Analyst Predicts Short-Term Headwinds Could Spark Major Precious Metals Rally

The interview centered on Penny’s cautious short-term outlook, which he juxtaposes with his extremely bullish long-term prediction for assets like silver, which he expects to reach "well into the triple-digit" range. His analysis offers a compelling perspective for investors looking to navigate the current market landscape.

Penny explained that the recent sharp sell-off in silver, which saw the price drop from its highs, was not a surprise. He highlighted several factors contributing to the correction, including bearish data on the Commitments of Traders (COT) report (before the government shutdown), heavy shorting by banks, and an influx of "weak-handed momentum chasers" who do not fully understand silver's bullish fundamentals.

According to Penny, this pullback is a healthy development necessary to "shake loose some of those weak-handed momentum chasers." While he maintains a very bullish long-term stance, he anticipates further downside movement, suggesting that support levels for silver could be tested near $40 or even $35.

He emphasizes that "strategy is greater than predictions," and for those with cash, the dip presents a rare chance. "Bring on the dip. Bring on the downside because I think any dip that we do see in silver and gold is are dip that is to be bought," Penny stated, noting that trading algorithms and institutions are likely in a "buy the dip mode."

Penny detailed the technical confluence of resistance that triggered the silver sell-off. He shared a long-term 40-year cup and handle chart pattern for silver, noting that a decisive monthly close above $50 would confirm a major breakout with a conservative measured move target of about $96 silver.

For gold, he identified the $4,000 mark as a crucial battle line, similar to $50 for silver. If $4,000 fails to hold, Penny points to $3,500 as a "really nice support" level. He characterized this potential drop as a "healthy pullback," noting that 20% corrections are common within gold bull markets.

A major focus of his analysis was the US Dollar Index (DXY). Despite being extremely bearish on the dollar long-term, Penny sees conditions ripe for a short-term "spike in the dollar," catching many market participants off guard. The DXY is currently bouncing off a 15-year support line, and a rally would act as a headwind for the metals.

Penny believes the true long-term catalyst for the precious metals is not an industrial boom but rather the Federal Reserve’s reaction to a future panic. He argues that a sharp spike in the dollar could coincide with a deflationary impulse and a broad panic-driven sell-off across equity markets.

In this scenario, the Fed would be forced to intervene, and "the Fed's reaction to such a panic-driven selloff would be the spark, the catalyst for silver, gold... to really see that big run we've all been expecting." He stressed that this event, which could lead to triple-digit silver, might be "closer than many think."

Beyond gold and silver, Penny identified platinum as the "most undervalued" of the three precious metals he tracks. He pointed out the small market size of both silver and platinum, meaning it takes relatively little investment capital to dramatically move their prices.

Platinum's unique appeal lies in its dual tailwinds: industrial demand from a growing economy and safe-haven/investment demand from a weakening one. Penny sees key support for platinum near $1,500 and projects that the all-time high of $2,309 has a "magnet on it," expecting that target to be achieved, potentially in early 2026.

Steve Penny’s analysis provides a clear road map for investors, urging them to embrace volatility. While he is prepared for further dips toward $40 or even $35 for silver and $3,500 for gold, he frames these not as threats but as extraordinary opportunities to accumulate assets before the next major move. His ultimate conviction remains that the next great bull run for precious metals is a matter of when, not if, and will be driven by central bank response to the next financial crisis.