2025 Was a Bad One in Many Ways Except Investment (IMO and Speaking Personally)
A (and gold) lining was, of course, the precious metals sector for we who had anticipated the bull. led, the rest of the precious metals complex, and eventually broader markets, followed.
2026? It Can’t Get Any Worse Socio-Politically, and Pending a Potential Q1/H1 Liquidity Issue, Could Be Just as Good Investment-Wise
With the Fed already on a regimen and positioned for some form of QE (as it plans to buy short-term Treasuries and let MBS roll off the books), and Trump soon to tap a yes-man to chair the Fed, the inflation problem they appear to want to summon should lift a wider segment of the broad commodity and resources sectors.
Cyclical Inflation or Stagflation?
The above would assume either no recession in 2026 or a quick one (in line with our “interim liquidity event” theory that could come at the hands of a Yen Carry implosion and/or a counter-trend USD rally and/or rebound in the Gold/Silver ratio) that would actually give license to the Trump administration to go balls out inflationary in its fiscal policies.
They’ve already proven not to be inflation fighters, and I am not talking about tariffs. I am talking about a man badgering the Fed chief to cut rates (i.e. increase inflationary inputs), seemingly since time immemorial. I am talking about certain aspects of the big, beautiful spending bill.
With these inputs set in stone, 2026 looks to either feature cyclical inflation (inflation that works to keep the economy in growth mode) as in Q3, 2020 forward, or Stagflation, which would see a struggling economy, but higher prices of important goods and some services. I lean “Stag”.
There are no more important “goods” than the critical minerals and materials that bulled in 2025, amid global trade tensions and related asset grabs. This is especially so with the expansion of AI (it’s a bubble in many respects, but it is also real) and all those data centers being built to support it.
Precious Metals; Gold, Then Silver
Gold led the 2025 festivities, breaking upward in January after a 2.5-month-long consolidation. In the spring, as silver was blowing off to the downside in relation to gold, we anticipated a reversal to the upside. And boy did we get one!
It was gold, then the gold miners and then finally, silver. After first identifying a condition for a big upside reversal in the Silver/Gold ratio, here is the “Silver/Gold ratio” portion of one update on the precious metals from May, 2025.
The Silver/Gold ratio remains a stick in the mud. Of course, unlike many, we did not need silver to be strong to be bullish on gold stocks and the precious metals complex. However, my gut thinks that a final upside show could be put on with silver leading. Thus far, that is a non-starter.
Well, it started alright. And it went further than I’d originally anticipated. Because of course it did! Markets often move with more momentum than originally pre-planned. That goes double for the silver price.
Fast forward to today, a day after CME Group predictably raised margin requirements on silver and gold (again), after the hype, leverage and momentum built up in the silver price, right into year-end.
The Silver/Gold ratio is doing this (because of course it is!). It’s a little different than those fore-thinking days when we were projecting the play last spring (ref. green box below).
Despite positive macro-fundamentals, the short-term is subject to volatility and folks, if you believe that a vast majority of those in the silver market – despite physical holders/stackers – are healthy participants, you might want to think again. No market goes this hard for this long without attracting MOMOs, FOMOs and player of all kinds.
The 2025 precious metals story is typical, in that it was led by gold, then the miners kicked in, and then silver took over and cleared the tracks for a major run, fueled by momentum and FOMO. For years, Ringo sang to myself that “it don’t come easy”. Well?
Now? With the understanding that silver now has big picture macro backing, price and short-term activity are one thing, while long-term macro-fundamentals are another.
From NFTRH 895 last weekend:
Silver Mania, or Different This Time?
A subscriber sent me a link to this article, which I found very informative:
Silver Mania and the Predictable Bust
If you have interest in silver, it is a good read for its historical summary (especially regarding the Hunt Brothers). While the author agrees that the fundamentals for silver are strong, he believes a bust similar to 1980 and 2011 is in the offing.
The bust would come at the hands not of deteriorating fundamentals, but instead at the hands of something like Silver Rule 7, which was a severe restriction on using leverage to purchase silver futures. In combination with Volcker’s interest rate regime in the late 1970s, silver was cooked and the upward spike reversed terribly, bankrupting the Brothers and sending silver into a 20+ year bear market.
In 2009-2011 the silver price reacted to the immense inflationary fire hoses employed by Bernanke and friends [editorial comment: to fight the flames of the incinerating bubble that the Fed was primary in creating], zooming back up to the old Hunt Brothers’ high around 50. CME raised margin requirements until silver finally cracked into another bear market lasting about 9 years. CME instituted the first 10% margin requirement just this month. Are there more to follow? If silver continues parabolic, I would not bet against it.
Neither of these price highs had much to do with fundamentals (although Volcker’s relentless interest rate hikes could be considered an antagonistic fundamental development). They had to do with actions taken by a trading authority limiting margin and leverage, which was driving the silver price.
My view? People who claim silver is the victim of evil and manipulative forces are harvesting eyeballs and followers, and they are half right. But they are half wrong as well in not advising that silver was played and leveraged in the 1970s by the Brothers, and in 2011 by rampant speculation driven by leverage into 2011. Leverage is almost by definition, manipulation. It drives an asset price harder than if left to normal market devices.
Regardless of whether we are right or wrong about the new macro being silver-positive, fundamentally (which I believe it is), the mechanics of trading its price are a whole different animal. CME, Comex, the government itself? Some combination? Someone is likely to decide that it is time to control the silver price and when that happens, we’ll get the anticipated silver top/reversal/decline at least, or a new bear market at most.
I believe in taking things a step at a time. A reversal and decline is what we are on alert for as we enter 2026. Then we’ll evaluate the prevailing macro factors, along with micro factors like official and/or institutional price control actions.
For now, nothing has changed. Silver is on a hysterical and parabolic move, and the Gold/Silver ratio’s downside extreme indicates a coming end to the move. It could happen tomorrow or next week or in January or February. It could happen above $100/oz. or right here at $79. But it is very likely coming.
Frankly, I shorted silver (against gold/silver stock positions held) after writing #895. But then, per the in-week notes that subscribers can freely access, I just felt I did not want to tempt fate. I took the profit quickly.
Tactical positioning will be updated in Friday’s notes and/or Sunday’s NFTRH 896 and throughout the year. But the point is that while I think there could be more downside as CME attempts to rein silver in, it almost feels too obvious.
On that note, I’d also like to call your attention to this excellent post at X, by a rational * silver market watcher, @abcampbell. Here is his bottom line:
* As you may well know, they are not all rational.
The Wider Commodity/”Inflation” Trades
Assuming the situation shakes out to a bullish Silver/Gold ratio over the course of 2026, then big trades may no longer be mainly focused on the precious metals. They have, after all, taken a moonshot in 2025. This while the broad commodity index (CRB) has pretty much gone nowhere.
Frankly, I am not in love with the way 2025 ended for CRB (orange box), as it has wobbled the pattern and given RSI a bearish look on this monthly chart. That would of course fit our narrative of an “interim” liquidity problem for markets before any real, broader inflation trades get going.
Meanwhile, with 2025’s degrading global political picture, critical commodities became all the rage. Those (REE, Cu and to varying degrees PGM, Ni, Li and u3o8) were the focus.
Pending any H1, 2026 market disturbance (perhaps after a typically positive January) that may erupt, I expect critical commodities and their producers/explorers to bull once again, as part of the broader inflation trades.
It is going to be another long and potentially fruitful year. I can live without the levels of political and social angst that 2025 saw. But as with the markets, we’ll take that week-to-week, month-to-month just as we do the markets. I expect bull and bear phases across most markets.
Currently Anticipated (Rough) Outline
Positive January, market liquidity problems well within H1, 2026. Then renewed inflation trades, including the precious metals and critical commodities that bulled so well in 2025. Socially and politically, I don’t think it can get much worse. Indeed, from a U.S. perspective, I see a country entering the very early stages of healing itself. Social “green shoots”, if you will. Barely visible ones.
Stock markets were not within the scope of this article. But as we proceed into 2026, I would be careful about a perma-bear orientation. Stocks could go sideways or even rally, after all, in this new macro (in some ways similar to the 1970s macro). But they may continue to tank in “real”, gold-adjusted terms.
Short-term, note the SPX/Gold ratio at a breakdown/hold decision point. I would not be surprised if the SPX/Gold ratio bounces before a clear breakdown occurs.
Happy New Year.