Breathtaking stuff as the silver rally extends to $116 in the largest nominal gain ever

Silver has further extended gains, hitting $116/oz and up more than $13/oz on the day.

To offer a sense of how big a move that is, as recently as 2020, the total price of silver was just $11/oz. This is an unheared of move in terms of magnitude in silver market. It’s reminiscent of the Hunt Brothers squeeze on January 17-18, 1980.

That saw silver rally to an intraday high of $50.35 from $38.50 at the beak, an incredible 30% but now surpassed by the $13/oz gain today.

Adjusting for inflation, the peak of silver in 1980 would translate to about $195/oz today and that might be a target that the bulls look to, with little else on the chart for guidance. The metal is still trading at roughly half the “real” value it reached during the Hunt brothers’ corner.

Of course, that squeeze ended in the ruination of the Hunt brothers as margin levels were changed and silver fell to $34.00 by Jan 22, 1980 and all the way to $10.80 by March, including a 50% drop on March 27, 1980 — a day that lives in infamy for silver traders.

That bust wasn’t the end of the story for silver as it continued with some massive moves throughout the 1980s. That highlights that we may be in a new era of volatility in the metals market as retail money floods in and the market struggles to get a handle on the inflation outlook.

At the moment, I would be wary of chasing this move as this kind of parabolic stuff is tough to chase. For those who are already long though, the best trade is often to hang on for dear life, or take small profits along the way.

I would be wary of anything that happens after hours today as we could see margins raised and brokers could start to limit access.