Silver surges to all-time high of $80/ounce

Silver trading near $80 per ounce reflects a rare convergence of physical scarcity, financial demand, and macro hedging rather than a single catalyst. Multi-year supply deficits, constrained mine output, and structurally rising industrial demand, particularly from energy transition uses, have collided with renewed investor demand for hard assets as real rates and currency confidence come into question. At the same time, silver’s relatively small market size makes it especially vulnerable to sharp repricing when futures positioning and physical buying reinforce each other.

• After surging over 140% in 2025, the price of silver continued to trade higher in 2026
• Silver has benefited from several favorable demand trends
• The metal is used in semiconductors, solar panels, and batteries
• All of the above have experienced a surge in demand due to AI and the adoption of solar energy
• In addition, silver has a positive relation to gold, which has experienced renewed demand due to concerns about the US dollar
• On the flip side, the supply of new silver has not grown, as silver is hard to mine and is usually a by-product of other minerals
• Taken together, the chart of silver looks like the latest meme stock; however, for very different reasons

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One GDP reading shows economy growing at 5%

The latest GDPNow estimate from the Federal Reserve Bank of Atlanta jumped to roughly 5.1% annualized, with nearly 2 percentage points of that growth coming from net exports. The swing was driven almost entirely by a sharp decline in imports, not a surge in exports, which mechanically boosts GDP since imports subtract from the calculation. In fact, net exports flipped from a modest drag earlier in the quarter to one of the single largest contributors to headline growth. This makes the GDP figure look far stronger than underlying domestic demand alone would suggest.

• While many focus on the shrinking trade deficit as the reason for the latest reading, there were other reasons for optimism
• Consumption has been running at close to 2% and accelerated in the last calculation
• Private and government investment remained steady
• This administration seems intent on running the economy “hot,” hence Trump’s latest announcements about improving housing affordability and defense spending
• We expect to see more such actions as we get closer to the mid-term elections

Stocks begin new year with rotation

U.S. equities have opened 2026 with a clear rotation away from mega-cap tech, as more cyclical areas of the market lead performance. Through the first full week of the year, the Russell 2000 (small caps) is up just under 6%, outpacing the S&P 500 and large-cap tech, which have gained closer to 2%. Industrials, materials, and energy are among the top-performing sectors, up mid-single digits. The early-year divergence reflects a market pricing broader economic momentum rather than continued multiple expansion in a narrow group of tech leaders.

• The past several years have been characterized by big tech driving the stock market
• We have written in the past about how unsustainable this is in the long term
• As we begin 2026, we could be seeing the broadening of the market’s performance
• This would be ultimately healthy for stocks, however, it could mean mediocre returns for the broad indices
• We have seen this type of divergence before, only to revert to big tech leadership
• It is too soon to tell whether or not this is the beginning of a new trend, but it is notable, given that  it is happening at the beginning of the new year

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