With just a handful of days left to trade this year, the S&P 500 is proving it's not done setting records, perhaps setting up some inspiration for 2026.
Another asset class, though, is vying to steal its thunder. It's all eyes on silver as 2025 winds down, with the precious metals space in general seemingly on an unstoppable run right now. Industrial metals are also surging.
The rally for silver - up around 40% this month on a continuous futures contract (SI00) basis - and other precious and industrial metals drove a UBS strategist to warn clients this week that gains were looking "unhinged."
Our call of the day from Peter Krauth, author of "The Great Silver Bull," says silver's so-called "mania phase" is not far off, as he lays out the rationale for sticking to his longtime $300-an-ounce forecast.
Krauth, who has 20 years of experience in resource markets and edits the investment newsletter Silver Stock Investor, made the comments in a recent interview with Ben Mumme, founder and host of the Living Your Greatness Podcast.
He's made several accurate predictions, such as in 2023, when silver was languishing around $22 and Krauth warned of a dearth in supplies and surging demand at the Metals Investor Forum.
Krauth told Mumme that silver's surge this year - futures are up 154% - has been driven by the fundamentals of a structural deficit. He said he started digging around in 2024, when he'd already been following that macro factor closely for three years, to determine why prices were stuck.
He observed that from early 2021 to about 2024 silver inventories had been dropping at big exchanges in London, New York, Shanghai and China. In those places consumers could buy it and take delivery from long futures contracts on maturation, without pressuring miners to bring anymore to the market, he said.
He estimated at the time that it would be 12 to 18 months before those inventories would be completely drawn down for deliverable silver. "I think that's what the market came to terms with starting about a year ago and then especially in the early part of this year," said Krauth,
The veteran said the gold/silver ratio is crucial for prices and should start falling. That ratio refers to the gold price divided by the silver price, which tells an investor how many ounces of silver are needed to buy a single ounce of gold. The ratio peaked around April at 104 and currently sits at 68, but will drop to 15, he predicted.
He has also predicted a "mania phase for silver" that will take it to $300 an ounce, explaining that is calculated by dividing a gold target of $4,500 an ounce - roughly where it's sitting now - with a gold/silver ratio of 15.
Unlike others, Krauth thinks it will take a "few more years" to get to $300, but assures the "mania" phase will see the gold/silver ratio tumble.
While strong industrial appetite and a supply deficit - especially for silver - a weaker dollar, concerns about high government deficits, inflation and geopolitical worries have sparked a fever for those assets, Krauth said investors may not truly understand the supply/demand imbalance.
"If you add up the deficits of the last five years, including this year, we're at about 800 million ounces, that's almost a full year's mine supply," he said. And the international industrial association, The Silver Institute, has predicted ongoing deficits for the next five years, and Krauth sees historical price highs in that time frame.
Krauth said makers of solar panels are big consumers of silver, and newer and more efficient technologies use even more of it. Add to that silver investment demand for themed exchange-traded funds, which he said is now looking closer to 200 million ounces for this year versus a previous prediction of 70 million ounces, according to The Silver Institute.
He said $50 an ounce, which silver broke through in October, will act as a floor for the precious metal. "I do feel that $800 - $1,000 an ounce [predictions for silver] get pretty crazy," though he adds "nothing's impossible."
"Silver is just in a really good place. The market, everything is there to support it. That doesn't mean it can't correct. That would also not surprise me, at least sort of near term for a little bit. But all the ingredients are in place to support this for quite some time," he said.
