24 Jan 2026
Talk of Town
Everyone has been now talking about silver/gold. You speak to anybody, talk to a random person you meet at a wedding function or any other place – Its about commodity increasing at rapid pace. Why is that so. What relevance does it have. Lets decode the history.
The Chart of Silver – From Bachchan’s Era till Date (70s till date)
What does the chart show?
There is a long underperformance from 10 years to 30 years. But once this underperformance is broken, it rises at a rapid pace which some underlying news/activity which impacts the world.
In the late 1970s, the US had double-digit inflation, so people rushed into gold as an βinflation shield.β
In 2010s, After the 2008 meltdown, trust in banks/financial system was weak – people wanted a βsafe asset.β (This risk mood carried into 2010β11.) plus some other activities like Eurozone debt crisis and fear of US debt default.
This time again it is about Trump policies which are impacting the sentiment and commodities being the hedge for the fear – in simple terms.
Why did commodity prices fell during these 2 periods?
1980β1982: Gold fell after its Jan-1980 peak because the US Fed (Volcker) hiked interest rates sharply, crushed inflation, and the safe-haven panic cooled.
2011β2015 (big drop in 2013): Gold fell after the 2011 peak as the Fed signaled QE tapering, bond yields/dollar strengthened, and markets shifted from crisis-fear to risk-on.
Basically in simple terms – Fear Reduced and hence commodity prices fell.
What do we learn from these events?
Every time an asset rises ferociously – Silver rose 610 % in 80s and 127% in 2010s. At this time, you will find justification of insane levels. Same happened during tulip mania (you can read up on that event). This time also, fear, uncertinity is super high, headlines scream insane levels. Let me tell you no analyst knows anything beyond a point of time.
Where are we now?
Silver has moved 106% in dollar terms from breakout in around 3 months. We are around 45% above 50 Day EMA. Silver has moved 5-6 months ferociously in the past before tapering out. Where will we go, even I do not know and do not claim that.
But 1 thing is sure – Once this rally ends, we will fall hard, (history says 50- to even 90 percent,there will be doomsday headlines all around and it may correct a great deal and may take years or decades to recover again at the highest point.
What could be the reason on which it will fall? Maybe, when overall fear and undertainty reduces. Hence people trying to do SIP/investment by seeing current rally should be comfortable with long underperformance.
However, when the downfall happens cannot be timed and we should be happy to be witness to the rise and fall (whenever it happens)
Thank you!