(Money Metals News Service) In this Money Metals Midweek Memo, host Mike Maharrey cautions listeners against confusing market symptoms with the underlying illness. A headline-grabbing price spike seldom tells the whole story.
The recent, rapid climb in both gold and silver is better understood as the result of a debt-burdened economy, a Federal Reserve signaling more easing despite persistent inflation, and—most crucially for silver—a shortage of deliverable metal that has intensified into a short squeeze and exposed fragile links across the global trading system.
This perspective situates the week’s moves within a longer trend. Gold’s bull market has been underway for well over 18 months.
Policy choices that prioritize debt accommodation over price stability, together with tight physical markets, are not episodic catalysts but chronic forces.
Investors who focus on each day’s tape risk treating heartburn when the patient is showing signs of a cardiac event.
Gold’s Momentum and the Policy Backdrop
Gold showed how swiftly sentiment can flip in a structurally bullish environment.
After dipping below $4,000 per ounce last Friday, it rebounded above $4,000 on Monday and, by showtime, was trading just over $4,200 per ounce. December futures printed $4,235. The speed of the rebound implies that $4,000 is behaving as near-term support within a trend that has advanced for more than a year and a half.
Maharrey underscores the macro driver.
Federal Reserve Chair Jerome Powell has effectively teed up another rate cut this month. The stance is striking given ongoing inflation, but it makes sense in a “debt-riddled” economy that cannot function in a normal-rate regime.
Prioritizing growth and debt service over price discipline compresses real yields and lowers the opportunity cost of holding non-yielding monetary assets. That setup historically supports gold.
Institutional targets reflect this shift. Goldman Sachs raised its 2026 gold target to $4,900 per ounce, while Bank of America moved to $5,000.
Wheaton Precious Metals CEO Randy Smallwood told Bloomberg he is confident gold will top $5,000 within the next year and could reach $10,000 by 2030.
Not long ago, such numbers were derided as fringe.
Today, they appear in mainstream models.
Silver’s Breakout: Technicals Meet Tightness
Silver’s move is even more revealing.
At recording, it traded at $52.83 per ounce, threatening $53. On the charts, silver has broken out of a classic cup-and-handle formation on a secular timeframe. Historically, that pattern often marks the beginning of a sustained advance rather than its conclusion.
Corrections will come—they always do—but within this configuration, the dominant impulse remains higher.
Relative valuation reinforces the message.
The gold–silver ratio sits near 80:1 versus a modern-era average around 60:1, implying silver remains inexpensive relative to gold. In past cycles, the ratio has snapped back toward the mean quickly, especially late in gold bull markets.
Maharrey stresses that markets never move in straight lines and that down days can be violent. In a structure-driven market, however, pullbacks tend to be opportunities rather than verdicts.
London’s Stress Test and the Price of Scarcity
The most telling evidence for silver is not on a chart but in the market’s plumbing.
London spot surged to roughly a $3-per-ounce premium over New York futures, an inversion that appears to invite arbitrage but instead reveals how thin deliverable inventory has become. Overnight borrowing costs for silver spiked to well over 100 percent annualized, and London’s bid–ask widened from roughly three cents to well over twenty cents per ounce.
Those are not the hallmarks of a well-lubricated market; they are flares of illiquidity.
The scramble to relieve pressure has been dramatic.
Traders reportedly booked cargo ships to move bars from New York to London to capture the premium—a tactic common with gold but unusual for bulky silver due to cost. The urgency reflects a deeper constraint.
Much metal in London vaults is already encumbered by ETFs and other obligations. The uncommitted “free float” has shrunk from a peak near 850 million ounces to roughly 200 million ounces, a 75 percent decline.
With buffers that thin, small shifts in demand or logistics can produce outsized price effects.
India’s Frenzy and a Global Picture
If London shows the strain, India shows the spark.
Long linked with gold, India is nevertheless the world’s top silver consumer, and demand has turned frenetic. Shelves are empty, mints run overtime, and refiners in Canada, Australia, and Vietnam report backlogs. Investment vehicles have at times halted new inflows, citing a lack of metal, while others continue to accept funds, raising obvious sourcing questions.
Pressure intensified as Indian buyers shifted from Hong Kong to London during China’s Golden Week in early October, adding stress to an already creaking hub.
The most unsettling signal is the gap between India’s MCX silver futures and the street price. Futures have traded as much as ₹20,000 per kilogram below on-the-ground prices. That is not routine backwardation; it is a stress event indicating that someone cannot deliver metal.
Stocks in MCX vaults are thin enough that even a fraction of contract holders standing for delivery could strain supply.
To illustrate the scramble, Money Metals Exchange arranged a large shipment of 1,000-ounce bars from the U.S. to India via Dubai, and CEO Stefan Gleason suggested such shipments might occur daily for a time.
Structural Deficits and the Long Arc
This is not merely an Indian drama or a London logistics story. It is the latest expression of a multi-year global imbalance.
The silver market posted a 148.9-million-ounce structural deficit in 2024, its fourth consecutive shortfall. Over four years, the cumulative deficit reached 678 million ounces, roughly the equivalent of 10 months of 2024 mine supply.
The Silver Institute projects a fifth straight deficit this year.
When miners cannot produce enough to satisfy industrial users and investors, the gap is bridged by drawing down above-ground stocks—bars in vaults, coins in safes, inventory on someone else’s balance sheet.
Prices must rise to coax those ounces back into circulation.
Maharrey’s diagnosis counsels steadiness on down days and respect for structure on up days.
Dips remain buying opportunities in both metals, particularly where premiums are favorable.
For building exposure, he points to cost-effective routes such as random-design silver rounds and pre-1965 U.S. 90 percent “junk silver.”
He also notes growing interest in portfolio frameworks that allocate meaningfully to gold—referencing commentary that contemplated a 60/20 mix with 20 percent in gold—as investors reconsider how to hedge a world defined by high debt and activist policy.
In that light, institutional forecasts of $4,900 and $5,000 for 2026, and Smallwood’s confidence in $5,000 within a year and even $10,000 by 2030, look less like provocation and more like plausible waypoints on a path the market may already be walking.
