Friday Recap (12/26/2025)

AU: $4528 ($4337 - Last Week) - - (Jan 1st $2623 = +72% YTD) (ATH $4550 Dec)
AG: $77.86 (67.10) - - (Jan 1st $28.97 = +168% YTD) (ATH $77.86 Dec)
HUI: 747 (717) - - (Jan 1st 289 = +155% YTD) (ATH 747 Dec)
DXY: 97.6 (98.7)
S&P: 6929 (6834) - - (Jan 1st 5881 = +17% YTD) (ATH 6939 Oct)
10-Yr: 4.12% (4.14%)
Oil: 56 (57)

Silver ripped $10 in one week. Clearly, it was a short squeeze. Amazingly, there are still 28,000 commercial (big banks) short contracts, representing 140M oz short. Huge exposure still exists. It was 82,000 contracts short, or 400M oz short, so it is shrinking. The squeeze is almost over. However, it would not surprise me if the big banks (banksters) add a large amount of short contracts after they get out of harm’s way. Will they stop accumulating large quantities of short contracts? Probably not.

Where is the silver floor after this squeeze? My guess is around $55. If $70 holds for a few weeks, then perhaps it is $60 or higher. Even if the floor is $50, that is a healthy market for silver miners, with their current all-in cost around $32, that is a FCF margin of 36%, which is probably worst case for 2026. Currently, the FCF margins are 58% ($77 - $32), which is huge. For gold miners, their margins are currently around 46% ($4500 - $2400). I expect margins to remain high for gold miners in 2026.

It’s easy to get excited and think silver will just keep ripping higher. However, this is not about silver. It’s about gold, which is at an ATH. Gold continues to trend because the rest of the world has lost confidence in the US economy, the US dollar, and US Treasury bonds. Silver is doing what it always does. It is following gold, which has caused a short squeeze. So, we need to focus on the fundamentals for gold. Sure, they will remain strong, but gold has a huge negative event that is approaching: the S&P 500 crashing.

Once the S&P crashes, a fear trade will begin, and no one will want to own the S&P. Guess what they will want to own? Gold, silver, and the miners. But to get there (a huge influx of new gold/silver investors), we will need to experience another October-like correction. In October, the correction was 12% down in gold, 18% down in silver, and 22% down in HUI. It could be worse next time. Expect the worst, and hope for the best. I would love to see $4000 gold hold, but I doubt that it will. The good news is that gold wants to go higher and has become the buy-the-dip asset. The buy-the-dip asset has been the S&P 500 since 2009, but no longer. Right now, Wall Street doesn’t realize that and remains bullish, with only 3% in cash. They have lost their minds and don’t see the train wreck dead ahead.