Happy Thursday, GoldBuzzers.

As we’ve been expecting, the Fed dropped rates again on Wednesday, and Gold and Silver went vertical.

What’s happening with Silver right now is unprecedented in the 55 years of precious metals history that I analyzed in the Theseus project, and that’s the subject of today’s Real Talk.

Ok, let's dive in.

Holy. Mother. Of. Metal. 🚀

The Fed just dropped a 25-basis point rate cut (now at 3.5%-3.75%), and while Powell's saying "that's all folks" with only ONE cut penciled in for 2026, markets aren't buying it. Traders lifted the odds of two or more cuts in 2026 to roughly 68% after Powell's comments about cutting "a little" or "more than a little" opened the door wider than expected.

Gold shot up, closing at $4,228 per ounce, testing those record October highs near $4,379. Real rates are getting squeezed, the dollar's taking a breather, and gold's eating it all up.

But silver? That's the REAL story. The white metal soared to $61.83, and physical silver is getting vacuumed off exchanges faster than you can say "supply squeeze."

Bottom line: The Fed's talking tough but markets smell weakness. With growth forecasts UP and inflation forecasts DOWN, this is precious metals paradise. Stay shiny, stay skeptical and enjoy the ride! 💰⚡

The answer is that it didn't disappear overnight - it’s been draining out slowly over the past 5 years - into solar farms, battery terminals, and industrial supply chains that couldn't get enough. And now the world's major silver vaults are sitting at decade lows.

I vividly remember buying my first large bar of Silver in late 2008, at a local bank, when the price was just $10/oz. Now, Silver just cracked $60 for the first time ever, up 116% this year. It’s been leaving gold (+63% this year) trailing in its wake. But this rally isn't hype. It's the market waking up to a critical supply gap that's been widening since 2021.

Silver’s performance this year has been so spectacular that we need to take a deeper look.

Firstly - the Numbers Don't Lie

The Silver Institute's World Silver Survey 2025 tells a sobering story: global mine production is limping along at just 835 million ounces this year - down 7% from 2016 peaks. Here's the kicker: silver doesn't play by normal supply rules. Around 70-80% of it emerges as a byproduct of mining copper, lead, and zinc. When those base metals slump, silver output doesn't magically ramp up to meet demand. It's structurally inelastic.

Meanwhile, demand is going vertical. Industrial uses alone are consuming over 1 billion ounces annually, driven by solar photovoltaic panels, EVs, and electronics. Solar demand is projected to devour 400 million ounces by 2030, with each gigawatt of capacity requiring roughly 1.5 tons of silver. Layer on investment buying and jewelry demand across Asia, and you've got a textbook supply squeeze.

The result? A fifth consecutive year of structural deficits. For 2025, analysts forecast a shortfall of 117.6 million ounces. The cumulative gap since 2021 now approaches 800 million ounces - nearly a full year of global production, simply gone.

The Vaults Are Running Dry

Here's where things get uncomfortable. Major trading hubs are flashing warning signals that even the most seasoned traders can't ignore.

LBMA silver inventories have plunged to decade lows. The "free float" - metal actually available for immediate delivery - has cratered to just 155 million ounces. That's a 63% collapse from 2020 peaks above 1.2 billion ounces.

COMEX registered stocks? Down 70% from their March 2020 highs of 346 million ounces to a mere 82 million by late 2023, with further erosion through 2025.

Shanghai's vaults recently hit a three-month low of 1,227 tons (roughly 39.5 million ounces), dropping 50 tons in a single week as Asia's industrial giants hoover up supply.

Reports are circulating that major trading houses are now cold-calling mines directly, offering 20% premiums over spot for long-term contracts. LBMA lease rates have spiked above 100% annually - up from a sleepy 1-3% - turning physical silver borrowing into either a lender's dream or a borrower's nightmare, depending which side of the trade you're on.

Why This Matters Beyond Price Charts

The ripple effects could hit hard where it hurts most. Solar panel production - the backbone of the net-zero transition - faces potential shortages that could delay projects and inflate costs. EVs and 5G infrastructure? Same story. The U.S. has now added silver to its Critical Minerals List, triggering stockpiling efforts and tariffs that further constrict global flows.

The Investment Angle

For precious metals investors, the setup is compelling. The gold-silver ratio has compressed to around 70:1, historically a signal of silver's asymmetric upside potential. Technical analysts are eyeing $63 as the next resistance, with $80+ targets if momentum holds.

Junior miners - especially primary silver producers - could deliver significant leverage as supply strains force production premiums higher. But volatility cuts both ways: backwardation became extreme in October, and any Fed policy shifts could amplify swings in either direction.

Bottom Line

Silver isn't just scarce - its supply is structurally incapable of responding to demand. We're approaching a moment when physical market realities override paper trading dynamics.

The crunch is here. And it's only getting tighter.

That’s all for this Thursday, folks. See you on Sunday!

Before you go, please take a moment to rate today’s newsletter and let us know how we did.

Rick Adams
Founder, GoldBuzz
rick@goldbuzz.com