January 7, 2026

 

THE EXPLOSIVE RALLY IN SILVER – IS IT OVER?

 

January 7, 2026

 

Hello everyone

Silver rocketed up to around $79 per ounce in 2025, which amounted to almost a 170% move, breaking the 45-year-old resistance level of $50.

But what is fuelling this strong rally in silver?

Let’s dig deeper.

 

Persistent structural supply deficit:

Global silver demand in 2025 was estimated at 94 million ounces, while supply was only 850 million ounces, leaving a 110 million oz annual deficit.  With over 70% of silver mined as a by-product, supply cannot respond quickly to higher prices.

 

Record industrial demand:

Strong demand from solar panels, EV’s, electronics, 5G, the military, space industries, and data centres, along with recent usages in AI. Every advanced Tomahawk missile needs about 500 ounces of silver, which is roughly 15 kg.  If the U.S. wants to produce 1000 of them, it will require about 15 tonnes of silver for that purpose alone.  Plus, recent news about China putting constraints on silver exports. (China, alongside Mexico and Peru, is one of the top silver producers).

 

Strong ETF and investment inflows:

Silver-backed ETFs absorbed approximately 95 million ounces in net inflows in 2025.

 

Tight inventories and market stress:

COMEX and London vault inventories are at multi-year lows.

Macro:

Markets are pricing future Fed rate cuts, driving real yields lower and weakening the USD. Gold’s breakout has reinforced rotational flows into silver, compressing the gold-silver ratio.

 

Silver Now Designated a Critical Mineral by the US Government:

The U.S. has listed silver in its Critical Minerals list, which identifies commodities that are essential to the U.S. economy and national security.  Rationale – high usage in AI and its AI race with China.

 

Technical Analysis:

Combining a symmetrical triangle with Fib. Extensions, we can paint a picture of where silver could be heading. 

80 is the first target, which was made late in 2025.

The next target would be around 125 and then 180.

It could be argued that we may touch the 125 area around the first quarter of 2026, and then a major consolidation may take place, which would see silver rest until around year-end or early into 2027.
Notably, the Gold/Silver Ratio dropped from over 100 to 57.  It could reach 30-20

Risks:

A pause in rate cuts may slow down the metals rally.  The markets – being forward-looking – are already pricing in the expected cuts in 2026.

A dark cloud could emerge over the global economy if signs of a recession become evident.  This would certainly impact industries that use silver.

 

 

 

SOMETHING TO THINK ABOUT

John Newell (President & CEO Golden Sky Minerals Corp.)

The Cyclical Battle: Stocks vs. Gold

This chart tells a story most investors rarely look at, yet it has shaped returns for decades.

What you’re seeing is the long-term ratio between the S&P 500 and gold. When the line rises, stocks are outperforming gold. When it falls, gold is winning. Simple concept, but powerful when viewed over long periods instead of short market cycles.

Over nearly sixty years, leadership between stocks and gold has rotated in long, persistent waves. These shifts are structural, not tactical, and they often last close to a decade.

From the late 1960s into 1980s, gold dominated as inflation and monetary stress pushed investors toward hard assets. From 1980 to 2000, stocks took over during the great disinflation and tech boom. That leadership flipped again from 2000 to 2011 as financial crises and aggressive monetary policy drove another gold cycle. From 2011 to around 2020, equities reclaimed leadership.

What matters isn’t the dates. It’s the rhythm.
The most interesting part of the chart is the similarity between past cycles and the current setup. The circled areas highlight nearly identical topping patterns in the ratio. In both cases, the ratio peaked, corrected, attempted to recover, and then failed. These repeating structures, often called fractals, reflect human behavior more than math.

In the current cycle, the ratio rallied into a key Fibonacci retracement near the .618 level, a zone where countertrend rallies often fail. Since then, the ratio has rolled over again, suggesting gold is beginning another period of relative outperformance.

This does not require stocks to collapse. Gold doesn’t need chaos to outperform. It simply needs to lose less or rise more over time. Historically, that has been enough to drive meaningful capital rotation.

Most portfolios today are still positioned for the last decade, not the next one. Yet 2025 has already delivered an early signal, with gold and silver outperforming broad equity markets and mining margins expanding sharply.

I’ve watched this ratio for a long time. It doesn’t flash signals often. But when it does, they tend to matter.

Markets rotate. They always have. This chart suggests leadership may be shifting again.

 

 

 

Cheers

Jacquie