Silver and Gold

In early November of this year, silver was officially designated a U. S. critical mineral. The Secretary of the Interior made this announcement through the U. S. Geological Survey’s Final 2025 List of Critical Minerals in the Federal Register. The Secretary of the Interior justified silver’s inclusion on the following bases: (1) silver is essential to U. S. economic and national security, (2) silver has a supply chain vulnerable to disruption, including foreign dependence and geopolitical risk, and (3) silver serves an essential function in manufacturing and defense-related, energy, and electronic technologies, the absence of which would have significant national consequences, as defined under the Energy Act of 2020. 

This comes at a time when the silver supply has been squeezed through rising industrial, consumer, and investment demand, and after the silver price has surpassed its key 45-year technical (cup-and-handle) level around the $50/oz mark. At the time of publishing, the silver spot price has surged beyond $70 USD per ounce, at the same time that gold has eclipsed the $4,500 USD (per ounce) level, and by all indications this latest phase of the bull market (going all the way back to the year 2001, when silver and gold traded as low as $4/oz and $263/oz, respectively) is just getting started in earnest. 

Silver started the year at $28 per ounce, while gold began the year around $2,600 per ounce; their prices at the time of writing mark a 150-percent gain for silver, and nearly a 74-percent gain for gold, in 2025 alone. This marks the continuation of the latest phase of a strong bull market dating back to March of 2020, when silver briefly traded just below $12 per ounce and gold traded at roughly $1,471 per ounce. This means that the gold-to-silver price ratio has narrowed from around 125:1 in March of 2020 to approximately 64:1 as of the time of this writing — just as gold and silver have set fresh all-time highs. And bear in mind: Geologically speaking (i.e. crustal abundance), the gold–to-silver ratio is about 15–20:1, the mine production ratio is roughly 8–10:1, and the market price ratio has historically held at levels comparable to or below the geological ratio — particularly at the peaks of precious metals bull markets. For further historical context, consider the Coinage Acts of 1792 and 1834, by which the United States government’s bimetallic monetary system maintained ratios (for legal tender purposes) of 15:1 and 16:1, respectively. 

For even further perspective, consider the cases of 1980 and 2011, the peaks of the two previous major bull runs: intraday highs for gold were $887.50/oz in 1980, and $1,921/oz in 2011; silver posted highs of around $50/oz in each of the two cases. The $887.50/oz high in gold constituted an $852.50 gain, up 2,435 percent from $35/oz in 1971; the $1,921/oz high constituted a $1,668.10 gain, up 659 percent from $252.90 in 1999. In 1980, the $50.35/oz high in silver represented a $49.08 gain, up 3,866 percent from $1.27/oz in 1971; the $49.52/oz high in 2011 represented a $44.64 gain, up 914 percent from $4.88/oz in 1999. With reference to the post‑2011 lows for gold ($1,192/oz) and silver (roughly $12/oz), each percentage gain realized in 1971‑1980 and 1999‑2011 would imply the following prices (per ounce) for each metal: $30,233 and $9,061 for gold; $475.90 and $121.80 for silver.

In 1980, the gold-to-silver price ratio plunged to roughly 14:1 at its intraday low, and the DJIA-to-gold ratio dropped to about 1:1 (its lowest level since it fell to 1.9:1 in 1933), meaning that roughly one ounce of gold could buy the entire Dow Jones Industrial Average. Then consider 2011, when the gold-to-silver price ratio fell to 31:1 from its 2009 high of around 78:1. In 2011, the DJIA-to-gold ratio fell below 6:1, after reaching 45:1 in August of 1999; an eighty-six percent decline. Today, with gold surging through the $4,500/oz level and the Dow Jones Industrial Average closing at 48,362.68, the DJIA-to-gold ratio is approaching 10.7:1. This means that, from its 1999 peak to today, the Dow Jones Industrial Average has declined by more than seventy-six percent when priced in gold; a far cry from the impressive dollar gains printed in the papers and celebrated by investors, speculators, and members of the financial industry. 

Now, let us imagine what would happen in the event that these ratios were to retest those prior levels: in the event that the Dow Jones Industrial Average remains unchanged and the DJIA-to-gold price ratio were to decline to 6:1 in alignment with the 2011 low, gold would be priced above $8,000/oz; and if the gold-to-silver ratio were to fall to its 2011 low of 31:1, that would mean that the silver price (today hovering around $70/oz) would rise to roughly $260/oz. In the event that the DJIA-to-gold ratio were to dip as low as 1:1 (with the same 31:1 gold-to-silver ratio), we would see a gold price of $48,362/oz, with silver around $1,560/oz.

After the DJIA-to-gold ratio plummeted roughly eighty-seven percent between its 1999 peak and 2011 trough, the ratio rallied to a level of 22.3:1 in September of 2018, whereafter a steady decline eventually gave way to a sharp plunge between January and March of 2020. In all, from the 2018 peak to the March 2020 trough, the ratio declined by roughly forty-eight percent to under 12:1. Thereafter, the ratio once again rallied, this time making a double-top at 20:1 in 2021 and 2022. Since then, with the exception of a brief rebound to 19:1 in February of 2024, it has been a case of lower highs and lower lows, nearing a level of 10.7:1 as of the time of this writing, marking a near-halving of the ratio since the double-top. In charting these cases and all others over the past century, another even more interesting detail emerges, one which is relevant for any reader interested in understanding where we are right now and what is likely to come: at no time in history has a marked decline in the DJIA-to-gold ratio reversed course without the American economy first entering an official recession.

All things considered, the continued price action in precious metals and the underlying reasons indicate that this is not just a flash-in-the-pan kind of moment, but rather the continuation of a new era — a ‘reset’ or a revaluation of hard assets, and a rotation out of U. S. dollars and speculative risk assets into safe havens and sound money. While this rotation is yet to begin in earnest, the groundwork has been laid, and we are currently witnessing the makings of the next leg up for precious metals — not only as safe havens and sound money, but (in time) as preferred financial vehicles for institutions, investors, money managers, and everyday workers.

During the 2001–2011 precious metals cycle, gold climbed from the mid-$200s to about $1,917/oz at its peak — more than a 646-percent gain over the decade — while silver rose even more dramatically, with total percentage gains exceeding 1,100 percent through to the 2011 high ($49/oz). During that cycle, institutional and retail allocation expanded significantly, as reflected in the growth of gold ETF (exchange-traded funds) assets: for example, large gold ETFs like GLD and IAU collectively grew from modest inception sizes into tens of billions of dollars in assets by 2011 (with estimates of approximately $135 billion in global gold ETF assets at the peak) and represented a much larger share (roughly 8 to 9 percent) of total ETF assets at that time.  

By contrast, in 2025 the gold price has again surged, with gold and silver repeatedly setting all-time (nominal) highs. However, allocations have yet to adjust: despite much higher absolute ETF assets today (gold ETF AUM — assets under management — is in the hundreds of billions and at record tonnage levels), gold ETFs represent a much smaller percentage of the broader ETF universe and investor portfolios than at the 2011 peak — for example, in the United States, gold ETFs currently account for only about 0.17 percent of private financial portfolios, and fewer than half of large institutions hold any gold ETFs at all, typically only in tiny allocations (0.1–0.5 percent). In 2025, the silver ETF SLV has roughly $38 billion of assets under management, constituting only about 0.2 percent of the global ETF universe (approximately $19.4 trillion), while gold ETFs GLD and IAU make up roughly 2.7 percent; a far cry from the ‘8 to 9 percent’ reached at the 2011 peak. In relative allocation terms, precious metals are far less embedded in portfolios in 2025 than they were at the peak of the 2011 bull market, even as current prices are continually setting new highs. With this in mind, one can’t help but ponder what is in store when allocations eventually begin to adjust upward: if allocations are to eventually match the ‘8 to 9 percent’ witnessed at the peak of the prior 2001-2011 cycle, then gold and silver are bound to climb still magnitudes of order higher from current levels. And by the looks of it, this ship not only has the momentum, the thrust (from easy monetary policy), the fuel reserves (where future allocations are likely to contribute to this bull market), and the economic fundamentals making it likely to head progressively higher; it also appears that resistance will become less of an issue than it has been in the past — particularly where short selling has served to keep a lid on prices.

As we have seen, while gold and silver continue to set new all-time highs, those with short positions are constantly being squeezed and facing progressively greater risk (and doubtless progressively more angst) in re-establishing any short positions; especially while precious metals — from gold and silver to platinum and palladium — continue their secular bull runs, knocking out one price level after another and forcing short sellers to cover by buying silver at still higher prices and (in many cases) even having to deliver the physical product to the long holder. At a time when more than ninety-nine percent of COMEX (Commodity Exchange) silver futures contracts are settled without physical delivery (with almost all settling in cash), a shift to physical delivery will reveal the extent of the physical shortage and the insolvency of the banks that have been overly exposed through short positions entered into with the hope of reversing retail sentiment and recovering past losses. Their strategy of doubling down against the price of silver has failed, and as liquidity dries up and they capitulate or even reverse their positions to go long on the price of silver, there will be little to keep the price from climbing ever higher — especially as the Federal Reserve steps in as the lender of last resort, whether through rate cuts or continued record-high usage of its ‘repo facility’, as we have seen as of late, to help shore up the banks’ positions where they are suffering major losses, facing margin calls, experiencing serious liquidity problems, and up against the real possibility of insolvency.

What’s more, the Federal Reserve has officially announced the end of ‘quantitative tightening’ while President Trump has committed to appointing an ‘accommodative’ Federal Reserve chairman who will commit to lower interest rates and more ‘stimulative’ policies; and this comes after the Federal Reserve has already committed to another round of ‘quantitative easing’ at a clip of $40 billion per month. 

Meanwhile, institutional investors are or will be facing pressure to increase allocations to gold and silver in the year(s) ahead; not only to satisfy clients’ wishes but to mitigate volatility and risk where there still remains significant upside potential in an asset class on a record run and showing no signs of slowing, especially relative to dollar-denominated assets. 

With current allocations being negligible, or even nonexistent, and with discouraged shorts out of the way and no apparent ‘resistance levels’ ahead, the future for gold and silver as financial vehicles seems promising, poised for progressively higher highs and higher lows. 

With the U. S. Dollar Index (DXY) losing its grip on the key 100 level, and with so much systemic risk in the form of geopolitical tensions, escalating trade wars, supply constraints, rising inflation, and domestic economic woes — considering record-high debt, both personal and public, as well as the lows in consumer confidence, the continued deficits in trade and government spending, and the longterm demands of unfunded liabilities — the U. S. dollar remains only relatively and artificially ‘stable’, but certainly not ‘strong’ compared to the real goods and assets it chases; indeed, it appears that the dollar’s relative ‘strength’ is limited strictly to comparisons against other fiat currencies which are also in decline, and that the artifice buoying the dollar is under threat by ‘de-dollarization’ and waning international appetite for U. S. debt. The fact that the U. S. dollar is nearing a record low against the Swiss franc (a leading indicator) reveals a decline in confidence for the dollar as a safe-haven asset, and as economic conditions continue to deteriorate and the U. S. government and the Federal Reserve seek to ‘combat’ the problems they’ve created and don’t understand, the dollar’s decline will only continue to accelerate. And China’s forthcoming silver export restrictions, which take effect in the new year, will make silver even more expensive in U. S. dollars, further undermining the safety, stability and purchasing power of the world’s reserve currency. With the Chinese constituting one of the largest markets — buyers, producers, and holders — for silver, the effects of this restriction cannot be overstated, not only in terms of the economic effects but also in terms of the message sent to the United States and holders of dollars and dollar-denominated debt; and the message sent about the economic, monetary, and strategic importance of silver into the future, where the world’s major economies and militaries will rely heavily on their supplies of (and continued access to) silver.

As for the monetary and economic implications unfolding before us, the trajectory of the dollar’s status as the ‘world’s reserve currency’ tells the tale: 

In 1970, the U. S. dollar accounted for roughly eighty-five percent of disclosed global foreign-exchange reserves. The dollar’s dominance began to wane at the end of the international Bretton Woods system and the end of the dollar’s gold standard in 1971. Since then, the dollar’s ’world reserve’ status has gradually eroded, falling to about seventy percent by the late 1990s. It has continued declining through the twenty-first century to roughly fifty-six percent today, reflecting long-term diversification by central banks despite the dollar remaining the leading reserve currency. As central banks across the globe continue to ditch dollars for actual ‘safe havens’ (namely gold and silver), and as more central banks follow suit, the dollar will continue to lose its grip on international trade as the world’s reserve currency — an exorbitant privilege squandered by politicians who have, from one administration to the next, funded foreign wars, special interests, and an out-of-control welfare state (all of it irresponsible, not to mention unconstitutional) with complete disregard for the Americans who inevitably would have to pay the tab, either through taxes or in the reduction of their dollars’ purchasing power. 

As these cracks continue to grow larger and become impossible to ignore, and as progressively more people become aware of the implications and begin taking action to protect themselves, their wealth and their future prospects, it will become abundantly obvious to the passengers — all who hold dollars, or fiat currency in general — that the ship is sinking; that the dollar-driven status quo cannot survive the storm. Consequently, price appreciation in the precious metals sector will accelerate as passengers abandon ship in favor of lifeboats. 

As it becomes clear that the dollar is sinking, it will cause a ripple effect worldwide, creating a wave of panicking dollar sellers rushing into the safety and security of sound money, toward the shimmering light of precious metals: an asset class reasserting its place, expanding in its use cases, moving ever higher by the day, and proven to provide reliable shelter in times of economic despair; and, above all, an asset class affirming its role as sound money and, with each gain, exacting a real cost upon those ignoring the lessons of history — or, as it were, upon those failing to notice the bow’s position relative to the horizon, and the fact that, once the lifeboats are filled and gone, they’ll be left treading water in the icy expanse of the North Atlantic.