Rich Checkan: Silver to Outpace Gold in 2026, Use This Dip to Buy

Key Concepts

• Gold and Silver Prices: Current pullback, long-term bull market, healthy consolidation, not the end of a bull market.
• Economic Indicators: Sentiment, geopolitical stability, social unrest, interest rates, quantitative tightening (QT), quantitative easing (QE), dollar strength, gold-silver ratio, Dow-gold ratio.
• Federal Reserve Policy: Interest rate cuts, end of QT, potential for further easing, impact on money supply and inflation.
• US Economy: Growth rate, consumer strain, inflation, wage stagnation, national debt, fiscal policy.
• Political Dysfunction: Lack of bipartisan cooperation, impact on economic solutions.
• Investment Strategy: Gold as wealth insurance, silver's potential outperformance, embracing dips.

Gold and Silver Price Analysis

Current Market Sentiment and Outlook:

Rich Tucken, President and COO at Asset Strategies International, discusses the current pullback in gold and silver prices, characterizing it as a "much needed consolidation" and a "healthy, very healthy consolidation." He emphasizes that long-term, he sees "nothing has changed" fundamentally to suggest the end of the bull market. The initial pullback was approximately 10%, which he considers minor given gold's prior rapid ascent (around 10% per week).

Key Arguments for Continued Bull Market:

• Absence of Bear Market Indicators: Tucken states that none of the typical signs indicating the end of a bull market are present.
• Geopolitical Instability: He highlights ongoing geopolitical tensions and the testing of nuclear weapons as factors that increase demand for safe-haven assets like gold.
• Social Unrest: Widespread social unrest globally is another indicator supporting a continued bull market.
• Low and Declining Interest Rates: Interest rates are low and expected to decrease further, making gold more attractive.
• Weakening Dollar: The dollar is weakening, and Tucken does not believe this trend is over. He notes the dollar is still below 100, significantly down from its recent high of 116.
• Gold-Silver Ratio: The ratio is still at 83, indicating significant room for silver to catch up.
• Dow-Gold Ratio: The current ratio of 11.9 (or 11-12) is far from the historical end-of-bull-market level of 5, suggesting substantial upside potential for gold.
• Government Spending and Monetary Expansion: Congress continues to overspend, necessitating monetary expansion (printing money) to bridge budget gaps, which devalues currency and increases the cost of assets.
• End of Quantitative Tightening (QT): Jerome Powell's remarks signaled the end of QT, which Tucken interprets as a move towards quantitative easing (QE) and an expansion of the money supply, leading to increased prices for assets.

Potential for Further Pullback and Timeline:

Tucken acknowledges that the pullback could go deeper, mentioning potential drops to $3,600-$3,700 for gold, but still considers this insignificant in the long-term picture. He is uncertain about the exact turnaround time but expects it to be "fairly quick," with a clear upward trend by "the end of the year, January, February time frame."

Potential Triggers for the Next Leg Higher:

• Commercial Lending Issues: Problems in commercial lending could destabilize the financial system.
• Countries Pulling Away from Treasury Market: A decrease in global demand for US debt could create significant problems.
• Stock Market Pullback: A sharp decline in the stock market could trigger fear and lead to initial sell-offs in gold and silver due to margin calls. However, bargain hunters are expected to quickly step in.

Federal Reserve Policy and its Implications

Interest Rate Cuts and Quantitative Tightening (QT):

Tucken believes the Federal Reserve will implement another interest rate cut in December, despite Jerome Powell's attempts to downplay expectations. He interprets Powell's comments as an indication that the Fed is under pressure and will continue to ease monetary policy.

End of QT and Quantitative Easing (QE):

The signal of ending QT means the Fed will stop shrinking its balance sheet and will likely move towards QE, expanding the money supply. Tucken states that this expansion of the money supply is a direct cause of increased prices for "anything of value."

Consequences for Inflation:

Tucken expresses concern that the Fed's easing policies could lead to inflation spiraling out of control. He recalls the previous period of easy money, where inflation reached high single digits or low double digits. He believes that if the Fed eases too much, too fast, inflation could quickly rebound to similar levels. He questions whether interest rate policy can effectively address issues in the labor market.

Federal Reserve Leadership and Independence

Jerome Powell's Term and Potential Successor:

Tucken anticipates that Jerome Powell's term as Fed Chair will end and that a successor, likely aligned with President Trump's philosophy, will be appointed. This new leadership is expected to favor cutting interest rates and making money more accessible.

Fed Independence:

Tucken is skeptical of the concept of Fed independence, viewing it as a "show and smoke and mirrors." He believes the Fed ultimately acts in ways that serve the administration's needs, particularly in managing debt and interest payments. He notes that the Fed has historically talked about a strong dollar while allowing it to weaken.

US Economy and Consumer Health

Economic Growth:

Tucken estimates current economic growth to be about half of last year's rate, describing it as "okay" but "not great" in absolute terms. He believes the US economy is performing "just fine" relative to other economies.

Consumer Strain:

Despite decent growth, Tucken highlights significant strain on consumers, particularly the middle and lower classes. He notes that even well-compensated professionals are struggling to pay bills, indicating a lack of economic health. He believes wages have not kept pace with inflation for years, making it difficult for people to afford goods and services.

National Debt and Fiscal Policy:

The US has $38 trillion in debt, which Tucken believes is not unfixable but requires immediate action. He advocates for balancing the budget and stopping the "bleeding." He suggests that easing regulations and enhancing business growth, potentially through advancements like AI, could increase revenues and help reduce the debt.

Political Dysfunction and its Impact

Government Shutdown and Lack of Cooperation:

Tucken points to the current government shutdown and the lack of bipartisan agreement as a major impediment to addressing economic problems. He criticizes the current political climate where disagreement is met with animosity, contrasting it with past eras where adversaries could still work together.

Fixing Dysfunction:

He believes that fixing the dysfunction in Washington D.C. is a prerequisite for solving other problems. He emphasizes the need for people to communicate and for the will of the people to drive policy forward.

Gold vs. Stock Market Performance

Long-Term Returns:

Tucken presents data showing that since January 1, 2000, gold has significantly outperformed major stock market indices:

• Dow: Up 319%
• S&P 500: Up 370%
• NASDAQ: Up 474%
• Silver: Up 812%
• Gold: Up 1288% (and was up 13,400% at one point)

Dollar Weakness and Valuation:

He argues that the impressive nominal gains in the stock market are largely due to the weakening dollar. He illustrates this by stating that the Dow, measured in gold, is only 60% of its value at the peak of the dot-com bubble.

Dow-Gold Ratio as an Indicator:

The current Dow-gold ratio of 11.9 (or 11.5-11.9) is significantly higher than the typical end-of-bull-market ratio of 5. Tucken calculates that for the ratio to reach 5, either gold would need to rise to $9,000 per ounce, or the Dow would need to fall to 22,000, suggesting substantial upside for gold.

Silver's Outperformance Potential

2026 Outlook:

Tucken predicts that silver will be the best performer between gold and silver by 2026. He believes the market is in the late stages of a bull market, which typically favors silver.

Drivers for Silver:

• Investor Demand: Unlike central banks, individual investors are now buying silver, which has a greater impact on its price due to its smaller market capitalization.
• Industrial Fundamentals: Silver has strong industrial demand, particularly in solar cells and batteries.
• Supply Deficit: There has been a deficit in silver production for the past 3-4 years, canceling out previous surpluses and creating a favorable supply-demand equation.
• Monetary Metal Status: Silver retains its status as a monetary metal, albeit to a lesser extent than gold.

Final Investment Advice

Gold as Wealth Insurance:

For those who bought gold for "wealth insurance," Tucken advises against selling it unless facing a personal crisis, regardless of price action.

Embracing Dips for Profit:

For those holding gold and silver for profit, he encourages embracing current dips rather than succumbing to fear. He suggests that this is an opportune time to buy more if one has the financial capacity.

Indicators for Market Shift:

Tucken reiterates that he looks for at least three or four indicators to signal a significant shift in the market. He notes that currently, not even one of these indicators is firing, and Congress has not changed its spending habits. He believes gold will continue to move higher until there is a clear will in Congress to balance the budget.