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Audio Length: 00:33:29

Silver took the gold medal in 2025, more than doubling its price.

So, what drove silver to over $80 an ounce last week? In this episode of the Midweek Memo podcast, host Mike Maharrey takes a deep dive into the dynamics of the silver market, explaining that while there are many factors at play, one fundamental reality underpins it - there isn't enough metal.

This dynamic has resulted in a significant silver squeeze, driving prices higher with significant volatility. 

In this episode, Mike also offers some advice as you contemplate your New Year's resolutions.

Mike opens the show by asking listeners if they have made their New Year's resolutions yet and offers a suggestion for those who haven't.

"Don’t panic every time the price of gold and silver drops."

Mike says a lot of people panicked on Monday when silver dropped sharply after its record surge to over $80 on Friday.

"People freaked. I know this because I saw the social media comments and got a couple of emails and text messages. I think a lot of people who follow precious metals have been browbeaten into perpetual pessimism. It was a significant selloff, no doubt. However, look at the bigger picture. Just three months ago, silver was below $50, and the naysayers were saying it would never break out above that resistance level. And a year ago, silver was under $30. I’m not so sure the negativity is warranted – at least not yet."

Mike notes that corrections are normal in a healthy bull market. 

"The important thing is to keep your eye on the fundamentals. Did anything significant change on Monday to drive silver down? Did somebody suddenly create a bunch of silver out of thin air? Did the government end its inflationary policies? Did the dollar suddenly become a trusted store of value? If the answer is no, it was probably just a correction."

The big selloff on Monday somewhat overshadowed silver's record run a few days earlier. Mike notes that there are a lot of factors pushing the silver market higher, but one dynamic dominates. 

"There isn’t enough silver. This has evolved into a significant silver squeeze."

Mike provides an overview of the first silver squeeze that manifested in October, driving silver to over $50 for the first time. Movement of silver from London to New York last spring, in the midst of tariff worries, set the stage, draining metal from London vaults. A surge in Indian demand was the straw that broke the camel's back, further pressuring London silver inventories. 

The market eventually adjusted, with metal flowing back to London. But this didn't solve the underlying problem.

"The root of the problem is simple: there isn’t enough metal to meet demand. While shuffling silver between London, New York, and India took the immediate pressure off the market, it didn’t magically create new silver."

Mike points out that silver demand has outstripped supply for four straight years, with 2025 likely continuing the trend. Silver inventories in COMEX, LBMA, and Shanghai vaults are all depleted. 

Last week, inventory problems began cropping up once again in London. 

"The premium between the London physical price and the NY futures price is almost back to $1. Meanwhile, the spread between the one-year silver swap rate and U.S. interest rates has now plummeted to -7.18 percent. In effect, this implies there is a significant 'yield' or 'benefit' holding silver relative to holding dollars."

This reveals another dynamic that doesn't get a lot of mainstream attention. There is significantly more paper silver than actual metal. 

"According to analyst Faysal Amin, published by FXStreet, the current paper‑to‑physical ratio stands near 356:1. In other words, for every ounce of physical silver in the world, there are 356 paper ounces. This is no different than fractional reserve banking. As long as everybody is content to keep their money in the bank, the system hums along quietly. But when people lose faith in the bank and demand their dollars, you end up with bank runs. Similarly, when people demand physical silver, the paper system collapses."

When you combine all of the dynamics in the silver market with a fundamental lack of silver, you have a recipe for rising prices. And that's exactly what we're getting.

"The reality is that the government can and will print more dollars. Nobody can print silver."

And about those New Year's resolutions. Mike says he's all set with his.

"It’s the same resolutions I made last year. I’m not making any resolutions. This strategy has worked well for me over the years. By refusing to make resolutions, I have avoided the self-flagellation that occurs when I inevitably break those promises to myself. I know it’s fun to make pronouncements about how we’re going to do better in the coming year. But I am a realist. The odds are you will abandon your 2026 resolutions within weeks, if not days."

Mike provides some statistics that show the odds of you keeping your resolutions are close to zero.

"But don’t lose hope. You can absolutely make your life measurably better in 2026. You can set some reasonable goals, take action from day one, and achieve them. The key, experts say, is incremental lifestyle changes. Instead of giving up donuts forever, maybe you could just cut back to one donut a week. Instead of promising to work out every single day, set a reasonable workout goal. Changing your life is a process, not a pronouncement!"

With this in mind, Mike offers some advice that might help improve your financial situation in 2026. Get real money -- gold and silver. 

"I made a similar recommendation last year. If you followed the advice, you’re pretty happy right now. Now, you might be thinking, ‘Well, Mike, that’s a great idea. But I really can’t afford to buy an ounce of gold right now, and even silver is getting expensive.’ Money Metals can help with that. Check out our monthly purchase plan. You can set up a monthly payment that works within your budget and build your gold/silver holdings over time. You can set up a subscription for as little as $100 per month. As a bonus, you’ll get access to lower premiums. It’s basically a set it and forget it program. Even I could keep that resolution!"

Articles Mentioned During the Show

London, India, and the Anatomy of a Silver Squeeze

Can Silver Mine Supply Meet Increasing Industrial Demand?

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