The Great Gold and Silver Squeeze: What’s Really Driving the Parabolic Surge?
Gold and silver prices are surging due to a short squeeze in futures markets, not inflation fears. Learn what's really happening and how to profit.
INVESTINGPASSIVE INCOME
Garrett
1/26/20265 min read
Quick Navigation: Explore the blog | Active Income | Passive income | job SHaming | Stairstep retirement
Wondering what’s going on in the silver and gold markets? The answer will surprise you, it’s not what you think.
If you’ve been watching the charts lately, you’ve seen something that looks less like a market and more like a vertical takeoff. As of late January 2026, gold has smashed through the $4,900 mark, and silver is sitting at a staggering $100 per ounce. To the casual observer, this might look like simple inflation or safe-haven buying due to global tensions. But if you look under the hood, the data tells a much more aggressive story.
What we are witnessing is a classic, violent, and concentrated short squeeze in the futures markets. After a decade of price suppression and paper manipulation, the rubber band has finally snapped.
The Mechanics of the Squeeze: Paper vs. Physical
To understand why prices are rising at a rate that is completely unnatural, you have to understand how these markets are structured. In the precious metals community, it’s a well-known secret that the volume of paper contracts traded on exchanges like the COMEX far outweighs the actual physical metal in the vaults. For years, investment banks have used these paper contracts to keep a lid on prices, selling "silver" that doesn't exist to satisfy demand.
But a short squeeze happens when the people who sold those contracts (the shorts) are forced to buy them back at any price to avoid infinite losses. The price behavior we’re seeing right now is parabolic. It’s disconnected from the reality of production. While the all-in sustaining cost (AISC) for silver miners—the actual cost to get an ounce out of the ground—is likely between $15 and $30, depending on energy costs, the market price has cleared $100.
When the price of a commodity is 4x to 5x its production cost in a matter of weeks, you aren't looking at price discovery. You are looking at a scramble for liquidity. The shorts are trapped and being liquidated.
The Catalyst: The Fed’s Mission Creep
Why now? The spark that lit this fuse was the Federal Reserve’s recent pivot. Despite official inflation statistics remaining elevated (and we all know those numbers are massaged to look better than the reality at the grocery store), the Fed has ended quantitative tightening and begun a cycle of monetary easing.
By dropping the Fed Funds rate into a high-inflation environment, the Fed has effectively signaled that it has given up on protecting the dollar's purchasing power. The market anticipated this drop in real interest rates, which is the nominal rate minus inflation. When real rates go deep into negative territory, gold and silver become a logical place to hide. This anticipation was the "gasoline" that sparked the short squeeze we see today.
The Technical Red Flag: Breaking the 2011 Ceiling
I’ve been in this space for over a decade, and I’ve seen plenty of head-fakes. But the monumental moment for me was when silver finally pierced its 2011 high around $50.
In technical analysis, a multi-year resistance level acts like a ceiling. The longer a price stays below it, the more powerful the move is when it finally breaks through. When silver cleared $50, it wasn't just a price increase; it was a regime change. It signaled that the decade-long bear market was dead and that the manipulation ceiling had been shattered. Once that level broke, there was no overhead supply left to stop the run, leading directly to the $100+ levels we see today.
The Karma of Price Suppression
There is a deeper, perhaps more controversial reason for this violence in the markets. For years, many of us have believed that large investment banks have cooperated with central banks to suppress metal prices. Why? Rising gold and silver prices are a thermometer for the health of the dollar. If the thermometer reads 105 degrees, everyone knows the patient (the fiat system) is sick. By keeping the price down, they maintain the illusion of control.
However, the policy mistakes made during the COVID crisis and the subsequent debt explosion created a pressure cooker. You can only hold a beach ball underwater for so long. The harder you push it down, the more violently it pops up when you lose your grip. This squeeze is a form of market karma, the equal and opposite reaction to years of artificial suppression.
A Word of Caution
I want to be very clear: short squeezes are violent and unpredictable. While it’s exciting to see prices rally, these moves are dangerous for inexperienced investors. I am not predicting future prices, and I am not telling you to do anything. What I am saying is that the cost of holding wealth in a failing fiat currency has become too high to ignore. Even though the squeeze is driving the bus (prices), it was the fear of currency risk that sparked the trip.
The Solution: Turning Negative Carry into Positive Yield
If you’ve held physical gold or silver in a professional vault before, you know the storage fee headache. You buy the metal to protect your wealth, but then you have to pay 0.5% to 1% every year just to keep it there. In financial terms, this is called Negative Carry. Your asset is bleeding money just by existing.
This is why I have used and loved Kinesis Money for over five years. Kinesis has completely flipped the script on the precious metals industry by introducing Positive Carry.
Instead of paying a vault to hold your metal, Kinesis uses a blockchain-based system in which a portion of global transaction fees is distributed back to holders. This is known as the Holders Yield. You own the physical metal (fully audited and insured in global vaults), but you receive a monthly yield in more gold and silver just for holding it.
Think about that: in a world where the dollar is losing value and traditional vaults charge you fees, Kinesis pays you to own the hardest money on earth. It’s the best place—and frankly, the only place I’ve found—to earn passive yields on gold and silver-backed assets.
How to Get Started (and Get Free Silver)
If you’re ready to move some of your wealth out of the "paper" system and into a platform that actually rewards you, I highly recommend signing up for Kinesis.
The Incentive: If you sign up using my referral link and complete the requirements, you can earn 1/2 ounce of silver-crypto (KAG). At today’s prices, that is worth over $50 just for joining.
Step 1: Sign up using this link: https://kms.kinesis.money/signup/KM13493445
Step 2: Verify your identity (KYC).
Step 3: Fund your account and buy at least $100 worth of gold or silver.
I will earn a small commission at no extra cost to you, which helps support the research we do here at CheatCode Wealth. I’ve used this platform for half a decade—it has integrated payment systems, a rewards-based card system coming soon, and it is a superb way to own precious metals without fees.
The "paper" game is failing. It’s time to move into something real that pays you.
Garrett Duyck is the founder of CheatCode Wealth and the writer behind the Portfolios & Bedtime Stories newsletter. He writes for employed people who want to build wealth without quitting their job, burning out, or missing out on life. Garrett is a former contributor to Seeking Alpha, where he built an audience of more than 4,000 readers, and he has published more than 140 articles about investing, passive income, and personal finance. He was among the top 20% of analysts according to TipRanks.
He has built a portfolio of income-producing assets that generates more than $50,000 per year in passive income, and he and his wife have paid off more than $180,000 in non-mortgage loans while raising four children. Garrett grew up in poverty, became a first-generation college graduate, and believes the best money strategies are the ones real families can actually stick with over time.
Educational Disclosure: CheatCode Wealth content is for educational and informational purposes only. It is based on personal experience, research, and firsthand investing practice. It is not personalized financial, legal, tax, or investment advice. Always perform your own due diligence and consult with a licensed professional before making significant financial decisions.
Affiliate Disclosure: To support the site, some links in our articles may be affiliate links. If you click on these and make a purchase, CheatCode Wealth may receive a small commission at no additional cost to you. We only recommend tools and services that Garrett has personally used or thoroughly vetted for the CheatCode community.
New to CheatCode Wealth? Start with our Paycheck-to-Passive guide to see how we build the foundation.
Connect & Explore:
Learn more about Garrett · Explore wealth-building tools · Garrett’s Seeking Alpha Archive · Connect on LinkedIn
About the Author
Subscribe to the newsletter and get a free copy of 101 Money Cheat Codes:
Spam-free. Unsubscribe anytime.
CheatCode Wealth™
Build your wealth. Keep your life.
© 2025. All rights reserved. Cheatcode Wealth LLC. This webpage may contain paid affiliate links.