Transcription
You know, I've been watching markets for a very long time now, with some more decades than I care to count some mornings. And when you've been doing this as long as I have, you start to see patterns, not complicated patterns, simple ones really, the kind that repeat themselves because human nature doesn't change much, even when the technology does.
Right now, as I'm speaking to you at the end of January 2026, I'm watching something that concerns me deeply. It's silver. And before you think I'm about to tell you to buy it or sell it, let me be clear. I'm not here to give you investment advice on silver. I'm here to share what I've seen before and what I'm seeing again now.
Silver crossed $90 an ounce recently. A few weeks ago, it briefly touched $122 before falling more than 25% in a single day. Just last year, at the start of 2025, silver was trading at around $29. That's a gain of more than 140% in 12 months. Some people made a great deal of money. Others are about to lose a great deal. I don't know which group you're in. And I don't know where silver goes from here. Nobody does.
What I do know is this. When an asset rises that fast, on that kind of enthusiasm, with that many people convinced they've discovered the secret to wealth, history suggests we should pay very close attention to what happens next. Let me tell you what I'm not going to do. I'm not going to tell you silver is going to crash tomorrow. I'm not going to tell you it's going to hit $200. I'm simply going to walk you through what I've observed over many decades, and you can decide for yourself what it means.
The story being told about silver right now is a compelling one. Industrial demand is surging. Solar panels need silver. Electric vehicles need silver. There's a supply deficit that's been running for years. The London vaults are emptying. Central banks are buying. China is restricting export. Geopolitical chaos is driving safe haven demand. It all sounds very logical, very scientific, very much like this time is different. And that phrase, "this time is different," is usually when I start paying the closest attention, because I've heard that phrase before.
I heard it in the late 1990s, when people explained why internet companies that had never made a dollar of profit were worth billions. I heard it in 2005 and 2006, when people explained why housing prices would never decline, because they never had before, not nationally. Heard it in 2011, when gold was hitting $1,900 and silver was hitting $50, driven by fears of currency collapse and inflation that never quite materialized the way people expected. The story always sounds convincing. It has to, or otherwise intelligent people wouldn't buy in.
Let me give you some numbers, and then we'll talk about what they might mean. Silver started 2025 at $29 and ended the year around $72. That's extraordinary. But then, in late December and early January, things got truly wild. The price shot up to 80, then 90, then briefly touched that $122 peak. In a span of weeks, silver nearly doubled from where it ended the year.
Now, you might say, well, that's because the fundamentals changed dramatically, perhaps. But let me ask you this. Did the number of solar panels being built suddenly double in 3 weeks? Did electric vehicle production suddenly triple? Or did something else happen? What happened, I suspect, is what always happens when prices start moving sharply upward. The story attracted attention. That attention brought in new buyers. Those new buyers push prices higher. The higher prices attracted more attention, and the cycle fed on itself.
I saw an interesting data point recently. Flows into leverage silver ETFs hit levels rarely seen historically. Search interest in silver spiked. Social media was buzzing with talk of silver going to 150, 200, even $500 an ounce. When retail investors start piling into a leveraged product they don't fully understand because they're afraid of missing out, that's usually not a sign we're at the beginning of something. It's often a sign we're closer to the end.
Now, I'm not saying silver has no value. I'm not saying the industrial demand story is wrong. I'm saying that price and value are two different things. And right now, I'm not certain the people buying silver at $90 or $100 an ounce are thinking carefully about the distinction.
Let me take you back to 2011, because I think it's instructive. Silver went from around $8 an ounce in late 2008 to $50 an ounce by April 2011. That's more than a 500% gain in roughly 2 and a half years. The story then was similar in many ways. The Federal Reserve had dropped interest rates to zero. They were printing money through quantitative easing. Real interest rates were deeply negative. People were convinced the dollar would collapse. Silver, they said, was the perfect hedge.
And you know what? They weren't entirely wrong about the fundamentals. The Fed was printing money. Real rates were negative. There was genuine reason to be concerned about currency debasement. But here's the thing. Even when the story is partially true, you can still overpay. You can pay such a high price that even if you're right about the direction, you still lose money or make very little over many years.
Silver hit $50 in April 2011. Then the Chicago Mercantile Exchange raised margin requirements five times in 9 days. That forced leverage speculators to sell. The price fell 30% in a few weeks. By 2015, silver had fallen to around $14. That's a 70% decline from the peak. People who bought silver at $45 or $50 because they were certain it was going to 100 waited more than a decade just to get back to break even. Some are still waiting.
The industrial demand story didn't save them. Silver is used in industrial applications. That's true. But when the price gets high enough, industries find substitutes. They use copper instead. They use aluminum. They redesign their products to use less silver. I saw a report recently that Chinese solar manufacturers are already replacing silver with cheaper base metals because current prices are too high. This is what always happens. High prices cure high prices.
The people who made money in that 2011 silver run were the ones who bought at 8 or 10 or $12 and sold at 30 or 40. The people who lost money were the ones who bought at 45 because they were convinced it was going to 70. And here's the uncomfortable truth. Most people buy near the top, not because they're foolish, but because that's when the story is most compelling. When everyone around them is making money, when the fear of missing out is strongest.
Let me tell you another story that goes back further, to the 1970s. Three brothers named Hunt decided they were going to buy silver. They were concerned about inflation, about government policy, about the risks posed by OPEC and the oil crisis. They couldn't buy gold at the time because it was illegal for individuals to own. So they bought silver instead. They started in 1973, when silver was around $1.50 an ounce. Over the next 6 years, they accumulated more than 200 million ounces. That's a staggering amount.
The price went from $1.50 to around $50 an ounce by January 1980. The Hunt brothers had made billions on paper, but they were using leverage. They were borrowing against their silver to buy more silver. And when the exchanges changed the rules, when they raised margin requirements and restricted trading, the whole thing collapsed. Silver fell from $50 to below $11 within months. The Hunt brothers lost everything. They had to declare bankruptcy.
The lesson isn't that the Hunt brothers were wrong about inflation or monetary policy. They weren't. Inflation in the late 1970s was real and severe. The lesson is that even when you're right about the problem, you can still be destroyed if you pay the wrong price, or use too much leverage, or fail to understand that markets can change the rules when things get out of hand.
I watched silver hit that $122 level a few weeks ago, and then I watched it fall 25% in a day. That's not normal price discovery. That's not a market calmly weighing supply and demand. That's speculation unwinding. That's leverage being forced out. That's what happens when the music stops and everyone tries to get through the door at the same time. Some people will tell you that was just volatility. That silver is still going higher. That the fundamentals haven't changed. Maybe they're right.
But I'll tell you what I know. Assets that rise that fast, that fall that hard, that attract that much speculative attention, rarely end well for the people who arrive late. The thing about bubbles is that they feel different when you're inside them. The story always makes sense. The fundamentals always seem solid. The people who warn of excess are dismissed as old-fashioned or out of touch. And for a while, the skeptics look foolish because prices keep rising. But eventually, something changes. Maybe it's margin requirements. Maybe it's industrial substitution. Maybe it's just that the last buyer has bought and there's no one left to push prices higher.
I've always believed in buying productive assets, businesses that produce goods and services, farms that grow crops, real estate that generates rental income. These are assets that compound value over time through their output. Silver doesn't produce anything. It just sits there. Its value is entirely dependent on what someone else will pay you for it tomorrow. That's not investing in my book. That's speculation.
Now, I'm not saying speculation is immoral or wrong. People can do what they want with their money, but they should be honest with themselves about what they're doing. If you're buying silver at $90 an ounce, hoping to sell it at 120, you're speculating. You're making a bet on price momentum and sentiment. That's fine. But don't confuse it with investing.
The dangerous part is when people convince themselves they're making a prudent, conservative investment. When they're actually speculating, they tell themselves the industrial demand story. They tell themselves about the supply deficit. They tell themselves they're protecting against inflation or currency collapse. And maybe all of those things are true to some degree. But at $90 an ounce, after a 140% gain in a year, how much of that future good news is already priced in? That's the question I always ask. Not whether the story is true, but how much am I paying for it? Because you can buy a wonderful asset at a terrible price and have a terrible outcome.
I'll give you a simple example. The internet was going to change the world. That was absolutely true in 1999. It has changed the world. But if you bought internet stocks at 100 times revenue because you were certain they were going to change the world, you lost most of your money when the bubble burst. The technology was real. The prices were not.
Silver's industrial applications are real. The supply constraints are real to some degree, but real things can still be overpriced. And when everyone agrees something is going higher, when the predictions get more and more extreme, when people who've never cared about silver before are suddenly buying it with borrowed money, that's usually a sign that price has detached from value.
I saw someone predict silver would hit $500 an ounce. $500. At that price, with annual mine production around 850 million ounces, the total value of yearly silver production would be over $400 billion for a metal that's primarily used in industrial applications where it can be substituted. Does that make sense to you? Maybe it does. It doesn't to me.
Here's what I think is happening, though. I could be wrong. I think silver had a genuine move based on real supply and demand factors. Industrial demand did increase. Inventories did fall. All that created upward pressure on prices. That was legitimate. But somewhere along the way, speculation took over. Leverage entered the picture. Fear of missing out drove new buyers in. Social media amplified the excitement. And now we're in that dangerous phase where price momentum is the primary driver, not fundamentals. When that happens, the end can come quickly. It always does.
One day, prices are hitting new highs and everyone's euphoric. The next day, something breaks. Maybe the exchange raises margin requirements, like they did in 2011. Maybe a major buyer unexpectedly sells. Maybe industrial users announce they're switching to substitutes. It doesn't really matter what the trigger is. What matters is that when everyone's using leverage, when everyone's counting on higher prices, any disruption can cascade. That $122 peak, followed by a 25% drop in a day, that might have been the warning shot. Or it might have been just volatility that gets bought back. I don't know. But I do know that kind of price action doesn't happen in healthy, sustainable markets. It happens in markets driven by speculation and leverage.
So, what should you do? I can't answer that for you. What I can tell you is what I would do, which is ask yourself some hard questions. Do you understand what you own and why you own it? Are you investing or speculating? If silver falls 50% from here, will you be able to sleep at night? If it goes to 150, will you have the discipline to sell and take profits, or will you hold on hoping for 200? Most importantly, are you buying silver because you've carefully analyzed the supply and demand fundamentals and concluded it's undervalued, or are you buying it because it's going up and you don't want to miss out?
There's no shame in the second answer, but you should be honest about it. Because if you're buying momentum, you need to be prepared to sell when the momentum reverses, and momentum always reverses eventually. I've seen this movie before. The details change, the asset changes, the story changes, but the pattern is always the same. Prices rise, the story gets more compelling, more people buy, prices rise faster, the predictions get wilder, then something breaks. And the people who bought late, who believed the story most completely, who were most certain this time was different. They're the ones who suffer the most.
I hope I'm wrong. I genuinely do. I hope everyone who bought silver makes money and nobody gets hurt. But I've been around too long to believe that's how this ends. When assets move like silver has moved, someone's going to lose a lot of money. History doesn't offer many exceptions to that rule.
So, I'll leave you with this thought. In investing, your goal shouldn't be to hit a home run. It should be to avoid striking out, to protect your capital, to compound it slowly and steadily over time by buying good assets at fair prices and holding them patiently. That's not exciting. It won't make you rich overnight, but it works. Speculation is different. Speculation can make you rich quickly if you're lucky and smart and early. But it can also wipe you out if you're unlucky or late. And the problem is, by the time most people hear about something like silver going to the moon, they're already late. The storm has already started. The question is whether you're in a position to weather it, or whether you're about to find out what happens when speculation meets reality. Be careful out there.