As of today, silver has reached $120 in an unprecedented run. If Trump-like wording were used, silver is surging like never before. 

There were many factors behind the rally, such as rising gold demand (due to high correlation), loss of trust in the economic and fiat system, rising debt and fiscal risks around the globe, high trade uncertainty, rising geopolitical risks, and high industrial demand from high-tech and clean energy investments. Most investors expected a silver rally, and we also mentioned a possible rally many times in 2024 and 2025, but what is happening here cannot be explained by these factors or expectations alone. Silver is rising due to a pure short squeeze and a massive FOMO effect. 

Gold/Silver Ratio 

Gold is rallying as if there is no tomorrow, yet the gold/silver ratio has fallen below minus two standard deviations. This has happened only twice before in the modern economic era: first in 1980 and second in 2011, when both gold and silver made long-term tops before falling for years afterward. Some might argue it is wrong to view the ratio through a regression trend instead of horizontally, but the gold/silver ratio has been in an upward trend since the early Middle Ages. 

(Silver Monthly Percentage Change) 

Silver rose 63% in January in an altcoin-like move, and yes, it is not normal in any way. This happened only once before, in 1980 with a 69% surge; three months later, silver fell 62% in a single month. The 2009 and 2011 rallies saw no more than 28% in a month. 

(Silver ETF Holdings, COT- Managed Money) 

Since December, both managed money positions in the COT report (which represent mostly hedge funds) and ETF holdings of silver have been falling. It could be that smart money is using this surge to take profits while retail investors go long. This does not mean a fall is imminent, but the price is at a level where smart money has started to reduce exposure to risk. 

(XAGUSD – Logarithmic) 

The level of 50 was very important for silver. After the breakout, a rally was expected. Our view was that it would reach 90 by the third quarter after the breakout, but instead silver rose to 120 in just three months. The biggest upward pressure has come from China, and a significant portion of it was from small investors. Silver has now reached the upper line of the long-term logarithmic trend channel that started in the early 2000s. It is hard to determine where the top will be during rallies driven by a combination of short squeeze and FOMO. But two things are clear: this move is neither normal nor sustainable, and smart money is taking profits.