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On January 30th, silver futures fell 30 1% in a single session. It was the worst day for the metal since March of 1980, back when the Hunt brothers attempt to corner the market collapsed. Nothing happened to silver that day. No mine flooded, no factory stopped buying, no new supply showed up. What happened was that President Trump named Kevin Worsh as his pick to lead the Federal Reserve and a market that had been priced for a very different kind of Fed chair came apart.
Silver had touched about $122 an ounce the day before. Today it's around 61. And the man who got that nomination is now running the Fed, which just raised interest rates for the first time in more than three years. So, here's what I want to work out. If that's what a silver shock looks like, what would the next one look like?
And where would it come from? Because you've probably seen Stanley Ducken Miller's name attached to silver warnings lately. And I should tell you upfront what I found. I could not find a recent silver warning from him. What I did find is something else he said about bonds and I think it matters more for silver than anything he could have said about silver itself.
Start with what happened in January because the mechanics are the whole lesson. Silver had already roughly doubled in 2025. Then it rose another 50 some percent in the first few weeks of 2026. Moves like that don't come from people calmly buying metal. They come from leverage. Traders were using futures contracts where you put up a small deposit and control a much larger amount of silver.
They were also using leveraged funds that promise two times the daily move. Here's the part people skip when a market gets that wild. The exchange raises the deposit it demands. The CME did exactly that with silver futures. A trader who was fine on Wednesday suddenly has to wire in more cash on Friday.
And if he can't, his position gets sold. Selling pushes the price down, which triggers more calls, which forces more selling. That's a margin spiral. And it doesn't care whether you believe silver is worth $200 someday. The numbers show how violent it got. The big eyesshares silver fund had its worst day on record.
A leveraged silver fund lost more than half its value in a day. Spot silver went from around 120 one to somewhere in the 70s and it settled that day near 78. Now a crash like that raises an obvious question. If silver is supposedly in a shortage, why did it fall off a cliff? That's where the shortage story gets more complicated than the videos usually make it sound.
The Silver Institute's World Silver Survey, put together with Metals Focus, says the market ran a deficit of about 40 million ounces in 2025. That was the fifth deficit in a row and they expect another one this year around 46 million ounces. Add those years up since 2021 and the world has drawn down roughly 760 million ounces of stored silver.
That's real and it's the reason silver can squeeze. But look at the size of it. Yearly demand is about 1.1 billion ounces. A 40 million ounce gap is around 4%. That's meaningful, but it isn't a world running out of metal. Silver gets squeezed when a small physical gap meets a huge financial appetite because a lot of silver is a byproduct of mining copper, zinc, lead, and gold.
Miners don't open new silver mines just because the price spikes. So supply responds slowly and in the meantime the price is set by whoever is willing to pay the most right now. And who is that? Increasingly it's investors. The same survey says coin and bar demand is forecast to rise nearly 20% this year.
Even as industrial and jewelry demand fall because silver got so expensive. Solar makers are using less silver per panel. Jewelry demand is dropping. Recycling hit a 12year high. So, the shortage is being covered by people buying silver as a financial asset. And financial buyers can leave faster than any factory can.
That's the first thing to take from January. Silver has two personalities. It's an industrial metal and it's also a kind of money that pays you nothing. In January, I personality was running the show, which means silver was trading on beliefs about the Fed and the dollar, not on how many solar panels were being built.
So, what were those beliefs? The rally in January was powered by a specific fear that the next Fed chair would be someone willing to push interest rates down for political reasons and that the dollar would lose value as a result. If you believe that you want assets that can't be printed, gold and silver are the obvious ones.
When wars was named, markets rid it as a more credible, more disciplined choice. The dollar firmed and the debasement trade got hit hard. The crash was a repricing of the Fed. Which brings us to Draen Miller and to what he has actually said as opposed to what gets attributed to him. He has been a gold holder at times and a seller at others.
In 2016, he told the SA conference that gold was his largest currency allocation. Then he sold it the night Trump won the election in November of that year. At SA in 2023, he said he owned gold and silver, but he was lukewarm about it, noting that precious metals have historically done poorly when the economy has a hard landing.
His words were, "Don't go out and buy gold. I could change my mind in a week or two." Folks, this past February, in a Morgan Stanley interview, he said his fund had some gold and called it mainly a geopolitical trade, not a monetary one. He was more enthusiastic about copper and was bearish on the dollar.
So, that's a man who treats precious metals as a tactical position. He is not a silver evangelist and I can't point to any recorded warning from him about a silver collapse. If a video tells you Draen Miller is warning that silver will crash or explode, ask where and when he said it. But in late August, he did publish something that matters.
In a Wall Street Journal up, Ed titled Let the Bond Market Speak. He called long-term Treasury yields the world's most important price. The occasion was a decision by the Treasury to double its buybacks of longdated debt to at least $4 billion per operation aimed at bonds maturing in 10 to 30 years running from September 9th through early November.
Let me explain what that means because it's the center of this. A treasury buyback is the government buying back its own older bonds. That reduces the supply of long bonds in the market which pushes their yields down. Treasury says it's about keeping the market functioning smoothly. Um Draen Miller's argument is that it's really price management.
He pointed out that the government is buying long bonds while selling shortterm bills, which he compared to a limited form of quantitative easing run out of the Treasury instead of the Fed. And he reached back to the 1940s when the Fed capped longterm yields to help finance the war, kept the cap after the war ended, and helped feed the inflation that followed.
His deeper point is political. The long bond, in his view, is the one thing that pressures Washington to deal with social security and Medicare. And the interest bill on the debt has now reached about a trillion dollars a year. If you mute that signal, Congress gets to keep postponing the hard choices.
The Treasury Secretary, Scott Bent, who once worked for Ducken Miller, pushed back publicly and said, "Ducken Miller changes his mind a lot." Now, connect that to silver because at first glance, it points the wrong way. Suppressed bond yields, you'd think, are good for silver. Lower yields mean holding a metal that pays nothing costs you less.
And the whole debasement story says that when governments quietly manage their borrowing costs, hard assets win. So why has silver fallen in September while this has been going on? Because the bond market didn't cooperate. The 30ear yield hit a 19year high in August around 5 and a4%. The Fed raised its target range to three and three quarters to 4% on September 16th and the vote was 12 to zero.
16 of the 19 officials in the projections expect at least one more hike this year. Oil has been elevated because of the conflict involving Iran with Brent trading above $90 at one point and that has kept inflation worries alive. The 10-year yield has been hovering around 5%. Here's what that does to silver.
Real yields, meaning the interest rate you earn after inflation, have climbed. When you can earn a solid inflation, adjusted return in government bonds. Owning a metal that pays zero costs you more. That's the opportunity cost. The dollar gets stronger, too, which makes silver more expensive for buyers using euros, yen, or reas.
On Monday, September 28th, silver fell more than 5% in one day to about $61, while gold dropped nearly 4%. Notice that silver fell harder than gold. It nearly always does. Silver is the smaller market. It's more speculative and it carries that industrial side that gets nervous when rates rise and growth slows.
When there's a squeeze in rates, silver feels it first and feels it most. So, here is where I think the title's question gets answered. A silver shock has two ingredients. First, a trigger that changes what investors believe about money. Whether that's a Fed chair announcement or a bond market lurching higher.
Second, a crowd of leverage positions that can't survive the repricing. In January, the trigger was a Fed chair choice. The next trigger, if there is one, could easily come from the bond market and from precisely the place Ducken Miller is pointing at. Think through the chain. Suppose Treasury's buybacks fail to hold the long end down and the 30-year keeps climbing.
That raises real yields further. The Fed already hiking has less room to ease. The dollar firms. Silver gets squeezed from the other side. Or suppose it goes the other way. The buybacks work in the short run. Yields settle. But investors start to see the program as exactly what Ducken Miller says. It is a sign that Washington can't let rates find their own level.
Then the debasement story comes roaring back. Silver rallies hard and positioning builds again. And a rally built on that kind of belief sitting on rebuilt leverage is just the setup for another January. Both paths run through the same thing, which is that silver trades off the bond market, not off its own supply and demand.
Now, I owe you the strongest case against all of this because the bull case isn't foolish. Silver is still up about 30% from a year ago. It's just down 14% this year and about half from its peak. The physical market has run deficits for six years and the draw down of stored metal is real. Mine supply is slow to respond.
Demand from the buyers who treat dips as chances to accumulate hasn't gone away. And the gold to silver ratio at around 68 has come down a lot from where it sat a few years ago. If you believe the longrun story about fiscal strain and weakening trust in government debt, then a 19-year high in the 30year yield is arguably evidence for it, not against it.
A pessimist about Treasury finances can be quite bullish on hard assets. There are also two reasons to be skeptical of the pessimistic reading I just built. First, high prices cure high prices. Uh the silver institute itself expects the deficit to to fade after this year because solar manufacturers are using less silver and jewelry buyers are walking away and recycling is climbing.
Second, even Dreen Miller's own argument has critics. One Forbes columnist argued this week that the 10-year isn't the most important price in the world at all and that the dollar is. and his own record on gold shows he flips positions when the evidence moves. So what would change my reading? There are a few things you can actually watch.
The first is the 30year yield through the buyback window which runs until early November. If yields grind lower while the program runs, Treasury's defenders look right. If they drift back up after each operation, Draen Miller's case gets stronger. The second is the next Fed move. The officials own projections point to one more hike this year.
If the Fed holds off or signals the hiking is over, real yields could ease and silver's biggest headwind weakens. The third is the dollar. It's been firming. A reversal there would matter more to silver than almost any piece of mining news. And the fourth is positioning. When margin requirements get raised again or when leveraged silver products start seeing big inflows, that tells you the crowd has returned.
That's the ingredient that turned an ordinary repricing into a 30% day. One more thing worth watching is Dra Miller's next regulatory filing in mid November. It only shows USC listed long positions. So it won't reveal futures or foreign holdings and it'll be a snapshot of the end of September, but it tells you whether a famously tactical investor is still holding anything in this corner at all.
So let me put it together. What happened in January was not a story about silver running out. It was a story about a crowded leverage trade built on one belief about the Fed. And it broke when that belief changed. What the evidence supports is that silver today trades mostly as a leveraged expression of real yields and the dollar.
What Derekenmiller has actually warned about is the bond market and the government's attempt to manage it. I can't show that he's warned about silver. So treat anyone who claims he did with some caution. And what remains unknown is the thing everything hangs on. Whether the Treasury can really hold down longterm borrowing costs or whether the market will make that decision for it.
None of this is a call to buy or sell silver. It's a way to see where the next surprise is more likely to come from. If you want to keep following this, subscribe because the next few weeks of Treasury buybacks and the Fed's next move will tell us a lot about which way this goes. And that's where the story picks up.
The next silver shock probably won't announce itself in the silver market. It'll show up first in the price of
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