The Core Price Targets for Metals
My central forecast calls for silver to reach $200 and gold to reach $7,000. These targets were raised again in early June. They represent my best guess of where prices are heading, but I want to be clear that prices can shoot right through them — a target is not a ceiling.
There are credible analysts, such as Michael Oliver, calling for silver at $300 to $500 this summer or this year. My own work cannot get me to those numbers, but I don't think he is crazy. He has reasons for his view, and we are in a very historic period, so I would not rule it out. Rather than fighting over exact figures, I prefer to anchor on percentages, because whatever level we ultimately reach, the same kind of percentage moves will apply on the downside.
How the Metals Get There
We had a huge run-up in December–January that carved out a top, and we have spent the last several months consolidating that move in several steps. The lows seen in the most recent week or so should mark the lows for this period. From here, we come out of that whole consolidation and, I believe, do so in a very steep way through the summer and into the fall.
That months-long consolidation matters psychologically. There was a lot of speculation, excitement, and momentum in metals, and then several months of going the other way hit a lot of people hard. That damage rebuilds a "wall of worry" — skepticism that the market can climb. When sentiment is reset this way, the rally can overcome that skepticism and run very hot. Sentiment damage during consolidation often resets positioning before larger moves begin. Retail typically chases headlines only after momentum returns, while institutions accumulate during the boredom — meaning the real risk for many investors is not volatility but being under-exposed when leadership rotates.
The Miners Should Outperform
Miners should outperform the metals themselves. The metals moves alone are large — more than a double on silver and a big run-up on gold — and the miners should beat that. My specific targets are:
- SILJ: 90
- SIL: 220
- GDX: 180
- GDXJ: 250
Run the numbers and the gold miners deliver well over a double, while the silver miners deliver a triple or more. In effect, the thesis is not merely higher metal prices but a phase in which miners compress years of gains into a single cycle.
What the Metals Do in the Bust
Does gold crater 50% in the bust if it reaches $7,000? It could fall close to that much — somewhere between 40% and 50% is likely. Does silver fall more? Yes. Because silver is so economic and far more volatile, a decline of 70% or 80% is not impossible. In practical terms, that could mean silver dropping from a few hundred dollars down into roughly the $50–$75 range.
The deeper point is that explosive upside and brutal downside can coexist in the same cycle. Higher prices do not protect you from drawdowns. Investors should care less about headline terminal targets and more about exit discipline and position sizing — the percentage reversals reveal more about system fragility than the price targets do.
The Formula for the Bust: Fragility + Leverage + Policy Error
The economy still carries fragility left over from the pandemic. Underneath the surface there are haves and have-nots — not only among consumers but among businesses. Many are getting by but are not strong.
My formula for how a bust arrives, viewed top-down, is: fragility + leverage + central bank policy error. The policy error is that officials don't recognize how weak things truly are underneath. They remain worried about inflation, so they are not easing. At the same time, the effort to pull money out of the system and normalize the balance sheet runs in exactly the wrong direction when the economy actually needs the opposite. Those three forces in combination produce the bust. What specifically triggers it is hard to say.
What Would Invalidate the Thesis
What macro conditions would make me abandon the melt-up/bust thesis? The thesis would be invalidated if the Fed and other central banks reacted sooner to economic softness, and if inflation came down enough that they felt free to react more aggressively. If they moved quickly, they might head off the worst — we might get only a lesser recession, and they might prevent the leveraged unwind, which otherwise happens very fast once they misstep.
So if you see the Fed not misstepping and reacting promptly, the bust might be averted. But you would also need to see the same correct response overseas, because the more vulnerable area this time is the banking system abroad.
Why the Trigger May Come From Overseas
The biggest market risk rarely appears where regulators are already looking; leverage only becomes visible after liquidity disappears, not before. The United States got "some religion" in 2008–09 and cleaned up its banks' balance sheets, so US banks are relatively stronger now. But elsewhere the picture is worse:
- Canada is repeating America's mistakes. It was not leveraged back in 2008–09, but it is far more leveraged now.
- China is a wild card.
- Japan is the real wild card, especially if inflation breaks out there — they have monetized their situation enormously.
- Europe's banks I still consider more vulnerable.
For these reasons the next shock could be triggered more from overseas. But it will be worldwide, and the US will certainly be a big part of it.
Commodities: A Demand Shock With No Quick Fix
In the melt-up, commodities go far beyond metals. Natural gas could run from roughly $3 to $50. Oil could go from 30 to 500. Steel will go through the roof. We are likely to see something not witnessed in 45 to 50 years — commodity demand far outstripping the ability to supply it, with no quick solution available.
Macro Will Trump the Balance-Sheet Plans
The historic balance-sheet expansion of recent years will turn out to be a nightmare for anyone determined to shrink the balance sheet. The macro environment will override those plans, because we are in the final decade of a supercycle.
I define a supercycle as the period between two depressions. The 1930s were the last depression; I expect the next one in the mid-2030s. The bust I'm describing now may sound like a depression, but it will be relatively short because we still have a printing press — it is a precursor, not the depression itself. Taken to its full extension, though, interest rates will track inflation. With double-digit inflation moving toward 20% or 25%, T-bills would sit at those levels, and the long bond — which peaked at 15% in 1980 — would this time probably peak closer to 20%. You cannot solve that equation: we already cannot service our debt at 5% with what we have now.
Debt Versus Arithmetic
The real conflict is not inflation versus growth, but debt versus arithmetic. If the debt rises another 50% from here and interest rates climb from 5% to 20%, there is no equation — it is "lights out."
That is why this is the end of a supercycle. Sometime in the early-to-mid 2030s — possibly with the Fed effectively out of the picture before the end of this decade, but certainly by early next decade — there will be no printing press and no solution. The only thing that has kept the system going is constantly monetizing problems by issuing more money. But in a hyperinflationary period, printing money is pouring gasoline on a roaring fire: inflation rises faster than you can pump money in, producing a negative effect rather than relief. At that point there is no wherewithal to service the debt.
I describe this primarily in US terms, but it is a worldwide story — the end of a Ponzi scheme that began after World War II. Almost every successive cycle has pushed inflation and debt to greater excesses, requiring bigger tightenings, overshooting into a bigger downturn, and then forcing officials to crank money back out to escape it. Like a buggy whip, the swings grow more volatile each time. We are now at the end of that process, where it spins out of control with nothing that can be done — the moment in a Ponzi scheme when everyone discovers there is nothing actually there.
The uncomfortable question is not whether money can be created, but whether confidence survives once money creation stops solving the problem. In a late-cycle world, preserving purchasing power — not chasing nominal returns — becomes the real contest.
The Bust: "2008 on Steroids"
The bust scenario is "2008 on steroids." It is hard to see right now, and I could be wrong, but the whole thesis rests on debt. Debt today is so far beyond 2008. We were highly leveraged in 2008 — that is what produced 2008–09 — and we are far beyond that now.
Consider the Fed balance sheet alone: it was $875 billion going into October 2008, ballooned to $9 trillion in the pandemic, and is back down to roughly six or seven trillion. Global debt is far beyond anything before; government debt grows day by day, and we now cross trillions where we used to deal in millions. Much of the world's leverage is sovereign. I do not expect sovereign debt to default this cycle because of the printing press, but there is an enormous amount of non-sovereign debt as well.
Crucially, "leverage" here means more than debt. Debt is leverage on the economy, and derivatives are leverage on the markets. There is far more derivative exposure now than ever before. Derivatives enhance moves on the way up, but they take things down extremely fast on the way down. We saw how quickly conditions flipped from okay to not-okay in 2020, and how fast things unwound from October 2008 to March 2009. This unwind will be at least that fast and probably steeper.
Leverage is no longer confined to one sector — it sits simultaneously across sovereign debt, private credit, and market plumbing. Larger systems can absorb stress for longer, but they tend to adjust more violently when they finally do. Wealth protection is therefore less about predicting collapse and more about recognizing when stability itself has become expensive.
Why the Rescue Will Be Late, Not Absent
People object that the Fed or central banks "won't let that happen." But it is precisely because of 2008 and 2020 that they are now reluctant to go back. Powell has stated many times that they will not repeat past mistakes and will not do "QE infinity" ever again, and the balance-sheet-shrinking camp feels the same way.
The consequence is that they will be slow to react — reluctant until a genuine crisis forces their hand, by which point it is so late they must come in with both feet. It is not that they won't ease early; it's that getting to a right-sized policy is the problem. Something this outsized would require doing more than ever before, while the prevailing mindset is to do much less than ever before. That is a bad combination.
This is the contradiction few investors model: the belief that central banks can always rescue markets may be the most crowded trade of all, yet prior interventions actually make future interventions slower and politically harder. Support expectations rise while response speed declines. Portfolios built entirely around immediate-rescue assumptions can become unexpectedly exposed during liquidity gaps, and waiting for official intervention can become the most expensive decision of all.
What the Bust Looks Like on the Ground
Is this a blend of 2008, 2000, and the malaise of the 1970s — with unemployment and foreclosures spiking? On unemployment, I expect double digits. But I do not think it shoots to 20% like the brief 2020 spike, because the country faces a labor shortage, especially in skilled labor. Reaching double digits would still be very painful.
On output, I don't focus on GDP and don't have a precise number; I don't think it will be down double digits, though we could have a single quarter like that. The greater danger is to the financial system, which I think will be under the gun. Pension funds, for example, are loaded with private equity and private credit — instruments they embraced partly because those holdings don't get marked down the way public assets do.
Bailouts, Bail-Ins, and the Banking System
In the crisis, do authorities resort to bail-ins rather than bailouts? For the banks, I expect the FDIC will be funded with whatever it needs to cover its insurance liability. Beyond that $250,000 insured threshold, I doubt the US will use bail-ins. My guess is that all the money being created — including money created by the Treasury — will be deployed in every creative way possible to keep consumers alive and keep everyone afloat. So in this country, I don't expect bail-ins. There is, however, precedent for bail-ins in Europe, so they could happen over there.
When rates become politically impossible, the policy narrative usually changes before the policy actions do.
How Far the Markets Fall
Is this a 2000-style ~80% Nasdaq drop, or a 2008-style ~50% drop? I believe we could see something on the order of 80% — and this time not just in the Nasdaq, but across the markets.
When people ask which area will drop the most, the answer is that if the broad market is down 80%, you don't have to pick one; it will be across the board. This is reinforced by the fact that the same handful of mega-cap winners — the "Mag 10," or whatever label fits today — sit inside virtually every mutual fund, so it almost doesn't matter what you own.
That is the hidden trap: when everyone owns the same winners, diversification becomes a story investors tell themselves. Concentration risk hides inside products marketed as broad exposure. Financial stress rarely begins with GDP headlines — it emerges where leverage, illiquidity, and shared assumptions meet. The right question for anyone trying to protect wealth is whether their supposedly defensive assets are truly defensive, or simply assets that turn out to be correlated later than expected.
