Silver Squeeze Risk Grows as Institutions Move Into Miners | Peter Krauth

Silver’s powerful rally may be entering a new phase, and the biggest opportunity could now lie in mining equities.

Speaking with Kitco News at PDAC 2026, Peter Krauth, author of The Great Silver Bull and editor of Silver Stock Investor, said the market has likely moved beyond its early accumulation stage and into the awareness phase of the bull cycle. He expects volatility to remain a defining feature of the market this year as prices continue climbing.

Krauth also warned that structural pressure may be building in the paper silver market. “If you get some big futures holder that says, ‘I'm standing for delivery,’ and the exchange can't meet that delivery,” he said, “that's when all you know what breaks loose, and then that's a reset.”

At the same time, institutional capital may finally be turning toward the sector, with large funds beginning to recognize the need for exposure to resources. Krauth argues that silver developers remain deeply discounted relative to producers, leaving significant upside if capital flows accelerate.
Despite silver’s surge, he believes the cycle is still early. “This bull market is just getting started.”

Recorded March 02, 2026.

00:58 - Silver Bull Market Bear Trap Explained
02:55 - Geopolitics, Recession Risk and Silver vs Gold
03:58 - COMEX Silver Squeeze and Delivery Risk
05:50 - India Moves Away From LBMA Silver Pricing
07:09 - Industrial Silver Demand and Substitution Limits
09:00 - Solar Power, Batteries, and Silver Demand
11:02 - Silver Miners Scarcity Premium Explained
11:28 - Institutional Investors Enter Silver Mining Stocks
15:12 - Silver Miners Leverage on the Silver Price
16:41 - Offtake Deals and Physical Silver Premiums
17:50 - How to Invest in Silver Stocks Now

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Transcript

SPEAKER_00 0:00

Kitco News, on-site coverage of PDAC, is presented by Gold Mining. U.S. Gold Mining, Uranium Energy Corp, and Uranium Royalty Corp.

SPEAKER_02 0:14

I'm Jerry Sapper with Kitco News here on location at PDAC 2026 in what is a little bit of a colder Toronto today. Here it's going to warm up, as silver is the undisputed star of the show. It's holding around$90 an ounce, selling off a little bit today, but again, still almost$90. And while the retail world watches the price, the institutional world is watching the plumbing, as we confirmed last week. And it looks like the pipes are finally starting to burst here. Joining me to discuss all about this silver market, of course, is one of our favorites, Peter Krauth, author of the Great Silver Bowl. And you also have the Silverstock Investor Newsletter, which has been doing really well in this market. Absolutely. Let's talk about what's happening here. I mean, you put out some new research, which I found very interesting. That shows that, you know, silver is now in this awareness phase. Even the taxi drivers are talking about. I mean, we saw that 267% run in two years. Is this the beginning of the systemic collapse of the paper markets?

SPEAKER_01 1:11

Well, potentially. I mean, you know, we've gone through what I believe is the stealth phase. That chart that you're talking about is a generic chart that talks about bull markets for any asset. It's going to be different for every asset, it's going to be different for every bull market in a given asset. But I think we've been through that stealth phase. We're at the beginning, I think, of the awareness phase. And what we had, I think in January, that dramatic parabolic run-up to$120, and then that big correction within a matter of days, a week or so, to intraday$67, then quickly to$70, and then trading in a range$78 to$80. If you look at that chart, that bull market chart, there's something called a bear trap. And the bear trap is, I think, applies especially to investors who have come in really late in the run up. Might have been people buying it$90,$100,$110. See it go to$120 and then to$70 almost overnight, and we'll sell. That's right. So I think there are a few reasons that that that may be. One of them is that, you know, there's concern that this will sort of slow down the economy globally a little bit. People are concerned about recession. Silver does underperform gold in a recession. Interestingly enough, it outperforms gold as you exit recession. We've seen that. In Goldwe Trust has done some fantastic work on that. And it outperforms prior, early, underperforms in the middle, and then outperforms as you exit recession. The other aspect of it is that a bit of a counter-argument is that there's a lot of silver in military applications. And global spending on military is at all-time highs. That's exactly right. And they they carry a fair bit fair bit of silver.

SPEAKER_02 4:11

I mean, we have to talk about the squeeze. I mean, at the same time, those silver ETFs have exploded 323% between August of 2026 and January. I mean, you know, even if a fraction of those paper holders demand physical delivery, I mean, is the the exchange forced into cash settlement default? What what happens?

SPEAKER_01 4:57

I I I've said that for a while, that, you know, that could be sort of the big trigger is that if if at some point, and and you know, who knows, maybe the these halts are a bit of a of a of a foreshadowing of that kind of thing happening. But if you get some some big um futures holder that says, I'm standing for delivery, and the the exchange can't meet that delivery and says, you know what, sorry, force majeure, this is too much for us, we're gonna deliver you in cash instead. And they say, no, no, no, I don't want the cash, I need the silver. That's when you know all you know what uh breaks loose. And uh exactly, exactly. And then and then that's a reset. And we're starting to see places like uh India, for example, that are saying, we're no longer gonna price our our uh our silver based on the L LBMA spot prices. We're gonna just do our own. They did they just feel that what is being determined in the West is no longer fair or realistic, and they've decided to move away from it. And I think that could potentially start to make, you know, Western pricing um um just just not not relevant.

SPEAKER_02 6:02

Yeah, yeah. I mean it feels like we've already seen that happen with the East versus West. I mean, you brought up India, it's a good it's a good opportunity to talk about that. I mean the SCBI just came out with this new ruling, they need 30% of that$365 billion behind silver and and gold spot. I mean, that's a ten to twelve billion dollar bid coming in a market that might be squeezed. Exactly.

SPEAKER_01 6:22

What does that do to price discovery? It does crazy things, yeah. They love silver, they love gold as well, obviously. Um as of April 1st, they're they are allowed to start using silver uh as collateral for loans. So that brings silver into mainstream. Gold has always been uh available to use as collateral for bank loans and so on. And then as you mentioned, in the last about seven or eight months, uh their holdings in ETFs in India have exploded by over 320%. So um and they've only been around for a few years. So they uh another sort of interesting anecdote, not just in India but places like Turkey, Egypt, uh, that are very big gold buyers traditionally for cultural reasons, for you know, family events, that kind of thing, um, gold has gotten so expensive for them that they're now shifting to gold-plated silver. So that could push up silver demand. Uh, you know, you're getting the same look in the product, and yet you're consuming more silver so that you get a similar look at a lower price.

SPEAKER_02 7:21

Yeah, that's an interesting one. I mean, you know, there is that argument on the the green side of things too that say, listen, at these prices, maybe it's too expensive to be implementing, but there's not really any way you can reverse engineer silver. It still gives you the best capacity.

SPEAKER_01 7:34

It sure does, it sure does. It's the most efficient. You know, we talked about this with with uh insiders uh in the of the industry in the last few days, and it's really not that obvious or or easy or quick to start substituting. Almost all of silver's applications, by the way, silver after oil is the commodity with the most variety of applications worldwide. It's something like 10,000 different applications. And so it's very difficult to substitute in a lot of those. Silver is in most cases industrially industrially used in such small quantities and has almost no effect on the final price. So either you have the manufacturer of that product absorb the additional cost of the silver, or they pass it on and it really has little effect on the final price. So yeah, it's really uh it's really you know set to be there.

SPEAKER_02 8:24

Um, you know, there's that a lot of talk about at least at$100 silver. We heard a lot about thrifting, right? A lot about that substitution we just talked to. I mean, at what point does silver become too expensive?

SPEAKER_01 8:35

So I've seen some research that in in solar panels at least, we could be looking at somewhere around$130,$135 for it to be motivating. Um, you know, there are there's there are always some potential counterarguments to that. It's true that silver is one of the the the biggest uh manufacturing uh costs in a solar panel. So as you know, as the silver price goes higher, obviously it gets more expensive to manufacture solar panels. But solar is still one of the the absolute, if not the cheapest form of new energy that utilities add, for example. And you know, for let's say uh data centers, they're growing uh incredibly. You know, it's mostly in the US, that's where the the the largest proportion of data centers are. And they initially, at least the the you know, some of the Mag 7 turned to nuclear. And I started saying, well, the next logical place is to go to solar. And I've gotten some pushback on that because it's not considered baseload power. They need steady 24-hour power. I believe that batteries are becoming a game changer in that sector because the cost of batteries uh for solar is falling by about half over the next 10 years, and we've seen that in 2025 they've already installed twice of 2023's solar capacity met by battery. So uh there was some really interesting work by Rystat Energy, it's a group out of Norway, I believe, and they showed that the growth of solar panel installations over the next 10 years is about 3% on average per year. Maybe not quite the pace of what we've seen in the last few years, but and this is on a global basis, but uh battery installations to support solar. So just so that we're clear, yeah, solar is daytime power. So what what do you do at night, right? So if you have batteries that can store some of that daytime power, there's your answer. Nighttime comes, you start drawing down the power from the battery stored in the battery, and you've got your 24-hour cycle of power. Very reliable, right? No moving parts, and uh the growth of batteries for solar is at 12% over the next 10 years. So batteries really are catching up to solar installations, and I believe, again, a game changer making solar the new sort of cheapest form of base load power. So it's gonna do a it's gonna take a lot, it's really gonna take a lot in terms of sustained high silver prices to sort of kill that bull side of the market.

SPEAKER_02 11:11

And that's another area where maybe China's a little bit more ahead of us. Exactly. Yeah. Exactly. Um we've got to talk about the miners then. I mean, that scarcity pro premium that's involved. I mean, it that's kind of the PDAC questions. Producers are making about 78% profit margins at$90 silver. It's nuts. It is. But you know, developers on the floor are trading at 0.2 of their net asset value. I mean, you you've called this your own word, the scarcity premium of course. I mean, when does the start stuff smart money stop and smell the roses here?

SPEAKER_01 11:41

Well, I can tell you, this is anecdotal, but it's personal experience. The last last couple of days had the uh interesting opportunity to have some insight in terms of let's call it um supposed smart money, because I wouldn't call it smart money. If it were they would have been there earlier. But big money, late smart money, um one of Canada's largest hedge funds, uh two days ago said to me, we need to be in this space. We've been investing in just about everything else but resources, and this is multi-billion dollar funds that are saying we now recognize we need to get into the resource sector. Um we have, you know, we can allocate half a billion dollars like overnight, and um, but we don't have the expertise. We need to hire full teams, we need to hire geologists, analysts, fund managers. They just don't know how to do it. Couple of other anecdotes relating to uh the BMO conference just about a week ago. Um so leading up to that conference, some of the juniors were telling me we get to see who our appointments, who our meetings are gonna be with uh for that for that conference. And they said, up until last year, uh the big institutional investors were sending one analyst, you know, check things out, let's just kind of make sure we stay on top of it. This year they're sending full teams, several analysts, fund managers, the whole works. So they're really starting to wake up to this. And even to show you how maybe unqualified they feel and it and it surprisingly admit that they feel. Um, one uh mining executive told me just a couple of days ago that at that BIMO conference, some of these multi-billion dollar institutional investors are saying to him, you know, we need to be in this space. How do we get started? That doesn't sound like very smart money to me, right? The institutions are finally coming in. Exactly. Okay, and that's a big wave. And they will start with the big producers, they will work their way down. But as you pointed out earlier, um there's a scarcity premium in in big silver miners. There are very few. Um, you know, you can easily find the big names in silver production, but they're trading at about two times their net asset value. The big gold producers are only trading at 1.3 times their net asset. That's almost double. And so, and if you go from developer to producer in the silver space, you're at 0.2 times net asset value. So there's a 10x to go from developer to producer in this space. And I mean that just speaks to the opportunity.

SPEAKER_02 14:16

So, when is that smart money, as we like to call it, even though I'm not sure why? You know, stop buying the metal and and start hostile takeovers or these juniors.

SPEAKER_01 14:23

I think I think the start m the smart money is going to start commit to come in over the next few quarters. Um, I think we're gonna really I've been talking about that since uh the beginning of this year. After the metal ran up like crazy and corrected a bit and has really looked like it's pretty healthy, um, that the next opportunity in silver is the silver miners. And I think that over the next few quarters, as they start to report, you know, profits at 78% instead of 30 or 33 percent, um it's gonna be unavoidable. Are they waiting too long? I mean, should they they be deploying this capital now? There's no question in my mind that they are waiting too long. The problem is that you know, these are big slow machines that have to tick a bunch of boxes off. They're not nimble, and that's the advantage that we have as retail investors. We don't have to wait for that. We can be ahead of that. And they we can sell to them if we've bought at at a multiple of where these prices are.

SPEAKER_02 15:21

So I mean we've seen that equity lag for years, and we always complain about it on the mining side. Is it possible that the market hasn't only fundamentally changed, but that the the leverage in the the juniors is kind of gone? Or are we gonna see the most violent catch-up trade in history?

SPEAKER_01 15:35

I think it's the latter. I really do. You know, I have a chart in my uh most recent presentation that shows the SIL ETF to the silver price, and that chart, if you go back ten years, it peaked. There was a a very short um uh blast off in in silver in early 2016, and uh silver was up uh almost 50 percent. Uh SIL was up almost 250%, so it was a five to five times leverage in a matter of seven months, and that ratio peaked in like August of 2017. And if you look since then at that chart, that that ratio has just been dropping on balance. It had a peak in 2020 through COVID when the metals and then the miners spiked, and then just recently, back in the fall, um, right around$50 silver, that ratio uh ran up again and then dropped, and it dropped because silver ran up so quickly to$100 and$120. The miners did not keep up. But if you look at the most recent version of that chart, um you actually have a second uh a double bottom, and the miners have started to catch up. And so once it finally breaks through that falling trend line, I think all bets are off, and that's why I say this is this is going to be the sector to be in for the next couple of years. I think we're gonna see some things that is going is going to shock a lot of people.

SPEAKER_02 16:54

No, I want to confirm something because this is an interesting point. I mean, we we were talking to Sprout on Friday, and he was interested in how companies like you know, Heckla and First Majestic are getting a premium over their spot price on the gold. So, I mean, one of the people would say maybe that's because EV makers or other people that want to secure supply, even Tesla, anything like that, they go straight to the source. Do you see any evidence of that happening?

SPEAKER_01 17:16

Absolutely. Absolutely. You've got some uh near-term producers, you've got some smaller producers that already have uh off-take deals with companies like Samsung, for example, that are not wasting any time. As you say, they're going directly to the source. I mean, uh another sort of anecdote, already a couple of years ago, um one of the medium-sized silver producers who sells half their output to China, the other half uh to the West, uh told me that they were uh their their Chinese buyers were coming to them and saying, uh, we are willing to pay you not only two dollars over spot, this was two years ago, we also are willing to pay you two weeks before delivery. That was how desperately they wanted and needed that silver. So this could just be the beginning. I believe it is absolutely the beginning.

SPEAKER_02 18:03

Now, looking at this market as an investor, because again you had the newsletter which has uh gathered a lot of attention, and I I in I tell viewers they should be checking it out, especially for some of your picks in the market. I know you won't give us that today, you gotta go to the site. But you know, what do you say to them over the next six months to one year? Have they missed the boat?

SPEAKER_01 18:20

Not even close. No, absolutely not even close. You know, the best way I can maybe rationalize that is to say um if you look even at the sort of the lowest risk uh of the spectrum in this space, so let's say the the the larger producers, although their share prices have moved up relatively significantly, if you only look at the share price, that's one thing. But that's looking at it in a vacuum, and it's not, I don't think it's it's fair to yourself as an investor. What you need to do is look at it versus the silver price, and especially to their profits. And even though their share price has gone up, they have actually gotten cheaper, believe it or not. Not on a pure share price basis, but on a relative basis because the silver price has moved up so much, and on a uh profit basis, they've actually gotten cheaper. Silver has moved up so much faster than the share price, believe it or not, these stocks have actually gotten cheaper. So, no way you have not missed this boat. Um get started. Start allocating. You don't have it doesn't have to be all in, you don't have to be, you know, with all feet at both feet right at right off the bat. Uh, but start placing. I I think I've always said the best way to to really uh you know be involved and to to uh be on top of your stuff is make a small allocation, pick some stocks, do some research, pick some stocks, start allocating to them. It doesn't have to be your full allocation, but I I know at least it is for me. The moment I start buying, even a small position of stock, I watch it like a hawk. I want to see what it's doing next. And of course, and that that has you, you know, personally vested in it, and so then you will watch it carefully. But this bull market is just getting started.

SPEAKER_02 20:03

Yeah, sometimes it's better advice just to not look and wait for the six-month spray. If you made the bet for six months, otherwise you're you're ending up selling uh to the bigger money. That's right, that's right, Peter Kraft. Always a pleasure. Thank you, Jeremy. Appreciate it so much. And of course, we're gonna be here at PDAC 2026 all week long. We got some wonderful guests just like heater himself, so be sure to hit subscribe. Stay tuned. I'm Jeremy Zafford. We'll see you next time.

SPEAKER_00 20:26

KitCo News on site coverage of PDAC is presented by Gold Mining, U.S. Gold Mining, Uranium Energy Corp, and Uranium Royalty Corp.