Exactly. The dynamic is different than it used to be. Silver price is back up, but gold and miners are barely higher. Silver is strong here, but…
The important detail is that gold remains below its October high. Despite the second attempt to move above it, gold failed.
The usual tendency for gold to bottom at the end of the year appears to be in complete reverse mode this time.
The link to 2011 remains intact.
The GLD performance confirms what we see in gold futures. Interestingly, mining stocks are up, but despite that, they are already after an intraday bearish reversal.
The black candlestick that you see is formed when the open is above yesterday’s close, but then the price moves below the opening price. Compared to the last day’s close, it’s a rally, but compared to the opening price, it’s a decline. This is often seen at reversals.
For example, we saw that black candlestick right after the October 2025 top, which serves as a short-term confirmation that one just formed.
Silver is up most significantly, and the question is if this rally can continue?
On one hand, yes because so many fundamental factors continue to support silver’s rally, but on the other hand, if gold formed a major top, silver is likely to decline in the near term, anyway. It might have been able to resist the declines, but CME just hiked margins for silver futures for the second time, and this likely suggests that the exchange is determined to get the price lower. That’s how the 2011 rally ended and what happened in 1980. The situation IS different now due to the physical shortages and significant (and rising) industrial demand, but
I think that this will result not in the absence of the short-term decline, but rather in its longevity. In other words, I don’t expect silver to trade at low price levels for long and I think it could recover sharply on any day during the declines – making shorting silver particularly risky.
If you’re interested in the fundamental side of this, I’m quoting part of today’s issue of the Silver Catalyst newsletter:
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- Deep Dive #2: The CME Intervention and Historical Context
On December 26, the CME Group released Advisory No. 25-393, announcing its second margin hike in two weeks:
When markets opened Sunday night, the effect was immediate and brutal. Leveraged long positions were liquidated en masse. Silver plunged from its $83.63 peak to $70.25, an 11% intraday collapse that ranks among the largest price reversals in silver history.
Why This Matters: The Paper-Physical Divergence
Here's what the margin hikes revealed: the paper market and physical market are now operating on different planes of reality.
When Shanghai silver trades at an $8+ premium to COMEX, it tells you that physical buyers in Asia are willing to pay substantially more than the futures price to secure actual metal. This is not normal. In a functioning market, arbitrage would close that gap within hours, or at least it wouldn't be as big.
The gap persists because there isn't enough physical silver available to arbitrage. The paper market can create unlimited contracts. The physical market cannot create unlimited metal.
The phrase "Silver Thursday" has dominated financial headlines this week, referencing March 27, 1980, when the CME (then COMEX) introduced "Silver Rule 7" to force the Hunt Brothers into liquidation. That intervention triggered a 50% price collapse over the following months.
The 2011 silver peak offers a more recent precedent. When silver surged from $8.50 to nearly $50, the CME raised margins five times in just nine days, causing a 30% collapse in weeks.
Why 2025 Is Fundamentally Different
The critical difference? In 1980, the Hunt Brothers attempted to corner the market, creating an artificial squeeze that collapsed when regulators intervened. In 2011, high prices triggered massive scrap recycling, creating a surplus that undermined the rally. Both price spikes were driven by speculation, not fundamentals. In 2025, industrial demand is consuming silver faster than it can be mined and has been for five consecutive years. This is a structural shift, not speculative excess.
The margin hikes address speculative excess in the paper market. They do nothing to address the physical deficit, the depleting COMEX inventories, or China's export restrictions taking effect in 48 hours.
Catalyst Connection: This directly validates Catalyst #56: Futures Market Structure Stress Indicators and Catalyst #48: Paper-Physical Ratio Divergence. The paper market is breaking down precisely as the FORCE Framework predicted.
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In other words, the margin hikes are likely to work and hammer the price down. However, lower prices might attract significant physical purchases not just from investors but from industrial users, which – given the shortage – could push the price higher once again.
And whether some big entity decides to buy large quantities of silver or not on a given day will likely not depend on technicals. That’s why placing stop-losses for a short position in silver right now might be challenging, and I don’t think shorting silver offers a good risk/reward ratio even though I do think that its price will move lower in the near term (and MUCH higher in the long term).
Meanwhile, the USD Index is doing very little – bottoming at its April bottom.
As you may recall, the USD Index is known to reverse close to the turn of the month. The last turn of the year marked a major top. It looks like we’re about to see the opposite in the U.S. dollar.
The implications for the precious metals sector are bearish, however, due to silver’s unique situation, I’m not writing about shorting it. I do think that shorting mining stocks will provide great results in the following weeks and months, though.
Thank you for reading today’s free analysis. We recently made major shifts in all parts of the portfolio. If you’d like to read more and stay up-to-date with the quick trades, intraday Alerts, and all the key details (trading position details, profit-take levels) that my subscribers are getting, I invite you to sign up for the Silver Catalyst newsletter, Gold Trading Alerts or the Diamond Package that includes them and much more.
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Przemyslaw K. Radomski, CFA
Founder
Golden Meadow®