Don’t Get Caught in Silver’s Bear Trap!
Peter Krauth told Charlotte McLeod at Investing News that the pullback after silver’s run to about $121 is a correction, not the end. He said so in public before it happened. At the Metals Investor Forum on January 27, with the metal peaking near $115 and then $121 two days later, he told the room to look for a correction, and that 40 percent would be unsurprising. Within about a week silver was at $67 intraday.
“Look for a correction. 40% would be unsurprising.”
What has not happened is the part he wants holders to notice. Since silver took out $50 in early October, almost a year before this interview, it has not gone back to $50 or below it. It took 45 years to clear that old high, then three months to reach $120. The old ceiling is acting like a floor. The test, in his telling, was about $55 in late July, then a run. Stocks have done well. The tape since January is a consolidation after a speculative spike, not a new bear market.
“That correction is what you’d call a bear trap. The unprepared or less knowledgeable investors about that asset think that that’s it. It’s over with. We’ve seen the peak. It’s a long term bear market now. It’s never coming back. And that’s the bear trap.”
Critics who said silver would never hit $50 are now watching a market that went to $120 and did not revisit $50. He calls that a healthy consolidation, and a way of weeding out weak hands.
The bid underneath it is physical. The World Silver Survey, including metal that flowed into ETFs, showed the largest deficit ever, about 330 million ounces. This year the Silver Institute forecast coin and bar demand at about 257 million ounces, the second highest on record, against total supply that has been flat around a billion ounces a year. Mine supply peaked in 2016 near 900 million ounces and is struggling to get back to 850 million. Solar is about 150 million ounces. AI and data centers, on conservative forecasts, add another 100 million within three years. Electric vehicles could add another 100 million within five. Those three uses alone are 350 million to 400 million ounces, about 40 percent of annual supply, with no meaningful new mine growth in sight.
He still places the market in the awareness phase. The prior two years were the stealth phase, the hard money, the gains that required staying in when almost nobody else would. Awareness is what follows the first discovery spike. The next leg, he told McLeod, belongs to the stocks, because the public, the analysts, and even the mining chief executives have not yet accepted that a higher silver price is sustainable.
“The last couple of years belonged to silver. I think the next couple of years are going to belong to silver stocks. And that’s because the wider silver investing public, the analysts, even the mining CEOs will start to believe in and accept a higher silver price, that it’s sustainable.”
The mania, in his title and in the argument, is still ahead. The trap is selling the first real correction and calling it the top.
