SILVER BREAKS

The US mint has just suspended its sale of silver coins. This means the government has lost control and is panicking. 

The price has reached 92 dollars per ounce, spot, in the COMEX. I am sorry folks, I can only think in dollars per ounce now, ever since I woke up and started tracking the silver story in September. 

There is a massive supply shortage of physical silver all over the world. In the US, the premiums at the coin shops are above ten dollars. Many shops are reporting stockouts. 

In Shanghai, the closing price yesterday on the Shanghai Gold exchange was 101 dollars. The SGE is the real market where silver is traded physically and that price is the real price. 

Meanwhile, all the factors that we have been talking about that made silver reach here ( 30 percent gain since Jan 1st alone, it was at 50 dollar levels in September) are still intact. Here is the link to my blog post of 2nd December listing out those factors: 

https://www.dineshgopalan.com/2025/12/silver-moves.html?m=0

Conventional economics tells us that when the price of something rises, demand drops. Well, forget your conventional economics. Watch the panic that unfolds now. 

If you are holding silver, don't sell. Don't don't make the mistake of "booking profits", "take something off the table", "reduce the risk" or any of those reasonable sounding anodynes meant for conventional times. These are not conventional times. 

Should you buy at 92? I think yes, but thankfully I am sitting on silver that I bought in September at 50 dollar levels and don't have to take that call at this time when prices have run up so furiously. 

There is still some supply in the Indian market, and surprisingly, there is no street premium. If you are holding silver only in the form of ETF, you may want to consider converting part of your holdings into physical silver. 

Happy Pongal! 

Changing world, re-evaluating investment strategies

The best investment for the next few years: Gold 

High beta investment for the immediate future: silver

The dark horse: Platinum

To be wary about: equity. It is likely US will collapse first, we may still have time to bail before ours does

Commodity super cycle is here. Keep watching for the right time to shift to Commodity stocks. 

 Debt / fixed income products are for liquidity. They are not necessarily investments especially in a situation like today with high global debt to GDP ratios, and increasing geo political tensions. In such a scenario, any assets, including dal, atta and chaval, are better than holding cash. This includes real estate, precious metals, and equity.

Prepare for action in the silver market

If you are into any derivatives position on silver, long or short, exit immediately. Book a loss if you need to, but exit. Do not get into any paper contract in silver. This applies to both US and India. 

If you are in the US, and If you have any investments in silver ETFs, liquidate, and buy physical. 

The underlying of the  US ETFs are suspect. They may not be holding physical at all. 

Indian ETFs are reasonably safe. There is reason to believe that they hold physical.  However, if you can shift to physical, do it. 

If you think the silver market saw a lot of action in 2025, well, you ain't seen nothing yet. 2026 is going to be explosive. 

And yes, it's still a good time to buy. But if you want to buy, do it soon. 

STORE OF VALUE

For decades we have been fed this story about gold…They keep saying, it is not a "productive asset", it has no utility, it just sits there doing nothing, what is the return you are earning on it, etc., etc.

 

Well, what is money then? It is just a promise that someone will pay you something of value. Correction, it used to be a promissory note to pay something of value, back in the days when money was backed by gold. After the US went off the gold standard in 1971 and the rest of the world followed, that is no longer the case. It is just a promissory note. Promising what? Read what is printed on your currency note, it says "I promise to pay the bearer the sum of rupees __". Huh? Promise on the currency note to pay me in currency? That is circular logic!

 

A currency note is a piece of paper that people are compelled to accept in return for their goods or services, that is enforced forcefully by law and held together by convention and faith.

 

Do you know that in international trade no one trusts each other's currency? All international trade is therefore denominated by, and translated through, US dollars. How foolish. The US dollar is nothing but a fiat currency and other countries have at last woken up. Alternate "currencies" or payment mechanisms are being discussed.

 

What will be the basis of these currencies, the hard bedrock on which they are anchored? You guessed it, gold! While they have been feeding you stories about gold not being valuable, etc, etc, they have been quietly buying gold themselves. Central Banks across the world are the largest buyers and hoarders of gold!

 

Why gold? Money serves as a medium of exchange and a unit of measure. But most important, for it to be trusted, it needs to be a store of value, that is, it must retain its value over time. Which element on the periodic table suits these purposes well? The element needs to be scarce, but not impossible to obtain; it needs to cost something to extract; it cannot dissolve or dissipate like all gases do; it cannot be poisonous; it should be easy to carry and store; it should be malleable and ductile, capable of being minted into coins; it should not react easily with other elements; it should be virtually indestructible; it needs to be culturally and socially acceptable to everyone around the world… Gold it is! Closely followed by silver!

 

Every year, about 3000 to 3600 tons of gold is mined. Roughly 216,000 tons of gold is the above ground stock. This stock when melted and cast into a cube will measure 17 metres long, 17 metres wide, and 17 metres deep. That's it! Les than your average office building! Most of this gold is in the form of jewelry, or stored as investment in the form of bullion bars.

 

In case of silver, roughly 30,000 tons is mined every year. Estimates of above ground stocks vary, it could be anywhere between 600,000 tons to 1.6 million tons. It is estimated that all the silver ever mined is about 1.7 million tons. However, there is one problem when it comes to silver. A lot of it is used up in industrial applications, and a lot of it, more than 60 percent for sure, is not recovered, and just goes into landfills. We can safely estimate that all the silver available above ground today, is say, about 1 million tons, or, five times the amount of gold.

 

The ratio of gold to silver in terms of annual production is about 8:1. The historical ratio used for currency purposes for much of human history is 15:1. Currently, silver is severely underpriced, the ratio is around 60:1.

 

If you want an enduring store of value, money that you can pass on to the next generation, and the next, and so on, look no further than gold or silver. When it comes to Indians, you don't need to work too hard to convince them on this point – Indians have historically been consumers of gold and silver for this very reason, that it is a store of value.

 

Remember you past, reclaim your legacy, protect your wealth, include gold and silver in your portfolio! How much, what percent? Well, the current global, economic and monetary situation in relation to these two metals and to alternate investment avenues, suggests going overweight on gold and silver.

 

Happy New Year folks, have a great 2026!

 

Dinesh Gopalan,

1 January, 2026.

 

Posted to my blog https:\\www.dineshgopalan.com

 

 

SILVER SHINES

Silver is now trading at 80 dollars an ounce, and seems to be trending up further. This is a parabolic upmove that has caught most investors by surprise. 

Sometime in the letter half of 2025 it became apparent that something fundamental was shifting in the silver market. All the reasons were not apparent, but it was clear that the shift was happening. 

We are in the middle of a complete realignment in the silver market that is happening as we speak. 

Reasons, in short, are: 

1) Silver as a monetary  metal has gained prominence along with gold, with the global monetary system looking increasingly fragile. 

US debt to GDP ratio is unsustainable. Dollar as reserve currency of the world may be reaching its end of life. The BRICS nations and other countries are quietly preparing for alternate settlement mechanisms. 

Silver has been currency for more than 5000 years, along with gold. Any new monetary system that emerges from the debris of another failed fiat currency regime will  need gold and silver as anchors. 

2) Silver as an industrial commodity is gaining further prominence. 

The traditional industries using silver continue to consume it, and new uses have emerged. Considering that traditionally industry already consumes 80 percent of annual mine production, these new use cases will ensure that going forward, the demand for silver is more than the annual production. 

The new uses are in solar PV cells, electric vehicles, missiles, and AI data centers. 

Add to that Samsung's new solid state EV  battery that will hit production in 2027. This battery promises a 1000 km range on a nine minute charge. The only catch? It needs one kilogram of silver per battery! 

Tesla in its new Tesla truck has moved from 12 volt electricals to 48 volts. This introduces certain technical constraints which necessitate the use of more silver. Silver just happens to be the best electrical conductor on the planet. 

3) Most industrial demand for silver is inelastic. Either there are no practical substitutes, or it is of the nature of a Giffen Good where the cost of embedded silver compared to the final product is so low, that price does not matter. 

4) Supply of silver is inelastic too. It is not easily available. Tons of ore are required to produce one gram of silver. 

New supply sources are few. It takes ten years to get a new mine into production. Old mines are declining in capacity rather than increasing. Pure silver mines supply only 25 percent of the actual demand, the other 75 percent comes from mines where silver is a byproduct, like gold, lead and zinc mines. 

It is also a problem that mines exist in very few countries across the world. Once governments recognise its importance, they will put curbs on its production and export. China is doing that with effect from January 1st, 2026. Other countries will follow. 

5) The paper market for silver ( and gold) is an order of magnitude times higher than the actual physical market. Think 100 times or more. 

Like fractional reserve banking, this system works, till it works. Just like a bank cannot sustain a run on its deposits, the paper markets cannot sustain a demand for delivery from more than a tiny fraction of its participants. That process has begun, more people are demanding delivery now, and shorts are being forced to cover their positions. This has a violent impact on the price. 

The paper markets centered in London and New York are losing control of the narrative. China, and to a lesser extent India and Russia are taking over the narrative. Prices will no longer be determined by the paper markets of the West but by the physical markets of the East. 

If you have silver in your possession, sit on it, this is not the time to sell. 

If you don't and are thinking of buying, you will be scared to enter at these levels, but I still think we are only in the middle of a long term bull run. Enter only if you have the stomach for extreme volatility. 

For those who are of a suspicious nature, or inclined towards paranoia, think back to those times when holding gold was illegal. This has been true both in India and in the US. 

You ( I am referring to the paranoid ones like me) may want to consider shifting your holdings to hundred percent physical over the next few weeks or months. 

Talking of gold, it will go up further from this point which is an all time high. 

Silver will go up even more. 

If you are already on the roller coaster, good. The fun ride is not yet over!