With just days left in trading this year, the S&P 500 SPX Index is proving it’s not done with its record-breaking performance yet, perhaps providing some inspiration for 2026.
However, another asset class is vying to steal its limelight. As 2025 draws to a close, all eyes are on silver, and the precious metals space seems to be in an unstoppable run right now. Industrial metals are also surging.
The rise in silver (up about 40% this month on a continuous futures contract SI00 basis) and gains in other precious and industrial metals prompted UBS strategists to warn clients this week that the rally looked “unhinged.”
our phone call of the day Peter Krauth, author of “The Great Silver Bull Market,” says silver’s so-called “mania phase” isn’t far away, and he lays out his case for sticking with his long-term $300/ounce forecast.
Krause, who has 20 years of experience in resource markets and is editor of the Silver Stock Investor investment newsletter, made the comments in a recent interview with Living Your Greatness Podcast founder and host Ben Mumme.
He made some accurate predictions, such as in 2023, when silver prices were hovering around $22 and Krause warned at a metals investor forum that supply was short and demand was surging.
Krauth told Mumme that silver’s surge this year (futures are up 154%) is driven by structural deficit fundamentals. He said he began conducting research in 2024, when he had been paying close attention to this macro factor for three years, to determine why prices were stagnant.
He observed that silver inventories on large exchanges in London, New York, Shanghai and China have been declining from early 2021 until around 2024. In these places, consumers can buy and take delivery from long-term futures contracts when they expire, without forcing miners to bring more product to the market, he said.
He estimated at the time that it would take 12 to 18 months to fully deplete the inventory of deliverable silver. “I think the market has accepted this starting about a year ago, especially at the beginning of this year,” Krause said.
The veteran said the gold/silver ratio is crucial to prices and should start to decline. The ratio is the price of gold divided by the price of silver, and it tells investors how many ounces of silver it takes to purchase one ounce of gold. He predicted the ratio would peak at 104 around April and currently stands at 68, but will fall to 15.
He also predicted a “silver mania phase” of $300 per ounce, explaining that this was calculated by dividing the gold target of $4,500 per ounce (roughly where it is now) by the gold/silver ratio of 15.
Unlike others, Kraus believes it will be “a few years” before $300 is reached, but he guarantees that during the “mania” phase, the gold-silver ratio will fall.
While strong industrial demand and supply deficits (particularly for silver), a weak U.S. dollar, worries about high government deficits, inflation and geopolitical concerns have fueled a frenzy for these assets, Krause said investors may not truly understand the supply-demand imbalance.
“If you add up the deficits over the past five years, including this year, we are short about 800 million ounces, which is almost a full year of mine supply,” he said. The Silver Institute, the international industry association, predicts continued deficits over the next five years, and Kraus expects prices to reach record highs during that period.
Krause said solar panel manufacturers are big consumers of silver, and newer, more efficient technologies use more silver. Coupled with silver investment demand from thematic exchange-traded funds, he said silver investment demand this year is expected to be close to 200 million ounces, according to the Silver Institute, compared with the previous forecast of 70 million ounces.
He said silver’s breakout of $50 an ounce in October would serve as a bottom for the precious metal. “I do think $800 to $1,000 an ounce [predictions for silver] It gets pretty crazy,” although he added that “nothing is impossible. “
“Silver is in a very good position. In the market, everything is supporting it. That doesn’t mean it can’t correct. That wouldn’t surprise me, at least in the short term. But all the factors are in place to support this over the longer term,” he said.
The Dow Jones Industrial Average and S&P 500 SPX are holding steady near their highs, while the precious metals sector, led by silver SI00 and gold GC00, is set to break more records, with palladium PA00 and platinum PL00 also surging.
|
Key asset performance |
final |
5 days |
1 meter |
YTD |
1 year |
|
S&P 500 Index |
6932.05 |
3.13% |
1.75% |
17.86% |
14.77% |
|
Nasdaq Composite Index |
23,613.31 |
4.05% |
1.72% |
22.28% |
17.88% |
|
10-Year Treasury Bond |
4.155 |
3.00 |
15.60 |
-42.10 |
-42.70 |
|
gold |
4539.7 |
4.03% |
8.30% |
72.00% |
71.10% |
|
Oil |
58.49 |
3.45% |
0.02% |
-18.62% |
-16.75% |
|
Data: Market Watch. Changes in Treasury yields in basis points |
|||||
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