Silver Prices Spike Higher: Why The Selloff Wasn’t What You Think

Precious Metals Market Update - February 2nd, 2025 - Jeffrey Kushin, CPM Group

Key Concepts:

• Cyclical High/Low: Short-term peaks and troughs in price movements within a larger, long-term trend.
• Secular Bull Market: A long-term upward trend in price.
• Speculative Fervor: Rapid price increases driven by short-term investor enthusiasm rather than fundamental value.
• Fabrication Demand: Demand for precious metals driven by industrial use (manufacturing).
• Variation Margin: Funds required to be deposited with a clearinghouse to cover potential losses in futures contracts.
• Circuit Breakers: Trading halts implemented by exchanges to prevent excessive price volatility.
• Spoofing: A manipulative trading practice involving placing orders with no intention of executing them, to create a false impression of market demand or supply.

I. US Dollar Performance & Historical Context

The US dollar is currently down 8.4% from its cyclical high on January 13th, 2025, with most of the decline occurring throughout 2025. However, it remains 39.6% higher than its low in July 2011, preceding the Treasury credit rating reduction. The dollar is also 7.6% above its 2021 levels following the pandemic lockdown recession. Jeffrey Kushin emphasizes that claims of the dollar’s imminent collapse are inaccurate, noting its resilience over time. He points out that the dollar has been the de facto reserve currency since 1971, and while its eventual replacement is inevitable, no monetary system has proven permanently stable throughout history – all previous systems were based on gold or silver and ultimately failed. He asserts that gold has not historically protected currencies from long-term debasement.

II. Time Horizons & Market Dynamics

Kushin stresses the importance of distinguishing between short-term and long-term market trends. He references past CPM Group predictions: in 1997, they forecast a gold price drop, accurately predicting prices below $300 would be unsustainable, though the decline lasted five years until 2002. Similarly, in 2011-2012, they anticipated a 3-5 year cyclical decline within a broader bull market for gold and silver, which materialized between 2012 and 2016. This highlights that short-term fluctuations can be significant even within a long-term bullish trend. He illustrates this with recent price movements in silver, which rose 135% from $50 to $121 in two months, a surge he attributes to speculative fervor and expected to partially retrace.

III. Current Precious Metals Price Analysis

• Gold: Prices spiked sharply since late November, but this is viewed as a speculative spike. While the long-term trend remains upward, the recent surge has lost momentum. The February Comex futures roll contributed to the price movement, alongside economic and political factors.
• Silver: Experienced an even more dramatic rise (135% from $50 to $121 in two months), followed by a correction. Despite the pullback, silver is still in a bull market, with the average price last year at $40. CPM Group anticipates a higher average price this year but doesn’t foresee a sustained price above $121 or $200.
• Platinum & Palladium: Both metals experienced record highs earlier in the month but have since retreated to levels seen at the beginning of the year, though remain significantly higher than a year ago.
• Fundamental Issues in Silver: Refinery turnaround times have increased from 1-2 weeks to 4-6 weeks, indicating a fundamental issue with fabrication demand and investor selling backing up the supply chain.

IV. ETF Activity & Market Implications

ETF (Exchange Traded Fund) investor behavior is a key indicator of market sentiment. In January:

• Gold ETFs: Investors were net buyers for 18 out of 22 trading days, adding over 3 million ounces.
• Silver ETFs: Investors were net sellers for 15 out of 22 trading days, selling 30 million ounces.
• Platinum ETFs: Investor activity was mixed, with roughly equal days of buying and selling, resulting in a net change of approximately 54,000 ounces.
• Palladium ETFs: Investors were consistently buyers, adding around 63,000 ounces.

Kushin explains that ETF investors comprise both long-term precious metals investors and short-term speculators seeking quick exposure to the market, contributing to volatility.

V. Geographic Price Discrepancies (Shanghai, Mumbai, London, New York)

Significant price differences were observed between silver prices in Shanghai and Mumbai compared to those in London and New York on Friday and over the weekend. This was attributed to the presence of “circuit breakers” in the Shanghai and Mumbai markets – regulations that halt trading when prices move too quickly in either direction. Kushin criticizes the hypocrisy of those complaining about the Comex not intervening to halt price declines, as these same individuals often claim the Comex manipulates prices. He emphasizes that the Comex operates as a free and unmanaged market.

VI. Market Commentary & Hypocrisy

Kushin addresses recurring criticisms and conspiracy theories surrounding precious metals markets. He points out the irony of individuals demanding transparency (e.g., bank gold holdings) while simultaneously refusing to disclose their own holdings. He also criticizes the tendency to attribute market movements to manipulation without evidence, particularly when prices don’t meet expectations. He uses the example of “spoofing” – a short-term manipulative tactic – being used to justify broader claims of systemic market manipulation.

VII. CPM Group Resources & Conclusion

Kushin concludes by promoting CPM Group’s resources, including the “Gold Silver Renaissance, 25 Years On” special report (available at cpmgroup.com and info@cpmgroup.com) and the upcoming 2026 yearbooks. He encourages listeners to seek assistance from CPM Group and emphasizes the importance of responsible investing and contributing positively to the world.

Notable Quote:

“The only monetary system that hasn’t failed is the current one. And over the last five, six thousand years, there's been numerous currency systems, all of which or almost all of which have been based on either gold or silver or the dollar and silver. And all of them have collapsed except the current one.” – Jeffrey Kushin, CPM Group.