Transcription
I think what's happening in silver is different than what's going to happen in gold. I think silver is in a major process of decades of catching up to gold in terms of valuation. Uh, you know, we're in a bull trend until everybody sees it. When you look at daily charts of this, you know, you get spooked like, "I got to take profits, this can't keep going." You know, which is take stand back and look at a bigger picture, and you should get a different view.
But in that 50-year, half a century range of price, you went from four bucks to 50 to four bucks to 50. You know, so you got a $45 range, okay? Roughly. And, you know, if you do the simple arithmetic silliness of measuring the dimension of the range and say, "Well, I'll add that to the top of the range," that says, "Hey, you're in a target area, right?" It's, you know, $45 range, add 45 to 50, and you end up with something in the mid-90s, let's call it short of 100, okay? So people looking at that think, "Oh, well, this got to be the end of the move."
We've done a lot of studies, uh, both momentum spread relationships, relative performance relationships, and also what's happened in some other markets rarely, but still has happened. And copper, for example, also this is true with lead, very exciting metal. Uh, they were stuck in a range for multiple decades back in the 70s, 80s, 90s, 2000. And in 2005, there you can see there's a cluster of 2004 and 5, but it was later in 2005 that you burst through the top of that basically $1.50 peak that had prevailed for decades. And in a matter of these are monthly, right? Monthly candles. Yeah.
Look, in a matter of a couple quarters, you went up to over $4. Bam. Okay. And by the way, it did it on its own. If you look, for example, at another base metal like lead, it didn't do that then. It did it a couple years later. The same thing in lead. And this wasn't associated, for example, with a silver-gold explosion of that nature either. This was copper on its own. It just said, "Hey, I'm out of here. That old reality is not true anymore. I'm underpriced." And in order to get to maybe a more proper pricing fit with the new realities of copper, let's say, uh, it didn't do it incrementally. If you weren't there, you missed it. Bam, gone. Okay. And then you lived, you'll see, "Oh yeah, it was a big sell-off after that." But look at the range that prevailed after that for decades. You know, either side of $3, let's say. So a new reality.
Well, how come silver during all this time you're looking at here was contained within its half-century box? It's like copper. If it was still at a buck 50 all the way over to the right of your screen, you know, it'd be like, "Why is it still down there?" Okay, why is silver still down there? Gold isn't. If you look at where it peaked in 1980, we blew that out in 2011, big time. Now, we've blown out that high, big time. And yet, silver only just recently has taken out its 50-year range. You know, I'm not going to get involved in the rationale why that may have occurred, but it was an error. Markets make mistakes. Markets are not rational all the time. And in the case of silver, it's been irrational in terms of being suppressed too long at an unreal price level, especially look at its new reality of industrial demand, for example. Forget the monetary aspect, which too many people are forgetting, by the way. But industrial demand has outpaced supply for over five years now. And they're not, despite the price rise, they're not increasing production because most of the silver does not come from silver miners. It comes from base metal miners, who, in which case, the silver they produce is really a minority issue for them in terms of their profits. So they're not extremely motivated by something that's 2% of their output, let's say, going vertical. Uh, so it's in a very unique industrial supply-demand awkward position, which is it's starting to correct quickly.
But when you look at silver instead of on this arithmetic or point scale, dollar scale chart, and you put it on a logarithmic scale, ratio scale. Going back, you know, again, to the 1970s, let's say, and you take the dimension of that range from those, you know, $4 lows to $50 highs. That's a tenfold move from range bottom to range top, range bottom to range top. Tenfold. Okay. Apply tenfold to 50 bucks to match the dimension of that range as a swing objective. Talking of $500. North of 500.
And and a lot of people know that, you know, Eric Sprat, for example, I've heard him explain that, you know, if you just do a money analysis of silver price using M2 as your measure of degradation of the buying power of the dollar, uh, silver should be a couple hundred dollars easily. Uh, and maybe even higher if you go against the 1980 high. Yeah, you can see, see what I mean. Yeah, there you go. It's just underpriced.
And it's like copper, like lead did in 2006-7, couple years after that copper chart went crazy. Uh, it went vertical in several quarters. It didn't arm wrestle its way higher, exploded. Silver's in that position now. It's, I think silver is like a surfer on the waves, but everybody's focused right now on the supply-demand to be the industrial aspect of silver, and they're not so much focused on it as a monetary metal. They're failing to recognize the history that just the same as gold, it's been money for man going back thousands of years, uh, and at much higher valuations. So, you know, if, for instance, if silver breaks out of the price range that it had for 50 years, which it's now done, why shouldn't silver's relationship to gold as a percent of its price, let's say, divide an ounce of silver and an ounce of gold, which is now like 2%? Was 1% early this year, by the way, ounce of silver into gold. But if you go back to the '79-'80 bull trend in silver or the 2010-'11 latter part of that bull trend, silver to gold was over 3% in 2011 of an ounce of gold, and it was up 6.5% of an ounce of gold back in the 1980 period. So what if this time, not only does price go up and challenge the highs of the prior decades and take them out, which it's already done, and maybe do the multiple gain we talked about in terms of ratio scale. Why shouldn't the spread go up and at least challenge or perhaps even take out those dual highs of the past 50 years?
Before we even begin, let me tell you something very plainly. What's happening in silver right now is not a normal bull market. It's not even an extended breakout. It's a structural repricing event. The kind of event that happens only once in a few decades. When a market that has been suppressed, ignored, or mispriced finally snaps back to where it should have been all along. And when markets correct 40 or 50 years of distortion, they never do it slowly. They do it violently. They do it suddenly. And they do it in a way that almost nobody's ready for. This is exactly where silver is sitting today. And I've been saying this for a long time, but now the price action itself is validating the setup. We're not watching silver trend higher. We're watching silver wake up from a 50-year coma.
Now, let's back up for a moment because I want every viewer to understand the magnitude of what's happened. For nearly half a century, literally since the 1970s, silver traded inside the same price box. $4 on the low end, $50 on the high end. That is one of the most bizarre ranges in all of commodities. No other asset with serious monetary or industrial significance has been pinned inside a half-century cage like that. Gold escaped, copper escaped, oil escaped, even lead escaped. But silver, silver sat there like a student who never got the memo that class had ended. People talk about manipulation, about paper markets, about shorting pressure. And I am not here to litigate all of that. But what I'll say is this: the price action itself tells you silver was mispriced. Markets are not rational all the time. Sometimes they are outright wrong. And historically, when a market is wrong for too long, the correction is not linear, it's explosive. Think copper in 2005. Think lead in 2007. Think gold in both of its eight-fold bull cycles. Those weren't bull markets. Those were markets correcting an error. Silver's error was larger and lasted longer, which means the correction is going to be more dramatic.
Let's talk about that range everyone's obsessed with. $4 to $50. If you take that range and do the stereotypical price target arithmetic, you know, the lazy range added to breakout method, you'd come up with a target near $95 or so. And that's exactly the kind of thinking that convinces people they're geniuses when silver hits $90 and then scares them into thinking the move must be over. But here's the truth: that type of target is amateur nonsense because it's built on an arithmetic chart rather than a logarithmic one. And with silver, a market whose range spans tenfold from low to high, an arithmetic chart is worse than useless. It's misleading.
Put silver on a proper logarithmic scale and the picture changes dramatically. Suddenly, you don't have a $45 range. You have a tenfold range. $4 to $50. And when you apply that dimension properly using ratio scale logic, the swing objective isn't $95. It's $500. $500. Now, before the comment section explodes, let me clarify. I'm not saying silver will stay at $500. I'm saying that is the technical dimension of the move required to correct five decades of mispricing. And when you combine that with what's happening in spreads, in momentum, in gold correlation, and in industrial demand, you begin to see why $500 suddenly doesn't sound so crazy. What's most astonishing to me is that people are obsessing over $90 silver as if it's some kind of cosmic ceiling. It's not a ceiling. It's the first floor of a skyscraper that was never allowed to be built.
You want to know what's actually driving silver's explosion? It's not Reddit traders. It's not speculators. It's certainly not the banks, most of whom, by the way, have been blown out of their short positions trying to fight this move. What's driving this is structural demand, industrial demand, monetary demand, sovereign demand, five straight years of deficits, solar, AI, semiconductor fabrication, electric weapon systems. All of these are exploding in consumption. And while the world is demanding more silver than ever, mine supply isn't rising. Why? Because 70% of all silver comes not from primary silver mines, but as a byproduct of base metal production. And copper miners and zinc miners don't increase production just because silver went up. They don't care. It's a rounding error in their revenue. So silver supply stays relatively fixed even while demand goes vertical.
But gold prior bull markets, uh, the last 50 years have been eight-fold gains from bare market low to bull market high. 1976 corrective low just above 100, 850 by 1980. Then over a more protracted period of time from 2001 to 2011, eight-fold gain in silver. Bare low was $4.50. I mean, we'd have to be $8,500 just to do the same thing again that we've done twice before. It's like, "Ho hum, gold did it again." You know, $8,500. Well, if you take $8,500 and figure out what 3-plus percent of that is or 6.5% of that, your jaw will drop. And I'm not sure at all. In fact, I don't think it will. I don't think gold's going to produce.
Was it three and a half percent? Three and a half percent. Is that what you said? Yeah. Three and a half percent of $8,500. You tell it is. $300 silver. Yeah. Okay. And then, you know, 6.5% uh, you know, back in the 70s and 80s. So, $500. You get the point. Okay. Meaning the logarithmic scale swing objective of silver instead of the $45 dimension is a tenfold dimension.
That sort of fits with the assumption that, hey, maybe these spreads are going to actually challenge or take out the highs we've seen in the last 50 years. Not just silver price catch up to reality, but its ratio to gold catch up to reality. Or in our case, we don't use ratio, we use percent. Um, think about it. Is it unreal? Does it make sense? You know, uh, therefore, if that makes sense, then $90-something dollar silver is still dirt cheap.
Is this the last time we'll be able to buy silver at two digits?
Here's what I says. The reason silver, first of all, back in June, silver approached for the third time dual ceilings it had at $35. Late '24, early '25, silver peaked just above $35 twice. So, quote, a double top, right? Okay. And then it got bagged down into April and then turned up again, and by June it was headed back toward that $35 potential triple top breakout. Okay, if you're a price guy, momentum said when it went up above 34 and even approached 35, you're gone. You're going to explode. And sure enough, we did. And we argued then that based on silver's momentum of its price, it was going into an acceleration phase. It didn't take long to get back to 50. Okay.
But then something else happened, and it wasn't silver being in a bull trend. Silver's been in a bull trend for a while. Just like in '79 to '80 when it exploded in the final months of that move. It had already been in a bull trend for a while. Same in 2011 when it exploded to 50. It had already been in a bull trend for years. Something happened late in that move that caused the explosive phase. And what it was was the spread relationship, our spread relationship versus gold in each case. I think it was summer of '79, well before that explosion to 50. And in September of 2010, before it, it was in the 20-buck range and shot up to 50. The spread of silver versus gold broke through a ceiling. You plot the monthly close of silver divided into gold and just plot that chart every month. And what you'd end up with there was a technical ceiling on the spread. We've had it in our reports many times. And it broke out above it. And when it did, that's when the whoosh occurred. And in each of those cases, just like in that copper explosion we showed, the move came and went in a couple quarters. I'm not going to get specific. 5 months, 7 months, maybe eight, okay? But let's call it at least a couple quarters, but very rapidly.
Now, let's pick up from where we left off. Because the part people really struggle with, the part that creates the most emotional whiplash is not the breakout itself. It's the acceleration phase. That's the phase when silver stops behaving like a commodity and starts behaving like a currency under reevaluation. It's the phase when the charts go vertical, the candles get absurd, and the pullbacks become so shallow and so brief that they barely register before the next leg up begins.
We saw this in 1979 to 1980. We saw it again in 2010 to 2011. But the truth is, neither of those episodes fully captured the magnitude of what's happening now. Because neither of those episodes began from a 50-year price cage or a tenfold logarithmic range. Neither of those episodes happened during a global monetary crisis in which sovereign deficits, real yields, bond markets, and central bank trust were all breaking down simultaneously. And neither happened in a world where silver's industrial demand was exploding from technologies like solar, AI, semiconductors, electric warfare systems, and battery chemistry in a way that simply didn't exist 40 years ago. People forget that markets are creatures of their time. Today's silver market is dealing with pressures that simply didn't exist in prior cycles, which means the magnitude of today's move cannot be compared to those cycles using simple arithmetic. This isn't silver trying to outperform gold in a vacuum. It's silver trying to correct half a century of mispricing in a world where the monetary system itself is wobbling.
Now let's come back to spreads because spreads are the heartbeat of this whole move. Earlier I said that the breakout happened in November when silver's relative performance against gold surged above a ceiling that had held for over a decade. To put this in context, that ceiling wasn't some weak line on a chart. It was a wall made of reinforced steel. Silver hit it repeatedly for 10 years and got thrown back every single time. It was an unmistakable sign of systemic underpricing. When it finally broke in November, it wasn't gentle. It didn't tiptoe through. It blew through like a freight train. That's the signal I've been waiting for. That's the signal that said the move begins now. Not begins someday. Not begins after consolidation. Begins now. And historically, once that breakout occurs, the acceleration phase lasts for roughly two quarters, 5 to 7 months, sometimes a bit more, but it is typically a small window. We are already inside that window. That's why I said in part one that the verticality isn't behind us. It's ahead of us. When silver moved from $35 to $50 in 2011, it did it in about 7 months. When it moved from the teens to $50 in 1979, it did it in 5 months. And in both cases, the spread breakout preceded the explosion by a matter of weeks. History doesn't rhyme perfectly, but in technical markets, it rhymes loudly enough that only the deaf miss it.
Now, let's talk about the psychology of this type of move because this is where most people mess up. During acceleration phases, the chart behaves like a roller coaster tilted straight upward. Price surges, pauses, surges again, stumbles for a moment, then explodes to a new level. And right in the middle of that climb, somewhere between week 6 and 12 of the window, you usually get what looks emotionally like a reversal, a pullback that feels different, a red candle that looks bigger, a sudden drop that wakes up people who have been lulled into complacency. In 1979, that pause lasted a few weeks. In 2010, it lasted only a month. Both times it tricked traders into thinking the top was in. Both times it created the false impression that the vertical move was exhausted. And in both cases, if you had sold during that stumble, you missed the most explosive part of the entire cycle. That's where we are now. A temporary stumble in a vertical trajectory. Not a reversal, a fake out, not a finale. A pause, not a peak. If you doubt that, look again at spreads. Look at momentum. Look at relative strength across asset classes. Look at gold. Look at copper. Look at the bond market and its breakdown. Look at the geopolitical backdrop. Debt ceilings, deficit spending, sovereign downgrades, weakening trust in central banks, loss of credibility in fiat systems. These are the exact conditions that produce monetary metal breakouts, not corrections.
Which brings us to gold. Because while silver is sprinting, gold is setting the stage. Gold is moving in a much more controlled, deliberate, almost regal fashion. But make no mistake, gold is in a structural bull market of its own. Twice in the last 50 years, gold has delivered an eight-fold move. In 1976, gold bottomed around $100 and soared to $850 in 1980. Then again in 2001, gold bottomed near $250 and climbed to $1,920 in 2011. Another eight-fold gain. Now consider this: our bare market low was roughly $1,050 in 2015. An eight-fold move from there, $8,500 per ounce. People hear that number and think it's outrageous, but that's because they don't know their history. Gold has already done it twice under conditions far less extreme than the ones we face today. We didn't have global synchronized deficits in the trillions. We didn't have 0% rates turned rapidly into 5%. We didn't have sovereign bond markets collapsing. We didn't have central banks openly panic buying gold at the fastest rate since records began in 1950. And we didn't have global militaries and AI industries driving commodity demand through the roof. In other words, the world today offers a far more combustible backdrop than either the 1970s or the 2000s. So when I say $8,500 gold isn't fantasy, it's just math. It's the historical precedent applied to current reality.
And if you accept the premise that gold can reach those levels, and there's no technical or macro reason why it can't, then silver's $300 or $500 price targets suddenly look conservative. Gold doesn't even need to hit $8,500. If gold simply moves to $5,000 and silver spread expands to just 3%, which again is where we were in 2011, that's $150 silver. If silver reaches 6.5% as it did in 1980, that's $300 silver. And if we apply the full logarithmic range tenfold from $50, you get back to that $500 area. All of these targets, by the way, are technical and structural. I haven't even talked about industrial deficits, geopolitical stress, or sovereign dollarization. Those are gasoline poured onto an already burning fire.
And let me add something here because viewers need clarity. Silver does not need a monetary collapse to reach these targets. It just needs continuation of the current trends. Deficits, distrust, supply deficits, industrial strain, sovereign accumulation. If you throw a currency crisis on top of that, then we stop talking about $500. We start talking about something much larger. Something that reflects silver's full monetary power, not just its industrial importance.
But let's stay grounded for now. Let's stick to the technical picture because the technical picture says one thing loud and clear. Acceleration is underway. It started with the breakout above $35. It intensified when spreads blew through their ceilings in November. It accelerated again when gold broke into the high 4,000s. And now we are in the part of the cycle where speed replaces slope. This is where the market goes from climbing stairs to taking the elevator. This is where people either get positioned or get forgotten.
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