Silver Slingshot
The Silver Slingshot
For the last 18 months, the Gold-Silver Ratio (GSR) has been the "widow-maker" for precious metals bulls. It has tested the patience of anyone paying attention to hard assets. While gold spent late 2024 and early 2025 shattering records and grabbing headlines, silver—the bipolar cousin that is half monetary metal, half industrial commodity—lagged behind.
But looking at the charts this week, that dynamic has officially shifted.
With silver finally breaking the psychological $60/oz barrier and the GSR compressing toward 70, we are entering the most explosive phase of the precious metals cycle: "Mean Reversion."
For the uninitiated, mean reversion in this sector is violent. Historically, during full-blown bull markets, the ratio doesn’t just stop at 70; it compresses toward 50:1 or even 40:1.
Mathematically, there are only two ways that happens:
-
Gold crashes while silver stays flat (unlikely in this fiat-dilution macro environment).
-
Silver slingshots higher to catch up to gold.
We are betting heavily on door number two.
The "Triple Leverage" Play
The "smart money" isn't just buying physical bars and sitting on them. The asymmetric upside is in stacking leverage:
-
The Metal: Silver itself acts as a leveraged play on gold during ratio compressions.
-
The Miner: Mining stocks typically move 2x–3x faster than the underlying metal due to operating leverage (fixed costs vs. exploding revenue).
-
The Structure: By using options instead of equity, you magnify that move even further.
The Problem With Miners (And The Solution)
The problem, of course, is that most junior miners are cash-burning incinerators. You can be right on the metal and still lose money on a poorly run miner.
To filter out the noise, we ran our proprietary "7777" Screen, looking for stocks with a rating of 7/10 or higher in four key fundamental categories:
-
Profitability: (Do they actually make money?)
-
Valuation: (Are they priced for perfection?)
-
Growth: (Are earnings expanding?)
-
Health: (Can their balance sheet survive volatility?)
Out of the entire universe of stocks with options traded on them in the U.S. (not just miners), only 11 stocks survived this screen.
The Trade
Those eleven stocks included one specific silver miner. It looks like the perfect vehicle for this "slingshot" thesis.
I am finalizing a specific options trade structure to play this breakout, alongside a separate "Lotto Ticket" trade on a French biotech firm where corporate jet tracking suggests a major buyout is imminent.
As usual, I will send the trade alert out to my Substack subscribers as soon as I place these trades, later today. If you would like a heads up when I do, you can sign up for our trading Substack below.
What If We're Wrong?
What if the gold-sliver ratio compresses not because silver spikes higher, but because gold crashes? If you're worried about that possibility—and you're holding a lot of gold—you can use our website or iPhone app to hedge, using an optionable proxy like SPDR® Gold Shares (GLD).
