Silver Gets the Blow Off After the Fed Cracks
Steve Penny came back on Commodity Culture with silver near $61, down almost 50 percent from the January high, and he did not treat the drop as a broken bull market. He has been calling it a 1974 moment since before the peak. An interim top. Then a consolidation longer than the crowd wanted to hear. He exited most of his speculative silver and gold into that high and has been scaling back in on the pullback.
The analog is the number he wants on the table. From 1971 to 1974, after Nixon closed the gold window, silver rose 423 percent in 27 months. Into the January 2026 peak, the preceding 27 months delivered 484 percent. Then the 1970s tape went sideways for 59 months after a 50 percent drawdown.
He does not expect five years of nothing. He thinks this pause is about halfway done, another one to three quarters of grind, then a retest of the highs late 2027 or early 2028.
“Take heart. I believe our 1979 moment awaits. In 1979, silver went up 8x in 12 short months.”
What ended that bull market was Paul Volcker taking rates to 17 or 18 percent. Penny’s bear case is that Kevin Warsh tries the same trick. He calls it highly unlikely. A 10 percent rate on $40 trillion of debt is $4 trillion of interest. Federal tax receipts are just over $5 trillion. Half of what Volcker did would consume almost all of them.
“Central planners, that’s the last thing they want. They fear deflation much more than they fear inflation.”
His operating theme into 2027 is hike, pause, print. Another hike, maybe two or three, while the market still prices a long tightening cycle. Then a speculative blow off across assets, including the metals. Then a deflationary impulse, a crash that hits almost everything. The catalyst is not the crash. It is the response.
“I think it’ll be the Fed’s response to that next panic driven selloff that will be the ultimate catalyst that sends our focus sectors, namely silver, gold, platinum up to those ultimate targets that many of us have in mind, 300 plus silver, 10,000 plus gold.”
He wants the Fed in with “bazookas guns blazing” after the big pullback, not before it. Silver is the metal he thinks wins that leg.
“Silver will outperform gold by a wide margin. Back in 1980, we got to a 15 to 1 gold silver ratio. Right now, we’re at about 70 to 1. So, if we were to return to that 15 to 1 gold silver ratio, silver would outperform gold by almost 5x from here. I don’t think that’s an unreasonable expectation.”
Mine supply is pulled from the ground at about 9 to 1, which makes the paper ratio look even more stretched. He also called the miners undervalued and said generalist money will pile in once precious metals beat ordinary equities. Manipulation is real in his telling, but it is not the thing that sets the final price. The debt trap does. There is no clean escape at these coupons. A rush into silver is the public chapter of the same story, after the Fed is forced off the Volcker fantasy and onto the printer. The pain is the consolidation still in front of holders. The reward, on his map, is the 1979 style catch up that Volcker cannot repeat.
