Heavy Metal
Good Day,
If you’re into watching car chases followed by car crashes, then you would have really enjoyed watching the gold and silver trade the last two weeks.
Silver has been trending higher for some time, depending on far back you want to go. In March of 2020 silver traded down to $11.735/oz marking the lowest it had traded since 2008. A lot of commodities traded to new lows in 2020 (remember crude oil trading negative) so silver wasn’t unique in that sense. Like other commodities silver had a sharp recovery off the lows trading up to nearly $30/oz by August of 2020 before sliding back into a sideways to lower trade for the next 2 years. September 2022 marked another low spot in the market as nearby silver futures traded down to $17.30/oz. You could say today’s current trend higher started there but the trade was still quietly sideways until April of 2024 when it returned to $30/oz. But the real fireworks didn’t start until April of 2025 when the pace of this trend along with the volatility changed from a tortoise to a hare … and in the last two months the hare started doing drugs.
A standard contract of Comex silver on the board is 5000 oz. There are mini contracts (2500 oz) and micro contracts (1000 oz) but the volume of trade in those is dwarfed by the standard 5000 oz contract. Until this year a $1 daily move ($5000/contract) in the silver market, while not earth shattering, would have still been considered a big deal. There have only been two other times in history where that may not have been true, the late 70’s when the Hunt brothers tried to corner the market and silver prices nearly hit $50/oz before crashing, and in 2011 post financial crisis when prices again approached $50/oz driven by safe haven buying. This week alone Silver traded a $46 range ($230,000/contract) from top to bottom nearly encapsulating the total range of historical silver trade in one week as what existed before October 2025.
Point being If you wanted to trade some silver contracts in the past you were already playing in the deeper end of the pool and you should know how to swim. Now that pool is the Pacific Ocean and it’s full of sharks and maybe sea monsters after Friday’s trade. For most folks fundamental and technical analysis will have little to no value in this environment unless you’re account value is the equivalent of the U.S. Navy. Just knowing how to swim isn’t going to cut it.
If you’re on the outside looking in it’s easy to make these observations and conclude that you should stay out of the pool, but if you’re on the inside it’s not always that easy. I’m sure there are some intelligent investors out there who have been trading or holding some physical silver, maybe some who inherited it, and we’re finally rewarded with the mother of all rallies this year. Some of those folks probably sold when the market rallied to $50/oz, watched it go to $100/oz and felt silly as they listened to some talking head tell them the bullish fundamentals for why silver is going higher, maybe they bought it back. You can imagine several scenarios that might not turn out well. Most farmers and ranchers have experienced the regret of “selling to early” and the FOMO (fear of missing out) that can follow and perhaps lead to some poor decisions. Today’s silver market is a good reminder of what can happen and how that view shifts whether you’re on the outside looking in or inside so far you can’t see out. The difference is farmers in most cases will raise another crop the next year and similar for ranchers and feeders that have another calf crop or make their living on the margin. The silver holders of the world aren’t growing another silver crop, and by that token they should be aware that nobody has to eat their silver either.
“Gold – what can it not do, and undo?” – William Shakespeare