The Current State of the Metals Market
Both gold and silver have entered bear-market territory, defined as being down more than 20% from their peaks. The damage in silver is especially severe: it has fallen roughly 50% from its all-time high of $125 down to around $62–$63 (the exact figure may shift by a dollar or so depending on the day). Gold, meanwhile, sits just over $4,000. This collapse is happening in real time, and sentiment across the precious metals space is extremely low.
Why Prices Are Falling: The Interest-Rate Narrative
The commonly cited cause for the price decline is the prospect of higher interest rates, which are in turn being driven by higher inflation. That inflation is being fueled by war and geopolitical tension, which has pushed oil prices up. Higher oil prices feed through into higher inflation, and the market now expects interest rates to rise. There is a near-certainty of rate increases in Europe and the UK, and almost certainly in the United States later this year — probably in December.
The logic that drives investors away from metals is the carry cost. When nominal interest rates rise, holders of gold and silver earn nothing on those assets and feel they might as well move into short-term deposits to earn a return instead. As a result, gold and silver have been sold as if inflation had suddenly become bullish for cash again.
That reasoning contains a contradiction that should make investors uncomfortable. The market is reacting to nominal rates while ignoring whether real purchasing power is actually improving. The official story holds that higher rates strengthen confidence, yet persistent inflation quietly taxes savers who hold conventional assets. It is worth noting a skeptical view of the official numbers as well: the latest US inflation figure of 4% — described as the highest in years — is arguably understated, since real inflation is likely higher than the official print.
Importantly, while political crises are traditionally viewed as potentially good for precious metals, there is little strong historical evidence supporting that link over a long career of observation. We are not in a 1945-type situation where people had to fill their pockets with gold to cross a border. So the weakness in metals may reflect positioning pressure more than any genuine collapse in long-term demand — and price weakness and thesis weakness are not always the same event.
The Rotation Into AI and Data Centers
A major force behind the selling is capital rotation. Investors have been pulling money out of gold, silver, silver miners, and gold miners to chase the fastest-moving assets — everything connected to data centers, silicon, and artificial intelligence. Almost daily over the past month or so, two or three stocks have surged 10–20% on the back of some story. This creates a fear-of-missing-out dynamic: investors who missed the last winner scramble to find the next one, feeling the pain of having passed on something that subsequently jumped 20%.
However, that AI sector now appears to be slowing. It had a very bad day recently, even though it bounced modestly afterward, suggesting that air may be coming out of the bubble. When investors abandon protection assets to chase momentum, the behavior may reveal urgency rather than conviction. Institutions often use that retail enthusiasm to quietly rebalance in the background. Retail celebrates headlines while underlying liquidity conditions tighten. This matters because concentrated gains can reverse far faster than diversified wealth compounds.
The SpaceX IPO and Liquidity Drain
A specific near-term factor is the SpaceX IPO, expected the day after this discussion (recorded June 11th). The amount of liquidity being sucked out of the stock market by this offering is, relative to the total size of the market, not large at all. Yet it still matters at the margin.
The numbers are striking: a roughly $75 billion issue has attracted around $250 billion in applications. That means people have likely raised about $250 billion in cash to participate. While $250 billion is small relative to the entire market, the timing is important — investors are selling stock to raise that cash at a moment when the market, and particularly the large mega-cap AI names, was already heavily overbought.
This creates a specific mechanic: sellers are trying to offload stock into an already overbought market, and other buyers are reluctant to step in, which is precisely why those stocks have been falling. The expectation is that once investors actually receive their SpaceX shares, conditions will settle down, and the money will probably head back toward where it came from. The ideal outcome would be for that capital to flow into gold or silver — but there is no evidence of that happening yet.
The broader lesson is that even small reallocations matter when positioning is crowded and valuations are stretched. An enormous pool of capital chasing a single narrative — on the order of $4 trillion — can distort pricing far beyond any headline number. Sentiment collapses often arrive before fundamentals deteriorate, and most portfolio damage comes from reacting late, not from being early. An old Wall Street maxim applies: never fight the tape, and the tape is going down. The same liquidity pattern has appeared before multiple past corrections, with enthusiasm peaking exactly when cash quietly leaves the broader market.
Why You'd Rather Buy Gold Higher Than Lower
A counterintuitive but important idea: it is preferable to be a buyer of gold at $4,400 than at $4,000. The reasoning is psychological and trend-based. At $4,400, you have the feeling that the price is now moving in the right direction. The ideal is not for gold to jump to $4,400 overnight, but to gradually grind upward until the pull to get in becomes irresistible.
This is described using the image of a "saucer" bottom. We are descending into the saucer, but we don't know if we're at the bottom yet — the low could be a bit further down, or we could be at it right now, or we could already be climbing the other side. There is no mathematical formula or chart that tells you exactly when you've reached the bottom; you can only develop a feeling for it.
The most expensive investment decisions are usually made by people who demand certainty before acting. Waiting for emotional confirmation often means paying materially higher prices later. Institutions accumulate into uncertainty precisely because they manage risk differently from retail investors who chase trend validation. Dollar-cost accumulation is less about prediction and more about surviving imperfect timing — and protecting purchasing power rarely feels comfortable at the moment of entry.
Practical Guidance for Stackers
For someone who steadily accumulates physical metal (a "stacker"), the current environment is a great time to keep buying little by little. By stacking slowly but surely, you are guaranteed to catch the bottom of the saucer wherever it turns out to be.
The advice differs by situation:
- If you already hold a substantial position and are at your personal peak allocation, don't go overweight right now. Wait to see if it goes a bit lower and add then. If it doesn't fall further, you're fine — you already own silver.
- If you hold no silver at all, definitely start buying now.
This is explicitly not a prediction that prices rise tomorrow — that is unknowable. It is a discipline-based approach.
The Futility of Timing the Perfect Bottom
Trying to buy the dip and time the market is both difficult and arguably the wrong mental framework. Dollar-cost averaging is better. A key insight: while there may not be new all-time lows, there are almost certainly going to be many, many more all-time highs. A concrete historical example illustrates the danger of waiting: when silver first broke above $50 and then dipped, many analysts predicted it would fall to $40. Waiting for that $40 entry would have been a mistake — silver never returned to that level. If silver is around $60 today and you wait for $50 to deploy everything, you may never get the chance.
Nobody ever buys at the exact bottom or sells everything at the exact top. The correct way to play the game is to put some in, and then put some more in. You might buy at 50, then 45, then 40, then 45, then 50, then 60, then 70, then 80. Yes, you'll be annoyed you didn't buy the whole lot at 40, and slightly annoyed you paid 60 for some when it's now 80 and you could have waited for 40. But the market rewards discipline far more often than it rewards precision.
This shifts the conversation from price prediction into behavioral risk management. Investors waiting for dramatic pullbacks often find the market offered only discomfort, not bargains. Wall Street sells the idea of timing because it feels intelligent, while compounding looks repetitive and boring. Yet missing exposure entirely can be far more damaging than imperfect entries.
The Silver Shortage and How Repricing Works
The all-time high of $125 is unlikely to be where silver stops. Some commentators are even printing price targets above the all-time high for this year. What can be stated with confidence is that we are in a genuine silver shortage. This is confirmed by the Silver Institute, which forecasts a larger deficit in 2026 than in 2025.
The crucial point is that this deficit has to come from somewhere. It cannot come from the mines, because they are not producing enough. It can only come from sellers — sellers of ETFs, sellers of physical bars and coins, or recycled silver. Every ounce on the planet has its price, and that price moves around according to how people feel.
A self-reinforcing dynamic emerges: to pull enough silver out to meet industrial demand, the price has to start moving higher. Once it does, the move becomes self-fulfilling because sellers continually raise their target sell prices. Someone willing to sell at 80 today will likely move their target to 85 as the price climbs, and then move it higher again as it approaches 85, because momentum itself changes how people think about their targets.
This produces an asymmetry in psychology. On the way down, people gradually lower their sell targets to roughly 10–20% above the present price. On the way up, they keep their target 10–20% above wherever the rising price currently sits. The implication is that silver genuinely has to rise to suck supply out for industrial needs.
The broader principle: a shortage only matters when sellers stop believing current prices are enough. Deficits do not automatically create rallies unless holders refuse to release supply. This creates a feedback loop that institutions watch closely, because psychology changes faster than production. Industrial demand will not negotiate with narratives forever. The real risk is not missing the exact low, but misunderstanding how repricing actually begins.
The Silver Miner Study: Analysts Are Too Cautious
A detailed study of silver mining stocks reveals a significant mispricing. As silver climbed from its low near $20 up to $120, the miners became enormously profitable. Even at $60 or $50 silver — well below the peak — these miners remain fantastically profitable. Yet many analysts were apparently not factoring this in, underpricing the stocks. When quarterly revenue results were released, the market was repeatedly surprised and prices jumped, on average about 10% over the period.
Methodology
The study examined the most recent results of the top 35–36 miners, identified using the Global X Silver Miners ETF (SIL) to select the largest holdings by size — broadly, the largest companies. The database was then reduced from roughly 35 down to 16 by eliminating two groups: all loss-making companies, and all companies with sky-high price-to-earnings ratios (specifically, anything with a P/E above 26 times). What remained were 16 profitable companies with reasonable valuations, most of them at the very top of the pile.
The Trade and the Result
The core test was simple: what if you had bought every one of these 16 companies exactly 7 days before their results were announced, and sold exactly 7 days after? The full numbers are available on the website clivethompson.com (with a link at the bottom of the page).
The conclusion: on average, you would have made a profit of 11.49% (also cited as 11.549%). This is because the miners across the board produced results that were mostly better than expected. Out of the 16 companies, only three went down, meaning 13 went up — and many that rose did so by a lot, with gains almost all in double digits. Running down the individual percentages: 13.95%, 7%, 14.58%, 22.27%, then a minus 40% (one of the three losers), plus 19%, plus 22%, plus 20%, then a minus 20% (the second loser), then 23.8%, and so on. Averaging all of these, including the losses, yields that ~11.5% profit.
When earnings surprise repeatedly like this, the issue may not be performance — it may be disbelief. Analysts can remain cautious long after operating reality has changed beneath them. Markets frequently reprice in bursts precisely because expectations lag fundamentals. Investors protecting capital should watch earnings quality rather than headline excitement: momentum attracts attention, but cash flow eventually attracts capital.
What This Means for the Upcoming June Results
The next set of results will cover the quarter ended June (and in some cases the half-year ended June). Those profits can already be anticipated to be much higher than a year ago, because the average silver price over the trailing 3, 6, and 12 months has been substantially higher than it was in the same June quarter of 2025. That means the mining companies have been making much more profit, and nearly every single one of them should report substantial year-on-year revenue and profit increases.
This leads to a speculative but logical strategy for those willing to take a chance: identify the companies set to show the biggest profit increases (there is a table on the website for this), on the theory that the ones with the largest profit jumps will move the most when results are announced. This is only speculation, but it would simply repeat what happened in Q1, when 13 of 16 went up a lot. There is no guarantee, but the exercise demonstrated that analysts were simply too cautious at the end of the last quarter.
The Valuation Disconnect in Miners
For those bullish on silver long-term, a key observation: the prices of these miners have fallen significantly since silver cooled off, creating a strong argument that the market is not pricing in the higher profits these companies are earning at still-elevated silver prices. The market has become overly negative.
Measuring silver-related equities — both ETFs and direct silver companies — against the last time silver traded at this same price on the way up reveals something telling. A portfolio of these companies (whether diversified or held via the ETF) would be worth less today than it was the previous time silver was at this level on the way up — and significantly less. In other words, the silver miners have underperformed the metal itself and have become overly pessimistic in light of the recent fall in the silver price.
The practical conclusion is that buying into silver miners today means getting in at a moment when people are excessively pessimistic. This does not mean it is necessarily the bottom — nobody can tell you that. It might be, it might not be. But the market is now pricing silver miners as if their margins had disappeared, even while the underlying commodity remains far above its old levels.
This reframes the entire question. It is no longer a commodity call but a valuation question. Underperformance does not automatically equal opportunity, but it can signal that expectations have become too one-sided. Investors should separate price damage from business deterioration before making decisions. Profit expansion and sentiment collapse can coexist for far longer than investors expect, and when earnings accelerate while valuations compress, the eventual adjustment tends to be abrupt rather than gradual.
The Underlying Philosophy
Wealth preservation is not about avoiding volatility — it is about recognizing when pessimism has become disconnected from cash generation. The biggest risk is often assuming the market has already priced everything in. Sometimes the largest hidden cost in metals investing is the obsessive search for the perfect bottom. Investors fixate on entry prices, while institutions focus on positioning size. And historically, extreme pessimism has a way of arriving precisely when the underlying business case is strongest.
In the long run, confidence remains high that gold and silver will go a lot higher. All the factors driving gold — and, for additional reasons, silver — remain firmly in place. Nothing has gone away. But in the short run, you never fight the tape, and the tape is currently heading down.