(Money Metals News Service) This article is based on a recent episode of the Money Metals podcast featuring host Mike Maharrey interviewing silver analyst and author Peter Krauth about the ongoing silver bull market and what might come next.
(Interview Starts Around 7:58 Mark)
Silver Breaks Out And Then Stays There
Silver has blasted through levels that were psychological ceilings for more than a decade. As Maharrey notes, the metal finally broke above $50 an ounce in October and recently traded briefly above $59.
Both he and Krauth expected a much deeper correction after that kind of vertical move. Instead, the pullback was shallow and short-lived, and silver quickly resumed its climb.
Krauth admits he’s “a bit surprised” at how strong the market has been. He thinks more investors are now awake to the silver story and are buying even tiny dips, preventing the kind of brutal retracements that defined past cycles.
Rather than big crashes, this bull market may feature short, modest consolidations. So far, though, silver has barely given back any ground and has almost doubled this year.
Gold’s Surge Makes Silver Look Like the High-Torque Play
Part of silver’s strength is gold’s visibility. Gold has been trading between $4,100 and $4,200, more than double where it was just a few years ago, when it sat under $2,000.
Krauth says this move is pulling in people who never cared about precious metals before. A friend who doesn’t follow markets recently told him, “I don’t feel like I own enough gold,” and he suspects that impulse is spreading.
Once people see gold over $4,000, they start asking what else might run. Silver naturally becomes the “high-torque” alternative: much cheaper per ounce, but closely tied to the same macro drivers.
Maharrey points out that silver has almost doubled this year. For an asset most mainstream investors still ignore, that’s hard to overlook.
From 60/40 to 60/20/20
Institutional thinking is shifting as well. Krauth cites Morgan Stanley research suggesting the old 60/40 stock–bond portfolio is giving way to a 60/20/20 structure.
In that model, bonds fall from 40% to 20% of the portfolio. The freed 20% goes into gold and other precious metals.
Maharrey notes that most investors are nowhere near that kind of exposure. If someone has 2% in gold today, he says, they’re already above average.
The gap between actual allocations and a 20% precious metals target is enormous. Even moving a fraction of the way there would mean a wave of capital looking for a home in gold and silver.
Silver’s Optimal Slice vs. Reality
Silver’s under-ownership is even more extreme. Krauth references research from Oxford Economics that looked at silver’s role in portfolios over a couple of decades.
For a medium-risk portfolio, they found the optimal allocation to silver was about 6%. At that level, investors not only boosted returns but actually reduced overall volatility.
The real-world allocation was around 0.2%, and that was indirect exposure, not physical metal. To get from 0.2% to 6%, the average portfolio would need to increase its silver stake by roughly 30 times.
Even reaching a modest 2% exposure would require a 10x increase. Krauth doesn’t expect the world to hit the textbook optimum, but he argues that even a partial move in that direction would have “off the charts” implications for demand and pricing.
Commodities Near a 50-Year Extreme
Krauth also puts silver inside a broader commodity story. At a McGill University Mining Club event, he showed students a 50-year chart of the Goldman Sachs commodities index relative to the S&P 500.
Aside from a secular bottom around 2000, today’s level is near the lowest in half a century. That means commodities, including gold and silver, are historically cheap relative to stocks.
His message was straightforward: if you grasp what that ratio implies, you’re staring at one of the most compelling long-term opportunities in markets. Even a simple 20% allocation to commodities over the next decade, he says, could dramatically improve returns if stocks and bonds disappoint.
Inflation: 2% Is Gone – And 3–4% May Be the New Normal
Maharrey notes that, despite official claims, inflation doesn’t feel “under control” to most people. Money creation has resumed, and more dollars are chasing finite real assets.
Krauth breaks it down with numbers.
Before COVID, U.S. inflation averaged about 1.5%.
CPI then spiked to around 9% in 2022. Since early 2023, inflation has cooled, but it’s still averaging roughly 3%—double the pre-COVID norm.
The Federal Reserve still insists on a 2% target. Yet it is cutting rates even while inflation sits about 50% above that goal.
Markets see this as capitulation. Krauth argues that central banks have decided they would rather sacrifice price stability and the currency than deliberately crash the economy.
Maharrey quips that “3% is the new 2%.” Krauth goes further, suggesting that labor bargaining power, de-globalization, the energy transition, and surging defense spending could push us toward a world where 4% inflation effectively becomes the new 2%.
He sees strong parallels to the 1970s. But one key difference makes a Volcker-style solution impossible today.
Debt Kills the Volcker Playbook
In the 1970s, U.S. debt-to-GDP stood around 35%. Today, it’s closer to 125%.
Back then, Fed Chair Paul Volcker could hike interest rates to 18–20% to crush inflation. In today’s debt environment, Krauth says, that kind of move would wreck the economy within six months and risk serious unrest.
That constraint means real interest rates are likely to stay low or head lower over time. For gold and silver, that’s about as bullish as it gets.
As Maharrey titled a recent show, “Math Wins.” No amount of political messaging can override the arithmetic of debt, interest costs, and unfunded promises.
Physical Silver: The Global Shell Game
The conversation then shifts to the physical side of the market.
In October, a silver squeeze in London was driven largely by surging demand from India.
Maharrey notes that Money Metals itself shipped several pallets of 1,000-ounce bars to India. Metal moved from New York to London and then on to India to relieve the immediate shortage.
That shuffle eased the pressure in London but didn’t create new silver. Now, reports suggest emerging shortages in Shanghai.
Krauth calls it a “shell game.” You move metal from one shell to another, but at some point, one of those shells is simply empty.
He points to a chart of Chinese silver stockpiles going back to 2015. Inventories peaked around mid-2020 and have since fallen to roughly nine-year lows.
About a year ago, a major miner told him that half its production goes to China and half to the West. Chinese buyers were offering $2 over spot and paying two weeks ahead of delivery just to secure supply.
Krauth doubts that tightness has eased; he suspects it has only worsened. To him, it all points to a chronically tight physical market that is playing a bigger role in price discovery.
Five Straight Years of Deficits
Maharrey highlights another key fact: the silver market has logged five straight years of structural deficits. For five consecutive years, total demand has exceeded total annual supply.
Can miners catch up?
Krauth’s answer is no, not on any reasonable near-term timeline.
He cites Silver Institute projections from April that call for continued annual deficits over the next five years, including a new record shortfall somewhere in that period.
Mine supply peaked in 2016 at about 900 million ounces. It has since declined to roughly 830 million ounces, while demand has risen around 20%.
With supply falling and demand rising, price is the only real release valve. And bringing new supply onstream is slow: it typically takes 10–15 years from discovery to production.
Mergers and acquisitions don’t change total output; they just change who owns the mines. Recycling may tick up with higher prices, but Krauth believes large private hoards of silver will only come back at much higher levels, well beyond $50 or $60.
Maharrey adds one more striking number. If you sum the cumulative deficits of the last five years, including this year’s projected shortfall, you end up with a figure roughly equal to one full year of global mine output.
Why Silver Miners Could Be the Next Big Move
One of the puzzles in this bull market is the lagging performance of mining stocks. Silver has doubled this year, but many miners and ETFs have not delivered the expected leverage—yet.
Krauth thinks this is temporary. He cites work by Tavi Costa of Crescat showing that while major producers’ share prices have risen, their valuations have actually gotten cheaper because gold has risen even faster.
Price-to-earnings ratios for many miners have fallen as their stocks have gone up.
In other words, the sector’s value improved during the rally.
Krauth sees early signs of rotation from tech-heavy generalist portfolios into undervalued resource and precious metals names. He believes the next couple of years could bring “tremendous returns” in quality silver miners as this shift accelerates.
He closes with a comparison that sums up the opportunity. The entire publicly investable silver mining sector – explorers, producers, and royalties – is worth about $50 billion.
The publicly investable gold mining sector is roughly $950 billion. Silver miners are only about 5% of the size of gold miners.
When serious capital finally decides it wants exposure to silver mining, there will be very few names to absorb that flow.
Quoting Doug Casey, Krauth says it will be like trying to push the contents of Hoover Dam through a garden hose.
For those wanting to dig deeper into the thesis, he recommends his book The Great Silver Bull and his Silver Stock Investor research service. You can reach Peter Krauth on his website, X (formerly Twitter) @peter_krauth, and on LinkedIn.
Maharrey signs off praising the book, promising to have him back in the new year, and quietly enjoying the rally on silver he bought years ago when it was trading around $12 an ounce.
 Mike Maharrey interviewing silver analyst and author Peter Krauth about the ongoing silver bull market and what might come next.){kind=link}