Forget $100 - Today's SILVER Price Means Miners Will Go BALLISTIC: Shawn Khunkhun

Key Concepts

• Silver Market Correction (Feb 2026): A significant 26% drop in silver prices followed by a recovery, attributed to technical factors, margin hikes, speculation, and Fed policy.
• Stage Two Bull Market: A phase characterized by corrections being bought and not lasting long, indicating continued upward momentum.
• Comex Manipulation: Concerns regarding potential intervention in the silver market by the Comex exchange and bullion banks to suppress prices.
• Peak Silver: The concept that silver production is unlikely to increase significantly in the coming decade, leading to potential supply constraints.
• All-In Sustaining Cost (AISC): The total cost of producing an ounce of silver, used to assess miner profitability.
• Silver Mining Equities: Stocks of companies involved in silver mining, potentially offering leveraged returns compared to the physical silver price.
• Dolly Varden Silver & Contango Merger: A proposed merger creating a company with production, development, and exploration assets focused on high-grade silver and gold.
• Kitsalt Valley Project: Dolly Varden’s 100% owned project in the Golden Triangle of British Columbia, Canada.
• Wolf Vein & Torbit Deposit: Key silver deposits within the Kitsalt Valley project, with recent drilling results indicating potential connection and expansion.

Silver Market Volatility and Manipulation

The discussion began with a deep dive into the dramatic 26% drop in the silver price on January 31st, 2026, followed by a subsequent correction and recovery. Sean Kungun attributed this volatility to a confluence of factors. He noted that silver had experienced an “unprecedented run” from $25 in April 2025 to $115-116, making a correction statistically likely, particularly as it coincided with the 60-day mark on a Relative Strength Indicator (RSI), a technical analysis tool. Further contributing factors included margin hikes implemented by the CME (Chicago Mercantile Exchange), overspeculation on margin, and a more hawkish stance from the Federal Reserve signaling stronger dollar protection with the new Fed chair nominee. Gold also experienced a correction, albeit less severe at around 10%.

Jesse Day highlighted the unusual behavior of the Comex exchange during the price drop, referencing research by David Jensen. Despite silver trading within a 19% range on a rolling one-hour basis – a trigger for circuit breakers – these breakers failed to activate. This fueled speculation about potential manipulation by the Comex itself or by bullion banks attempting to suppress the silver price. Kungun acknowledged the historical concerns about manipulation, citing the work of whistleblowers like Ted Butler and Chris Marcus, but emphasized focusing on the fundamental supply and demand dynamics. He stated, “I can’t impact manipulation…I can’t impact manipulation, you know, like you look at some of the whistleblowers that have come out…it's important to shed a light on what the games that are being played so that you know what we're really trying to do.”

Bull Market Dynamics and Physical Demand

Day observed that silver typically outperforms gold on the upside and downside, and the recent price action reinforced the belief that the market is in “stage two” of a bull market – a phase where corrections are bought and short-lived. Kungun emphasized the importance of physical demand, stating that it would ultimately overwhelm any paper manipulation. He pointed to the concept of “peak silver,” as highlighted by Phil Baker of the Silver Institute, indicating that silver production is not expected to increase significantly until the 2030s, creating a structural supply deficit.

Silver Miner Profitability and Equity Potential

A significant portion of the discussion focused on the potential of silver mining equities. Kungun illustrated the dramatic increase in miner profitability with an example: a miner producing 10 million ounces of silver saw their profit margin increase from $5 per ounce (at $25 silver) to $650 per ounce (at $85 silver) – a 1,200% increase. He argued that the mining equities had not yet fully reflected this increase in profitability.

Rick Rule’s recent decision to sell 80% of his physical silver and reinvest in silver mining stocks was cited as a strategic move. Kungun drew parallels to the 2002-2011 bull market, where high-quality silver miners like Pan-American Silver outperformed the silver price itself by a factor of 5x. He predicted that silver miners could potentially triple the price of silver in the current bull market, but cautioned that they had lagged in 2025, with the SILJ ETF underperforming silver. He attributed this lag to analysts using outdated price assumptions.

Dolly Varden Silver & Contango Merger – Catalysts and Outlook

The conversation then shifted to Dolly Varden Silver and its proposed merger with Contango. Kungun provided an update, stating that a shareholder vote is scheduled for March 17th, 2026, with the merger expected to be completed within a week of a positive vote. The combined company will have a roughly $1 billion valuation, cash flow from existing production, and a diversified portfolio of projects in British Columbia and Alaska.

He highlighted the significance of recent drill results from the Wolfane deposit within the Kitsalt Valley project, specifically the discovery of mineralization similar to the Torbit deposit. This discovery suggests a potential connection between the two largest silver deposits in the region, expanding the overall resource potential. Kungun stated the company is guiding towards a new mineral resource estimate showing 100 million ounces of high-grade silver and 1 million ounces of gold.

Looking ahead, Kungun outlined several catalysts for the combined company: pending drill results from Dolly Varden’s Homestake project and Contango’s Lucky Shot project, the completion of the merger, a 70,000-meter drilling program, and ongoing development of existing projects. He emphasized Contango’s existing cash flow from its Mcho mine, which generated $102 million in free cash flow in 2025.

Final Thoughts and Investor Advice

Kungun concluded by advising investors to focus on fundamentals, supply and demand, and the challenges facing the global economy. He cautioned against panicking during corrections and emphasized the importance of quality and due diligence. He stated, “For anybody who’s been around the space for a while, you’ve endured a 10-year bare market…that bare market has conditioned you to freak out when you have a day like Friday.” He believes the silver mining equities represent a significant opportunity for investors, particularly given the undervaluation of the venture exchange and the potential for substantial revaluation. He predicted a “very, very exciting time” for precious metals investors.

Technical Terms

• RSI (Relative Strength Indicator): A momentum indicator used in technical analysis to identify overbought or oversold conditions in a market.
• CME (Chicago Mercantile Exchange): A derivatives marketplace where futures contracts for commodities, including silver, are traded.
• Comex: A division of the CME specifically for trading metals.
• Circuit Breakers: Trading halts triggered when prices move beyond predetermined levels, designed to prevent excessive volatility.
• AISC (All-In Sustaining Cost): The total cost of producing an ounce of silver, including operating costs, capital expenditures, and exploration costs.
• SILJ ETF: An exchange-traded fund that tracks the performance of silver mining companies.
• Golden Triangle (British Columbia): A mineral-rich region in northwestern British Columbia, Canada, known for its high-grade deposits of gold, silver, and other metals.
• Torbit Deposit: A significant silver deposit within Dolly Varden’s Kitsalt Valley project.
• Wolf Vein: A newly discovered silver vein within the Kitsalt Valley project.

This summary aims to provide a detailed and specific account of the conversation, preserving the original language and technical precision of the transcript. It focuses on actionable insights and specific details rather than broad generalizations.