so, they are undermining the dollar’s position as the global reserve currency.

Why should the success of Bitcoin be a threat to the dollar? After all, the two have managed to coexist thus far. People may continue to transact using dollars, even though their value is constantly being eroded, and use Bitcoin as a store of value, to protect their savings. That is at least the prevailing narrative on Wall Street. But the implication is that inflation will continue, and that the Federal Government will do nothing to stop it. Given the low adoption rate of Bitcoin (estimates vary between 4% and 12% of the global population), this admission may send the public to buy a more traditional hedge against inflation. It may send them to buy gold!

Bitcoin’s claim to fame is that it is “digital gold”, a modern, high-tech version of the precious metal. It is supposedly better than gold, because it is infinitely divisible, easily transferable across great distances, immune to theft or confiscation, and of course, does not require any storage fees or insurance. All that is true, and yet of no consequence, because Bitcoin lacks the one thing that grants gold its value - it is not a commodity.

History shows, that during times of high inflation, the prices of commodities rise, in order to account for the increase in the money supply. This does not happen due to speculation. It happens due to necessity. Even though prices are rising, people still need to eat, to have a roof over their heads and to drive their cars to work. All of these activities involve the consumption of commodities, which they will continue to buy, regardless of their rising prices. As part of the commodity complex, the prices of precious metals rise as well. Thanks to their electrical conductivity and remarkable resistance to corrosion, gold and silver are vital to the manufacture of electronics. Without them, the entire high-tech industry would not exist. This necessity drives their price forward, even when the public no longer has any appetite for speculation. In fact, since they can also be used as a store of value, they tend to outperform all other commodities. Bitcoin, on the other hand, has no industrial use. People buy it because they want to, and not because they need to. Unlike wheat or crude oil, no one will die due to a lack of Bitcoin.

This is why I call Bitcoin “an empty jar”. It has all the attributes of good money, save the most important one, which is intrinsic value. It has no industrial demand to support it, and the only demand for it is speculative in nature. This is why it is so inherently volatile. Whenever the price drops, there is no industrial consumer to step into the market and save it. The liquidity instantly evaporates, because speculators are too fearful of grabbing the falling knife. This volatility hasn’t subsided, even now when it is traded for over a hundred thousand dollars per Bitcoin. I believe that ultimately it will kill it, once it experiences a large enough collapse, one that it cannot recover from.

Whenever you debate Bitcoin advocates, they tend to highlight its technological innovation. But it is not blockchain technology which is driving its price. Like any other asset, the price of Bitcoin is driven by nothing more than supply and demand. Fundamentally speaking, it is merely an online ledger, keeping a record of those who paid into the system early on, and can therefore cash out. But contrary to what many people think, there is no hoard of cash waiting somewhere for the moment they choose to sell some of their Bitcoin. In order for them to be paid, someone needs to take the other side of the trade. And if they expect the price of Bitcoin to rise in perpetuity, that means that the pool of buyers must always increase, and that they will always be willing to pay higher and higher sums for those Bitcoins. And since no one is ever forced to buy Bitcoin, this will only be true as long as Bitcoin is popular. In theory, it can work. But in practice, human beings are fickle, and popularity can evaporate overnight.

This is something which the public appears to grasp intuitively. It is no coincidence that in 2025, as the Federal Reserve started easing its monetary policy and fears of a second wave of inflation increased, the prices of gold and silver broke records, while Bitcoin lagged behind. Outside of the Bitcoin echo-chamber, there is great mistrust towards cryptocurrencies as a whole. They are perceived as risky speculations rather than as a safe haven asset. When push comes to shove and people need to protect their savings, they opt for precious metals, and not for Bitcoin. This is why the gambit which the US government is playing is so incredibly dangerous. In their attempt to legitimize Bitcoin and make it mainstream, they are eroding what little faith remains in the US dollar. A world in which the prices of gold and silver are rising dramatically as we’ve seen this year, is a world in which there is less demand for the dollar overseas, its share of foreign exchange reserves is shrinking, and the ability of the US to project power is waning. If they continue down this path, they may find themselves one day with no gold, holding nothing but an empty jar.

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As I’m writing these words, the prices of gold and silver are falling precipitously. Mainstream analysts would tell you that this decline was to be expected, and that after rising so dramatically since the beginning of 2024, they were over-extended and due for a correction. Some of them would even say that precious metals went into a bubble, and that this bubble has simply popped. It is true that prices never move in a straight line, and that during a bull market corrections are perfectly normal. And yet there are clear signs that this correction is not organic, and that it was the result of a deliberate manipulation.

The correction started on Friday, October the 17th. The initial selloff was the result of the Chicago Mercantile Exchange raising margin requirements on gold and silver futures contracts. Since many traders on the exchange use leverage, an increase in margin requirements forces them to either produce more cash, or liquidate their positions. This led to a decline of 1.7% in the price of gold and no less than a 4.3% decline in the price of silver.

On that weekend, a peculiar campaign emerged on social media. Dozens of Bitcoin influencers suddenly declared that gold experienced a “blow off top”, and that from that point forward, capital will “rotate from precious metals to cryptocurrencies”. It is not uncommon for influencers to echo each other’s thoughts, but the uniformity of the message, and the repeating use of the same terminology, gives the impression that it was orchestrated. It appears that they were tipped off by someone on Wall Street, that precious metals were about to be taken to the woodshed, and that they should create the narrative to support it.

Next came the early morning attack. When markets reopened on Monday the 20th, the price of gold rebounded, setting a nominal new high and demonstrating that demand was still strong. But in the early hours of Tuesday, while New York city was still asleep and volume was thin, someone dumped a huge amount of futures contracts on the market. This set the tone for the entire day. When trading on the COMEX began, the selling intensified. At some point that day, the price of gold dropped by over $300 an ounce, and the price of silver by $4.5 an ounce. This type of volatility is considered to be extreme. It was probably the result of many new and inexperienced traders entering this market in recent weeks, and setting their stop loss orders too close to the current prices. By slamming gold and silver down, someone was able to trigger those orders, and generate a cascade of selling.

The rest is history. The selloff continued ever since, and after breaking down from critical support levels, gold is now trading well below $4,000 an ounce and silver at around $46 an ounce. Overall, this represents a 12% decline for gold, and no less than 16% decline for silver. Again, this type of a correction is perfectly normal within a bull market, and any person who is not familiar with this sector would consider it to be organic. But once you examine the details, you begin to smell a rat.

Tomorrow, October 29th, the Federal Reserve will conclude its FOMC meeting, and Jerome Powell will hold a press conference. He is widely expected to announce a 25 basis point rate cut, and perhaps an end to the Fed’s quantitative tightening program. This type of monetary easing, when the stock market is at an all time high and there is no recession in sight, is extremely inflationary. If the prices of gold and silver were to skyrocket while he was delivering his remarks, this would put the Federal Reserve in a very bad light. It would mean that the market is losing faith in the Fed’s ability to control inflation and maintain the dollar’s status as the global reserve currency. A panic would perhaps ensue, prompting the public to ditch US treasuries in favor of precious metals.

Therefore, I suspect that the Fed preempted this event by crashing the price of gold and silver in advance. It didn’t do so directly. It has a number of large banks at its command, who can manipulate markets in the direction it wants. This of course comes at a cost. In order to push the price of gold and silver down, the banks need to expand their short position on these metals, and dig themselves into a deeper hole. After all, they have already sustained heavy losses on their previous positions, and continuing with this nefarious practice drives them closer and closer to default. But in order to save face, the Federal Reserve is willing to take that risk. This is a theory we cannot prove yet, since due to the government shutdown, the CFTC commitment of traders reports are not being published, and we don’t have the open interest figures.

In other words, this correction was a drive-by shooting, carried out by the US government and its financial henchmen. It was manufactured in order to quell investment demand for precious metals, allow the Federal Reserve to protect its reputation, and to alleviate the pressure on the COMEX and on the LBMA. Only time will tell how effective it has been, and for how long it can postpone the global gold and silver rush. Fundamentally speaking, nothing has changed. The Federal Government is still running huge deficits, interest payments on the national debt are skyrocketing and the Federal Reserve is prepared to ease its monetary policy in order to bail it out. This is the equivalent of pouring gasoline on the inflationary fire, and should be extremely bullish for gold and silver.

And yet your government will do everything in its power, to prevent you from protecting your savings. It will do everything in its power to keep you holding government bonds, who do not pay enough interest to compensate you for inflation, and are therefore losing value with each and every day. In order to maintain their power, politicians and central bankers are willing to impoverish the public, and to sacrifice its future. I urge you not to fall into their trap. Now that the technical damage has been done, precious metals may continue correcting and consolidating for a while. But eventually, I expect the bull market to resume and for gold and silver to set new all time highs. If you have the spare cash and the stomach to do so, take this opportunity and buy the dip. If you don’t, then at least don’t sell. Hold on to your physical gold and silver as hard as you can, until this inflationary storm is over.

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Well, folks. We have the first serious pull-back in precious metals since they broke out in early September. On Friday the price of gold fell by 1.7% and the price of silver fell by no less than 4.3%. Is this the end of this bull run, or just a healthy correction? Will they consolidate their gains for the rest of 2025, or perhaps they can still reach new all time highs? This is what we’ll try to figure out today.

Let’s begin by stating the obvious. Markets do not move in a straight line. They ebb and flow, like the waves of the sea, and when a certain price moves too quickly and too far in one direction, it is only natural that we should see a pull-back. This should not surprise us, and as investors we must learn to expect it. During this spectacular move, the price of gold has risen by almost 30%, and the price of silver by 36%. Therefore they need to retreat and to consolidate their gains.

If we look at the chart of gold, we will notice that it broke down from a very steep trend line which started on October 10th. This is nothing to be worried about. Such steep trend lines usually don’t last for very long. They break down, and the price retreats to a lower support level. I expect gold to find support on one of these two rising trend lines: either the steeper one which started in mid September, and is currently at around $4,100, or the lower trend line which started in late August, and is currently at around $4,000. Round numbers are important, and therefore it is most likely to revisit $4,000, and consolidate there for a while, before it can attempt to move higher.

Remember, since gold has surpassed every long term level of resistance, it is now traveling in uncharted waters. Therefore it has the potential to experience violent moves in both directions. Some analysts would tell you that we are approaching the end of the year, which is usually a weak season for gold. That is indeed true. But gold still has momentum on its side. There are plenty of traders who don’t own any gold, and have sat this entire rally on the sidelines. They are looking for an alternative to government bonds, which are not performing well, and I believe that they will take advantage of this pullback. Right now my year end prediction of gold hitting $5,000 looks less and less probable. But I’m not giving up on it quite yet. First I want to see how gold behaves in the coming weeks, and whether or not it is exhibiting strength.

Similarly to gold, silver broke down from a short term trend line. Again, this does not hurt the bull case for silver one bit. Although peak to trough it dropped by $4 on Friday, something which sounds frightening, it is quite normal in the context of a raging bull market. Now that silver is trading above $50 an ounce, daily moves of this magnitude could become standard. Eventually, silver managed to find support on its primary rising trend line. But this is probably not the end of this correction. Once the markets open again next week I expect it to drop even further, and eventually find support at around $50 an ounce.

You see, an important principle in technical analysis says that once conquered, resistance turns into support. For 45 years, the $50 level has been a “ceiling” for the price of silver, and now that we’ve finally managed to surpass it, I expect it to start acting as a “floor”. In order to establish that fact, we need to test this floor, and demonstrate that buyers emerge whenever we approach it. Therefore I expect the price of silver to revisit $50 an ounce in the coming days. If this level holds, this will be the proof of silver’s resilience.

I want to show you the gold to silver ratio, an important indicator regarding the precious metals market as a whole. When the metals are in a bear market, this ratio tends to trend up, and when the metals are in a bull market, this ratio tends to break down, or in other words, silver tends to outperform gold. Well, as you can see this ratio hasn’t broken down yet from its long term pennant formation. It has barely visited its lower trend line. This is a strong indication that the bull market in precious metals hasn’t even started yet. In my view, the $50 an ounce level was not the finishing line for silver, but in fact the starting line of a long race, which could last for many years.

Finally, I want to address the issue of Bitcoin. In the past few days, my X feed has been inundated with posts by Bitcoin investors who were bad-mouthing gold. Their argument is that very soon the bull market in gold will end, and all that liquidity will come rushing into Bitcoin, carrying it to $200K dollars per Bitcoin or more. Well, first of all, their over-confidence is palpable. As the saying goes, a bull market climbs “a wall of worries”. In their case, there are no worries, and perhaps very soon there won’t be a bull market either.

But even more intriguing is their seething hatred towards gold and silver. They don’t mind it when the Nasdaq is rising, or when bonds are rising. But they do care when gold is rising, because they correctly identify it as the Bitcoin killer. The only reason that Bitcoin exists, the only reason it has grown to such monstrous proportions, is because gold and silver, the traditional hedges against inflation, did not perform well in the past decade, a time of rampant inflation. Now that gold and silver are again receiving the respect that they deserve, Bitcoin is no longer needed. Although many of them are not particularly bright, this is one thing that Bitcoin investors do understand, and that’s why they are so frantic.

I want to show you this chart, of the Bitcoin to gold ratio on a log scale. As you can see, since 2020 it has been in a rising wedge formation, which mind you is considered to be bearish. It recently broke down, indicating that gold is outperforming Bitcoin. Such a decisive breakdown usually does not reverse itself so easily. To me, this is an indication that in the coming years, gold will massively outperform its digital imitation.

So stay strong my friends, and continue stacking your physical gold and silver! If silver does find support at the $50 dollar level, in my opinion this will be incredibly bullish. I hope to continue following this bull market with you for many years to come.

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Disclaimer
I am not a licensed financial advisor. This article is intended for general informational purposes only, and should not be regarded as investment advice. Before taking any investment decision, please consult with a professional financial advisor, who may assess your personal investment objectives and needs.

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Ladies and gentlemen, it’s happening!

The silversqueeze which we’ve been warning about for so long is unfolding before our very eyes. As I’m writing these lines, the price of gold is over $4,200, and the price of silver is over $53 an ounce. They both appear to be racing forward with tremendous energy, and besides an occasional pullback, this rally has no end in sight.

Technically speaking, both metals are extremely overbought, and mainstream analysts would tell you that they are due for a correction. But there are rumors coming from all across the world of physical shortages, and of bullion dealers suspending sales due to lack of inventory. The LBMA is reportedly running low on silver, and having to import some from New York in order to meet its obligations. If that is truly the case, then technical analysis is no longer relevant. Investors who are currently holding unallocated silver, or what we call “paper silver”, may be spooked by those reports, and become fearful that the LBMA may default. As a result they may seek to convert those unallocated positions to allocated, and even take delivery of that silver and transfer it to their own vaults. But since the LBMA is operating on a fractional reserve basis, there isn’t enough silver to go around. The first few to do so may get hold of some physical silver, but the rest of them will be left with nothing but worthless pieces of paper.

Their next target would probably be the COMEX. Since its silver inventory is at a record high, and it currently holds close to 200Moz in its registered category, investors are likely to purchase futures contracts, and attempt to take delivery on them as soon as possible. The next delivery period, for the November contract, will begin at the end of October. To my understanding, this will be the test whether we are in a true silver panic, or whether the rush for physical silver may be contained. If we see an exceptionally high number of traders standing for physical delivery, and the demand exceeds 200Moz, then this is indeed the silversqueeze, and the panic is only expected to spread.

Unable to get silver on the COMEX, investors will have no choice but to turn to the retail market. In their desperation, they will raid every bullion dealer on earth who still has some inventory left, and wipe their shelves clean. Since the retail market is tiny compared to the wholesale market, this could happen very rapidly, perhaps even overnight. The next morning we will wake up to an entirely new world. A world in which physical silver is no longer available, demand outstrips supply many times over, and what little can be found sells for outrageous, triple-digit sums. In its desire to acquire some silver, the public will begin bartering both goods and services against silver coins. Ultimately, I expect this to lead to a global hyperinflation and the collapse of all fiat currencies. The governments of the world will be forced to reintroduce sound money, based on gold and silver. They won’t do that willingly. This will be the only way to regain public trust and to stabilize the financial system.

I want to read you an interesting post which I read on X today, by a British lady called Claire. She writes “Said this before but I’ll say it again. Just one lifetime ago in the UK, our grandfathers could buy a home, buy a car, have 3 to 4 children, wives could stay home, take annual vacations, and then retire... all on one middle-class salary. What happened? We had same day GP, ambulances within minutes, dentists, good education, decent public transport, clean river and beaches. So AGAIN WTF happened?”

And I answered, saying “What happened? Fiat currency happened! The fact that the currency is backed by nothing allows politicians to run infinite deficits, and central bankers to fund them through money printing. This leads to inflation, which erodes the purchasing power of your salary and your savings. This also leads to a stagnating economy and encourages corruption. Inflation makes it hard for people to raise families, and leads to a decline in the birth rate. In order to keep the racket going, politicians import millions of third world immigrants, thinking that they’re just as good as their own people, even though they are clearly not. Crime rates rise, welfare systems get overburdened and the few who still work for a living and pay taxes see no benefit to their hard work.”

“Finally, inflation becomes so obvious, that people begin to ditch the currency. They convert their savings to gold and silver, and the prices of these precious metals begin to skyrocket. The collapse in the value of the currency accelerates, until it becomes worthless, impoverishing the vast majority of the population, and perhaps even leading to civil unrest, a revolution or a civil war. This is what we call “hyperinflation”. We are now approaching the final stage of this process, which has happened many times throughout history (mostly in third world countries such as Zimbabwe and Venezuela, but also in western countries such as Germany). The only upside, is that it is an opportunity to get rid of your corrupt politicians and restart the economy with a small government, low taxes and sound money, made of gold or silver!”

So there you have it. People are not yet connecting between inflation and their declining standard of living, but as the increased demand for precious metals is suggesting, they are beginning to catch on. It is important to stress, that nothing moves in a straight line. Although the prices of gold and silver are rising, they can still experience sharp corrections and consolidations. In order to benefit from them, you should acquire them in their physical form, without using any debt or leverage. In spite of the volatility, try to hold on to them no matter what happens. Don’t sell them until there is clear evidence, that the inflationary spiral is over, and that the fiat monetary system has been replaced by a new and more stable one. These will be challenging times, but as the owner of gold and silver you will be in a better position than most people. Once all is said and done, you will have the capital to acquire undervalued assets and help restart the economy on a more sound footing.

If you like this content, please donate to the Silver Hermit podcast!

Disclaimer
I am not a licensed financial advisor. This article is intended for general informational purposes only, and should not be regarded as investment advice. Before taking any investment decision, please consult with a professional financial advisor, who may assess your personal investment objectives and needs.

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Ladies and gentlemen, we have history in the making here. The price of silver has closed the week at almost $48 an ounce, which is in fact a new all time high. Because although it was briefly traded above this price, both in 1980 and 2011, it has never managed to close a week this high. We’ve also just had an all time high quarterly close, when silver ended the last trading day of September at $46.6 an ounce. Closing prices are important, because there are many traders and asset managers across the world who are looking specifically at these numbers. They won’t step into this market until they are fully convinced that silver is breaking out to new all time highs. With each new record, more of them are willing to come off the fence, and join this spectacular rally. We are now within spitting distance of the intra-day all time high of $50 an ounce, and if we manage to cross it, the last doubters will have no choice but to admit their mistake and buy some silver.

On this momentous occasion, I would like to quote from an interview which I gave to “Ron’s basement” almost two years ago. Read it carefully, because it will teach you an important principle in investing:

“last week I bought the dip, like a good stacker is supposed to do. A few days later, I went to visit the guy and pick up the few ounces that I bought. And you know, I always talk to the person. I try to understand what he thinks about the market in general. I should point out this is a guy who usually deals with collectibles. But this time he had a really big sale, and he had some silver coins which were modestly priced and had a good value. So I took advantage of the opportunity. But what I was absolutely amazed about was just how negative he was about the price of gold and silver in general. I understand that he deals mainly with collectibles, and that he tries to capture the premium on collectible coins. But he was so negative. He wouldn’t even let me explain why I believed that the price of gold and silver was destined to rise. He wouldn’t hear of it. It was just amazing. And I couldn’t help but thinking that sometimes it’s a contrarian indicator. It shows you that the sentiment is so low. If even the guys who deal with gold and silver are so pessimistic about the price, perhaps we’re close to a bottom.”

This interview was recorded in February of 2024. As you can see from the chart, this was exactly when the price of silver bottomed, and the current rally started. How could I possibly know it back then? How could I predict it so accurately? Am I some sort of a genius? No, I’m not! No one has a crystal ball, and no one can tell the future. But there are certain indicators that you yourself can follow, and one of them is the market sentiment. Back in early 2024, the sentiment regarding silver was absolutely abysmal. Although it is a valuable commodity which is in short supply, and although inflation was raging at the time, its price seemed to be going nowhere. Even the greatest precious metals bulls were demoralized, and willing to throw in the towel. This is what we call a “contrarian indicator”. It occurs when everyone has already sold the asset in question, and there is no one left to sell. Therefore, there are only buyers in this market, and the price must change direction and rise.

A similar thing can happen during market tops. When an asset has been rallying for a prolonged period of time, and everyone is certain that the price can only go up, there comes a point in which there is no one left to buy, and therefore the price must fall. In other words, when things become too extreme, the market tends to move in the opposite direction of sentiment. This is why most people fail to time the market correctly. Since they are driven by sentiment rather than by facts, they are always too late to buy an undervalued asset, and to sell an overvalued one.

What about silver right now? What is the market sentiment telling us about the future price of silver? Well, I’m afraid that the current situation isn’t as clear cut as it was in early 2024. On one hand, the price of silver has more than doubled since then, and according to various momentum metrics it is extremely overbought. This would suggest that it needs to go through a correction, and work out these overbought conditions. The all time high of $50 an ounce seems like the natural place for such a correction to occur. This is where sellers are likely to emerge, looking to capitalize on the uncertainty and doubt surrounding silver’s price.

But on the other hand, silver is still regarded as an esoteric asset, which very few people own. Although it is traded near an all time high, it is hardly mentioned on the news, and very few asset managers are recommending it to their clients. At the same time, the Federal reserve is once again cutting interest rates, fanning the flames of inflation and creating more demand for hard assets. Silver is in its fifth year of physical deficit, which due to its strange market structure, is unlikely to be resolved anytime soon. And lest we forget, the banks are still sitting on a huge short position, which by now is deep underwater. There’s a good chance that this time, the demand for silver, both from new investors entering the market and shorts needing to unwind their positions, will overwhelm any resistance at the $50 level, and that the price will simply go on flying into the stratosphere, sentiment be damned.

So if you don’t own any physical silver, now is perhaps a good time to get some, before things get really crazy and it becomes unavailable. And if you do own some, hold on to it and don’t let go. I am not a licensed financial advisor, and I cannot give you any investment advice, but it seems to me that right now the chances of silver continuing its trajectory to the moon are greater than the chances of it falling back to the ground. Nothing in life is certain, but I can guarantee you one thing - that my personal money is on silver.

If you like this content, please donate to the Silver Hermit podcast!

Disclaimer
I am not a licensed financial advisor. This article is intended for general informational purposes only, and should not be regarded as investment advice. Before taking any investment decision, please consult with a professional financial advisor, who may assess your personal investment objectives and needs.

Subscribe now