Gold and Silver Market Update – Stephan Gleason (Money Metals) – January 2026
Key Concepts:
- Silver Volatility: Significant price swings in silver, including a large one-day drop, driven by call option activity, physical demand (China & India), and refining capacity issues.
- Gold’s Continued Rise: Gold has doubled in value over the past three years, driven by central bank buying, but currently in a “repair period” with potential for further gains later in the year.
- Refining Bottlenecks: Severe backlogs in silver refining, particularly in the US, with over 50% of capacity located in China, leading to price dislocations and challenges for dealers.
- COMEX Inventory & Delivery: Concerns regarding declining registered silver inventories on the COMEX and the ability to meet physical delivery requests.
- Sound Money Policies: State-level initiatives to remove taxes on gold and silver transactions, establish gold reserves, and promote sound money principles.
- Audit the Gold Act: Proposed legislation to audit US gold reserves, assess their purity, and ensure transparency.
- Silver Act: Proposed legislation to diversify silver depository locations and increase market access.
I. Current Market Situation – Gold and Silver Price Action
As of early 2026, the gold and silver markets are experiencing volatility. Silver experienced a rapid ascent in December and January, peaking near $120 before a substantial correction down to $64, currently trading in the high $70s. While still higher for the year, the correction raises questions about its low point, with a key support level identified in the low $70s. This surge was fueled by call option activity, demand from China and India, and momentum buying. Gold has more than doubled in the past three years, but is currently in a “repair period” with potential for gains later in the year. The largest one-day drop in silver history occurred on January 31st, a 28% decline, exceeding the drop experienced in 2011 which occurred over a longer period.
II. Dealer Perspective – Trends in Retail Demand
The past three years, particularly since the regional bank crisis of early 2023, have seen fluctuating retail demand. Initially, there was a surge in gold buying driven by central bank activity and international demand, accompanied by significant selling from existing holders, creating equilibrium at the dealer level. However, the rise in silver prices in late 2025 triggered a new influx of retail interest, particularly in silver, with hundreds or thousands of calls per hour. This demand was driven by headlines and excitement surrounding silver. Money Metals and other major bullion dealers experienced intense pressure, leading to website notices regarding delays. Interestingly, this surge coincided with continued selling of both gold and silver as individuals capitalized on price increases. This created a highly active two-way market with crushing volume, requiring intensive labor for metal examination, testing, and order fulfillment. Demand has slowed slightly in recent weeks but remains significantly higher than a few months prior.
III. Refining Capacity Constraints & Market Dislocations
A major issue impacting the silver market is a severe lack of refining capacity, particularly in the US, with over 50% of global capacity located in China. Refineries are heavily backlogged, refusing new customers except long-standing or large clients. This has led to increased refining values and financing challenges for refineries due to high hedging costs and dislocations. The backlog has impacted smaller businesses, particularly scrap dealers, who are unable to secure financing from refineries and are facing capital constraints. This has resulted in lower bids for scrap silver and some dealers being forced to cease operations. The situation has created price dislocations, with 90% junk silver trading at discounts to spot prices. Money Metals is exploring options to ship silver to China or Dubai for refining.
IV. China’s Role & COMEX Inventory Concerns
China’s demand for silver is evident in the consistent price increases observed when the Asian market opens. The premium for silver in China is estimated at $2-3 per ounce, incentivizing arbitrage opportunities. COMEX silver inventories are declining, with registered inventories dipping below 100 million ounces, raising concerns about the exchange’s ability to meet physical delivery requests. While most contracts settle without physical delivery, the drain on inventories is noticeable, with metal moving to regions with higher premiums.
V. Sound Money Initiatives & Federal Policy
State-level initiatives promoting sound money policies are gaining momentum, including removing sales and income taxes on gold and silver transactions, establishing state gold reserves (Utah, Wyoming, Ohio, Texas), and promoting legislation to audit US gold reserves (Audit the Gold Act). The proposed Audit the Gold Act would assess the purity of US gold reserves and ensure transparency regarding potential encumbrances or leasing. A new bill, the Silver Act, aims to diversify silver depository locations, reducing reliance on the New York area and increasing market access. Concerns were raised about opportunistic proposals for government-business partnerships in the gold and silver market, which could lead to government control over private assets. Stephan Gleason expressed skepticism about a hawkish Federal Reserve under Jerome Powell, suggesting that lower interest rates are likely given Trump’s preferences. He also highlighted irregularities in past audits of US gold reserves, noting that a significant portion of the reserves are not in a readily marketable form.
VI. Notable Quotes
- “Silver is kind of the late bloomer in the bull market. Doesn’t start, you know, until maybe the fourth inning.” – Stephan Gleason, on the typical timing of silver’s price surge.
- “There’s definitely an ongoing drain [from COMEX] and I think a lot of it is moving out of the country where there’s a higher premium.” – Stephan Gleason, on the movement of silver from US exchanges.
- “Just because it’s a gold bill doesn’t mean it’s good.” – Stephan Gleason, cautioning against uncritical support for all sound money legislation.
Conclusion:
The gold and silver markets are currently navigating a period of volatility and significant change. Silver, in particular, is experiencing rapid price swings and refining bottlenecks. While gold has demonstrated strong performance over the past three years, it is currently in a consolidation phase. State-level sound money initiatives are gaining traction, but concerns remain regarding potential government intervention and the need for greater transparency in US gold reserves. The situation demands careful monitoring and a cautious approach to investment, particularly regarding leverage. The overall outlook remains bullish for both gold and silver, with potential for further gains as economic and geopolitical uncertainties persist.
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