Silver and Gold Targets
My silver target for this cycle top is $200; gold is $7,000. I am not momentum driven - I work the opposite way, raising targets when my analysis, sentiment, and setup line up, not when price runs.
Some analysts, including Michael Oliver, see $300 to $500 silver this cycle, maybe this year. That is not crazy, and the setup could well exceed my $200. My own analysis just cannot get there, so I stay at $200.
The Correction I Called
In my January letter, out in the first 10 days of January, I raised the silver target to 125. The metal then went more parabolic, hitting 122. In a podcast that week, with silver around 117, I said the move was up on stilts, run very fast, not the end but ready for a sharp correction soon - maybe 35% in silver, 20% or a bit more in gold. Within a few days it topped and rolled over. I did not expect 50%, and silver ultimately fell to 55 or 56, which I did not see coming. But I was sure speculative fever had built up and would reverse as fast as it rose.
Silver surged from roughly $47 to $122 in two and a half months. That pace is ridiculous. Everyone who had questioned silver was suddenly all in and bullish. The critics who mocked my earlier calls - when silver was 25 and 30 and I said it was going to 75, then higher - were now believers at 120. When the doubters become believers, the move cannot continue for long. Micron (MU) did a similar vertical move, shorter and smaller, and it too had to consolidate. As a contrarian it was easy to say the upside was overdone, at least short term.
I expected the correction to last a few weeks or a month. It took six months. Both gold and silver have now bottomed from that long consolidation and are starting the next leg up. I raised the silver target to 180 and gold to 6,800 in late January or early February - while I was still expecting the correction - then to 200 silver and 7,000 gold in May.
A parabolic move like that would normally make me wonder if it was the top. This time there was no doubt it was not the end. Through the whole six-month consolidation I stayed one of the few true bulls on silver, while others called for 50, 40, and lower. I am not dogmatic; a vertical market can stay bullish while still punishing late buyers with brutal volatility.
Why the Metals Have More Upside
The dollar has not even begun its next leg down. My DXY target is the low 80s - 82 or 83, raised from 80 a couple of years back. The dollar fell from 115 to 95 or 96, bounced to 101, and everyone then called for 110 or a return to prior highs. That bounce was a counter-trend rally inside a downtrend, a long one-year consolidation. Now it is rolling over; the next stop is probably 90 on the way to 82 or 83. A falling dollar gives silver and gold plenty more upside.
I am a bull on bonds while everyone else is bearish. Lower interest rates will help silver and gold.
The Iran conflict played a big role over the last six months and probably made me underestimate how long the consolidation would run. The trade in silver and gold became a risk-off trade. People assume gold does well in war, but gold and silver had been in big bull markets that traders loved, so during the fear they cut those positions and stayed with equities instead. The market may have known the war was coming, front-ran it as a final push, and then corrected once the "buy gold because of war" news arrived - by which point it was too late.
The Bond Signal and the Coming Bust
Bessent's announcement last week drew heavy skepticism and criticism, but I think it set the bottom. A reversal was coming either way; his move roughly coincided with it and may have sped it up a little.
The bond market is beginning what I expect to be a very big bull market to lower yields than 2020. Back then the 10-year fell to 40 basis points; this time I think it reaches zero - not for good reasons, because we are heading into a global bust next year. The bond bull market starts gradually, speeds up next year, and ends in a big fall in rates and a big rise in bond prices.
The driver will be all central banks, not just foreign ones. If we get a global bust like October 2008 - when GE Credit was about to go under, meaning GE (GE) itself was about to go under - the response is global. In 2008 that fear pulled us back from the cliff. This time, because of massive leverage on both the debt side and the derivative side, we go over the cliff, or at least it looks that way. That triggers a deer-in-headlights moment where every central bank floods the system with money, because nothing else moves fast enough to stop a free fall in the global financial system.
I expect 20 trillion in new QE from the Fed, maybe more, and about 50 trillion globally in new money printing. Money printing means the Fed buys every Treasury and government bond in sight and credits banks with money. I am not endorsing it; it is the inevitable result of decades of policy.
The hard part is timing. You cannot forecast the exact snowflake that starts an avalanche, but you can tell when the snow mass shifts from stable to unstable equilibrium. Bond markets - and probably all markets - are now in unstable equilibrium. This matches the Austrian view, what Mises called the crack-up boom, where people rush into real assets instead of paper.
One More Cycle Before the Collapse
Many people are linear and think we are already in the commodity boom, pushing out big numbers now. I expect a run into the top, with the top in the market and the economy probably this year, though it could be months away. The real commodity boom comes next cycle, from all that money printing. Silver could fall 75% from 200 back to 50, then run from 50 to 1,000 in the early 2030s.
This is not the end-of-the-financial-system event or great reset, because the printing press still works and next year is a deflationary bust. A bust brings deflation, which gives central banks unlimited room to print. So there is one more cycle. My difference with the Austrians is timing - as long as they have the printing press, they can kick the can one more time.
Next year will be nasty: I am calling for an 80% bear market. I think we put in a secular top in stocks this year. My S&P (SPX) target is 10,000, but wherever it tops, a secular top means the next cycle falls far short of it. An 80% drop from 10,000 to 2,000 could quadruple back to 8,000 and still stay well below this cycle's high. That secular top means the whole long cycle since the Great Depression is in its last stage, with just one more cycle left.
The mid-2030s is where all of this ends, in a collapse - the end of a Ponzi scheme that has run 80 or 90 years. The real danger is believing the commodity boom is now, when the monetary surge comes later. A brutal drawdown may come before the opportunity, so hold liquidity and patience.
