Rudi's View | 10:00 AM
Are markets fundamentally changing? If so, investors might need to change their approach and strategy too.
By Rudi Filapek-Vandyck, Editor
The two charts below showing the price of spot silver over the past two years in USD and AUD respectively are indicative of how financial markets are nowadays operating.
After underperforming its bigger brother gold bullion, at some point in 2025 silver caught the upward momentum wave of ever more enthusiastic buyers, and that price simply flew to the moon and beyond.
I remember sitting in front of my desktop pc, staring at my social media feed, with one eye focused on online news elsewhere, and thinking: is there anyone still around (outside of my lonely self) who's not on board this runaway train?
As per usual, there were all kinds of narratives accommodating the newfound mass interest in silver --some fundamental, some technicals, some cyclical, some macro, and some industrial-- but what everyone who was not on board was able to see (that's me again) is that it had as much to do with human psychology, the comfort and justification when in group, and the attraction of a strong uptrend in price.
Let me correct that last sentence: by the time I was making my observation, silver had long out-rallied whatever original justification there was and its uptrend had become a momentum-led crowded trade.
There was always going to be a sizeable bend in that uptrend, but picking the exact pivot is easier done with the assistance of Harry Hindsight.
The speculation-driven blow-off peak was reached in January this year. Five months of hindsight clearly show things got a bit crazy back then. Also note; in the run up the silver price more than doubled in about three months.
What has transpired since:
- The price of silver is now circa -30% below its peak, but also some 40% up still from when the last leg took off
- Silver outperformed gold to the upside, and has since heavily underperformed (that's how a more risky asset traditionally behaves)
- Measured in AUD the correction from the peak is closer to -50% (showing the extra complication from FX)
- Those narratives... funny, but I rarely still see them popping up
- Gold held its elevated pricing for longer, but has since also succumbed to a (less severe) downtrend
True proponents of having exposure to silver still believe the longer-term investment thesis continues to have merit, but how does one reconcile this with what has happened over the past nine months?
That's every investor's dilemma right now.
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