If You Thought Gold Was In A Bull Market Already, Wait Until You See What Happens Now That Silver Has Joined The Gold Bull Market
The risk-on trade is actually a perfect way to describe when investors jump into Wall Street stocks. While they are trading at historically high PE ratios and CEOs are unable to give forward guidance on the health of their businesses due to economic uncertainty.
The risk-off trade is when investors focus on buying bonds which are deemed to be risk-free. Nothing could be further from the truth as there is a massive supply of US debt that will only get worse with Trump’s big spending bill and the cost of servicing the debt. With so much supply the question becomes who is going to support that house of cards and keep it from falling in on itself? The buyer of last resort will be needed as the bond vigilantes are nervous.
Whether I look at the Wall Street stocks and the US debt, all I can see is remarkable risk. On the other hand, the riskiest situation for investors is to not have enough exposure to gold and gold stocks.
Key reasons that I am convinced we are still in the very earliest part of a long-term bull market for gold is that we haven’t really seen the gold stocks join the party, nor have we seen silver get in the game either. This is all changing.
Until recently, if gold rallied the majors and some of the smaller companies down the gold stock food chain would have positive moves. But, on days when gold was down the enthusiasm to sell was more powerful than the buying on the up days.
The gold rally above $2000 started in late 2023, since then gold has been making a series of record highs in 2024 and 2025. During the same timeframe, silver started from a base around half its all-time high and has also rallied but at its current price around $36, it still has a long way to go to reach its record highs like gold.
I’m always looking for inflection points and I am convinced we are in one now based on what I am seeing of late in the gold stocks and silver.
Lately, gold stocks are moving up with more enthusiasm on days when gold is up and instead of seeing red across my screen in the gold stocks on days when gold is down, there are actually a healthy number of gold stocks in the green. What this tells me is that the gold stocks have entered the gold bull market.
Ever since the Hunt brothers tried to corner the silver market, silver has reached $50 a couple of times and has actually not spent much time above $35. The recent breakout above $35 is very bullish for the price of silver. I can see that silver going over $40 is going to happen this year and it will likely take a run at its record highs in 2025.
Although I hear many silver bulls talk about how out of whack the gold-to-silver ratio is, I don’t pay much attention to that indicator. What I think are much more important are the tremendously bullish arguments for silver.
In addition to being a monetary metal, it also has impressive demand coming on the industrial side for its use in solar panels. That demand has put silver in a physical deficit for the past few years, to the tune of around 1 year's annual supply. The deficit is around 200 million ounces per year, which is approximately 25% of one year of physical supply from mining.
This quote from Elon Musk is a good one when you consider silver demand from solar panels. Elon Musk: “My prediction is that long-term, 90% or more of all power on Earth will be solar panels with batteries.” If he truly believes that, which I think he does, he may want to think about getting into silver mining.
If the demand keeps growing from solar panels and silver becomes more important as a monetary metal, it can easily blast past its record high and make a run at triple digits. Which is exactly what I think is going to happen over the next few years.
The fact that silver is not already making record highs, while gold is, tells me that it hasn’t yet joined the gold bull market party. This recent breakout is a crucial one as I think it is the indicator that I have been waiting to see, telling me that silver is finally joining the gold bull market party.
There aren’t a lot of great silver companies for investors to choose from, so I can see them primed for explosive moves to the upside.
During the 2001 to 2011 gold bull market, silver and other metals also had tremendous runs in what was the greatest metals bull market ever. The one we are currently in has even better fundamentals.
Gold, silver and other metals have gone through decades of underinvestment into their respective supply chains. Which is why the majors are struggling to increase production and replace their old mines with new ones. There aren’t enough development projects to help the supply chains with high-quality projects and the explorers don’t have nearly enough important discoveries to help the broken supply chains. The broken supply chains are going to stay that way for many years into the future.
Even with gold making a series of record highs, global production has peaked and it hasn’t incentivized investment in a significant way into new mine development or exploration.
One doesn’t need to be an adept trendspotter to see that the gold supply chain is broken from production to exploration. Just look at the gold production and the dearth of high-quality gold development projects and explorers with important discoveries.
These factors without a doubt suggest that the broken gold supply chain is going to stay that way for many years.
It truly is a no-brainer trade to be picking up gold miners, one doesn’t even really need to be overly discerning between high-cost and low-cost gold miners, they are all making money hand over fist.
The junior gold miners, gold mine developers with high-quality projects and explorers with important discoveries are the best bang for your buck and are offering tremendous value propositions. They are still trading as if gold was around half its current price.
None of the gold stocks, even the best in breed major gold miners are pricing in much higher gold prices. The sentiment toward gold stocks is still very much subdued but I can see by the recent action that generalist investors are starting to position themselves. Which is a brilliant move.
Gold is the perfect antidote to the virus that is the Death Spiral of Debt in America and throughout the world.
Debt has reached such unsustainable levels that the cost of servicing the debt is a snowball going down a mountain that isn’t going to stop, it will only get bigger and gain speed. Trump is a debt and deficit junkie as are his GOP cronies controlling the House and Senate. They are no different than the Biden administration and the Democrats.
Washington is full of debt and spending junkies on the left and right. It doesn’t matter who is in the White House or leading the House and Senate. They are all junkies.
Not only does Trump’s big spending bill not slash spending, it increases spending, surprise, surprise, not surprised.
Trump also wants to increase the troublesome real stagflation that has been building since Biden and the Democrats were leading the spending and debt parade. They can fool some of the people some of the time with their phony government statistics that continuously understate inflation and overstate growth, but not all of the people all of the time. Especially those outside America that clearly see the ticking debt time bomb.
The smoke and mirrors government statistics don’t hide the truth from consumers and CEOs. Which is why the sentiment is negative and they are all worried about a recession and higher inflation. Stagflation will be phenomenally bullish for gold, silver, and the stocks in those metals.
Gold certainly didn’t need problematic stagflation, it was heading higher due to the Death Spiral of Debt that Bush Jr., Obama, Trump 1.0, Biden and Trump 2.0 created. Those four presidents (the Four Horseman of the Debt Apocalypse) are responsible for creating around two-thirds of the $37 trillion national debt. You see what I mean? It doesn’t matter which side of the political divide they are on, they are all spending and debt junkies.
Gold has tremendous supply and demand fundamentals, and the same can be said for silver. In fact, the fundamentals are so powerful that the current bull market in gold, that now has silver joining the party, is going to last for many years into the future, decades most likely.
Until the gold supply chain gains strength or politicians kick their spending and debt addictions, it will keep going. I don’t see nearly enough money coming into investing to fix the supply chains and there are practically zero politicians in America, or the G7, that have the guts to do what is needed to fix the Death Spiral of Debt.
Silver has a fantastic one-two punch combination as a monetary metal and its importance in solar panels is going to drive it higher by multiples of its current price.
Combined with the long-term supply scenario in which major silver miners struggle to increase production and replace old mines with new ones, and not enough high-quality silver development projects, and too few explorers with important discoveries is extremely bullish for silver. Just like gold, the silver supply chain is broken beyond repair for decades into the future.
The reason that I don’t pay attention to the gold-to-silver ratio is because I think it is not important and certainly isn’t what will drive the silver bull. Sure in a silver bull market the gold-to-silver ratio will narrow, but the gap narrowing has nothing to do with the true reason it is moving. Which is the broken supply chain and the powerful demand from solar panels and as a monetary metal.
Plenty of silver bulls think the gap will close dramatically, I don’t agree because gold is going to be moving up as well, so it will be a moving target. And gold has a pretty significant head start as it has been making a series of record highs during 2024 and 2025.
I certainly believe that silver is way too far below its record highs and is going to take a run at the record highs and triple digits in the short-term. This will be fantastic for well-run major silver miners, silver mine developers with high-quality projects and explorers with important discoveries.
Gold and silver are heading much higher, to levels that will shock effectively every generalist investor. And they will be blindsided by the bull market in the gold and silver stocks.
All the best,
Allan Barry Laboucan
