As I sit snowed in on the East Coast, gazing out at the relentless whiteout, I can’t help but draw parallels between this winter storm and the current state of the silver market. What we are witnessing is not just a weather phenomenon but a significant shift in the financial landscape. For years, the banking establishment has maintained a “smokescreen” of paper contracts, obscuring a crucial truth: the world is running out of physical silver.
The Divorce from Reality
On January 1, I predicted that the New York paper market would soon divorce from reality. Fast forward to today, and that separation has become one of the most talked-about—and costly—legal splits in financial history. While banks were quick to label silver a “bubble” when it surpassed $70, it now holds firm above $100 an ounce, defying their predictions.
The Viral Math: From Industrial Metal to Survival Asset
For the past 15 years, I’ve attended family office events worldwide, where discussions about gold and silver were often absent. Wealth managers viewed silver as a “boring industrial metal.” However, that narrative has shifted dramatically this month—silver is going viral.
The global family office network manages over $16 trillion in assets. Historically, their allocation to silver has been nearly nonexistent. If these offices were to move just 1% of their wealth into silver as a hedge against a declining dollar, inflation, or rising global debts, they would collectively seek $100 to $150 billion worth of metal. This demand would be a mix of new supply, old supply, and ETFs.
The Supply Crunch
Herein lies the problem: the entire annual supply of investment-grade silver bars is only about $25 billion. You cannot funnel a $160 billion “viral” trade through a $25 billion straw. As I noted on January 12, “the banks are trapped in a mean-reversion move that has no basis in physical reality.”
The BRICS Strategic Vault Shift
The shift isn’t limited to family offices. Major players like Russia and China have stopped selling their silver reserves.
Russia: The Russian Finance Ministry has initiated a pilot project to bring precious metals into state circulation, allocating billions of rubles to acquire silver, gold, and palladium.
China: As of January 1, Beijing has implemented an export licensing regime that effectively weaponizes their silver supply, allowing only 44 state-approved companies to export.
When nations like Russia and China decide to hoard a metal, it transcends the realm of commodities and becomes a Strategic Survival Asset.
The Bank “Ghost Stories” vs. Reality
In early January, financial “experts” were eager to downplay the silver rally:
HSBC predicted that the silver rally was “fundamentally overvalued,” forecasting a retreat to $68.
UBS labeled the surge a “speculative frenzy” as it cleared $80.
In my January 8 article, I identified these warnings as a smokescreen to conceal major shortages in the physical market. I predicted that silver would reach $100 quickly, and it took less than 20 days to do so.
The Hunt Brothers 2.0: The Infinite Squeeze
In 1980, the Hunt Brothers drove silver prices to $50, but they were individuals who could be thwarted by regulatory changes. Today’s Hunt Brothers are nation-states and trillion-dollar tech giants that require silver for their operations. You cannot change the rules for sovereign nations or massive corporations.
The total market value of all above-ground investable silver is approximately $4 to $6 trillion at current prices, significantly smaller than equities or bonds. The annual supply, including recycled silver and global mine production, is about 1 billion ounces.
The Global Deficit
We are currently entering the sixth consecutive year of a structural silver deficit. Between 2021 and 2025, the world over-consumed roughly 900 million ounces more than it produced. These deficits have been covered by drawing down known inventories, but as of this month, those vault cushions are at their thinnest levels in decades.
Why Gold is the Anchor
While silver is the high-octane play, gold serves as the anchor. With gold nearing $5,000 an ounce, the debt-to-GDP ratio and the weaponization of the dollar have turned it into a melting ice cube. Gold will continue its ascent, potentially surpassing $6,000 and $7,000 as we enter the Age of Commodities.
Performance Tracker
In just 15 trading days, while the broader market has struggled, silver has experienced a parabolic rally:
Up +11.7%
Up +24.0%
Up +39.5%
Up +47.1%
Up +28.8%
The Supply Reality Problem
Many believe that high prices will bring more supply, but they are mistaken.
Byproduct Mining: 72% of silver is a byproduct of mining copper, lead, and zinc. Even if silver prices soar to $200, a copper miner won’t invest in a new $2 billion mine just for silver.
Mine Peak: Global mine production peaked in 2016 at 900 million ounces and is projected to fall to 835 million ounces by 2025.
The New Demand: AI & Energy Multiplier
The Great Divorce is being fueled by industries that cannot operate without silver.
Solar: By 2024, solar energy will consume 25% of global silver supply, a figure that will only accelerate as energy independence becomes a priority.
AI & Nuclear: AI data centers and new small modular reactors (SMRs) are silver-intensive. Tech giants like Nvidia and Microsoft have the financial muscle to pay $200 an ounce for silver without hesitation.
The Weaponized Dollar Catalyst
As the U.S. debt-to-GDP ratio reaches alarming levels, the dollar is not just losing value; it’s losing credibility.
The QE Trap: If the Fed resorts to printing money to save banks, the dollar will devalue further.
The Pivot: Central banks are diversifying their reserves. While they buy gold for stability, savvy investors recognize that silver is the gold on high octane.
This isn’t merely a rally; it’s a re-pricing of a strategic asset that the world has suddenly realized it cannot live without. As the Age of Commodities matures, we will witness other commodities embark on their own bull runs.
The Verdict
The Great Divorce is finalized. The New York paper market is a ghost town, trading IOUs for silver that doesn’t exist. Meanwhile, the physical price is being set in Shanghai and Moscow. We are on the brink of the largest rise in silver prices ever recorded.
As the snow outside my window will eventually melt, the Silver Storm is just beginning. How high can it go? That depends on the demand from the Forbes crowd and how spooked they become. An avalanche starts slowly, gaining momentum until it moves mountains. We are about to witness that mountain shift.
At $140, we are on the path to $200, and one day we will look back and wonder why we hesitated at $100 silver.
Disclosure: I am long MTA, WPM, PSLV, SLVR, GBUG. This article reflects my opinions and I am not receiving compensation for it. I have no business relationship with any company mentioned.
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