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Silver Hack Files… Ferrari/Honda Accounts Behind the Drone Boom… Why Yardeni Says FEMO Beats FOMO…
Is silver about to go out?
For over a year, we have been tracking the horse race between gold and silver, identifying which metal appears best suited to outperformance due to its gold-to-silver ratio.
Quick takeaway: In early 2025, with the gold-to-silver ratio at 105, silver was undervalued. We pointed out the asymmetric uptrend, and between July 25th and January 15th, silver rose 137% while gold rose 37%.
Then, with silver’s big rally reset the ratio to around 51 – its lowest level since 2012 – we flipped the script and said gold was the better bet. Gold has certainly outperformed as the ratio returns towards balance.
When we last checked in on April 23, the ratio was close to 61 — in the middle of its historical range. This resulted in the following takeaways:
As the gold-silver ratio returns to balance, there will no longer be a lopsided imbalance that tips the odds squarely in one camp.
To be sure, since then, there has been no breakout performance either way. Both gold and silver declined slightly, so the gold to silver ratio is approximately 60.
But if senior analyst Brian Hunt is right, there is a different potential catalyst racing towards us that could send silver higher…
The basic state of silver
Brian, editor of our free daily email Money and mega trendsSilver has been long and bullish for years — whether because of its hedging properties against a falling dollar or what he calls “high-tech tailwinds.”
From Brian:
Silver has the highest electrical and thermal conductivity of any metal. This makes it a critical component of AI infrastructure, solar power systems, and other electrical systems.
This structural demand story has not changed. If anything, it’s a deepening.
Brian points out that as AI moves toward the “edge”—that is, working on local devices such as phones, cars, robots, and satellites—the performance demands on electrical components intensify:
Not only do these systems require more electrical performance, they require better electrical performance under increasing thermal and power constraints.
Every watt counts. Every degree of temperature is important.
Silver is in every important part of that infrastructure.
At the same time, the display image remains structurally constrained…
According to the 2025 Global Silver Survey, the cumulative market deficit since 2021 has reached approximately 680 million ounces. Nearly 80% of silver is mined as a byproduct of the base metal – meaning higher prices alone cannot simply create more supply.
As Brian says:
The market cannot claw its way out of the silver shortage.
“But why now?”
As mentioned earlier, the gold-silver ratio remains in relative balance today.
So, what could be the catalyst that could push silver higher?
Here’s Brian:
The chart below shows how silver has traded over the past few months in what I call a “squeeze pattern.”
Its latest range of highs and lows is tighter than the previous one.
These pressure patterns often lead to strong moves in the direction of the underlying trend.
For wide exposure, and iShares Trust Silver (SLV) It’s your simplest play – it’s the largest physically backed silver ETF with over $40B in assets.
If you want a more focused bet, Brian highlights this Pan American Silver (Bass) – The world’s largest silver-focused producer, with 10 mines in the Americas and $1.3 billion in cash on the balance sheet.
I’ll throw in a fun wrinkle before we move on…
Guess what else is in his compression pattern?
You guessed it – gold.
Are we about to jump in both silver and gold, which effectively means that the gold to silver ratio remains in rough balance?
It is definitely possible. If both metals move together, the ratio of gold to silver remains approximately the same, which may make… measuring This step is more important than the metal you have.
Whatever you decide, if you want to improve your gold or silver entry further, I’ll direct you to last week’s report. Convergence operator It happened With lead traders Jonathan Rose and Mark Chaiken.
The biggest moves in gold and silver usually start with institutions – not individual investors. By the time the average trader sees what is happening, the easy money has already been made.
Jonathan and Mark made their fortunes in the market by solving exactly this problem – tracking the direction in which institutional money is moving before it becomes obvious.
Last week, they held their first ever joint event – Peak convergence – to explain how they did it and the settings they see now.
If silver – or gold – is about to break out of a constriction pattern, Jonathan and Mark’s “Convergence Trigger” indicator will spot the institutional signature before the rest of the market does. So, if you’d rather not buy both metals and just wait, you can track institutional funds and use their activity as a starting gun.
Here’s a free replay of last week’s event to get all the details.
Now, silver’s high-tech tailwinds are running through almost every emerging defense and infrastructure technology — including technology that has been quietly building one of the strongest fundamental cases in the market right now.
The math driving the next defensive trend
Silver’s role in drone construction is one reason why the story of industrial demand for the metal runs deep. But the drone opportunity itself deserves a theme of its own – and for one reason that can’t be argued…
Ultimate mathematics.
To illustrate, let me draw from an issue Investing from within Which I wrote in early May:
The cost of building the Shahed drone, which Iran produces in large quantities and launches in swarms, is about $20,000.
The cost of a Patriot interceptor missile launched by the United States to shoot it down is about $3 million to $4 million.
It’s like using a Ferrari to destroy a used Honda Civic — except the Civic keeps coming, a thousand at a time.
This cost asymmetry is not just a talking point. It’s the central math question that drives US defense procurement right now.
With the Iranian conflict still unresolved and the situation in the Strait of Hormuz remaining fragile, Washington is not treating this as a future problem — and Congress and the White House have just made that clear.
While the final $839 billion defense spending bill for fiscal year 2026 allocated $13.4 billion for autonomous systems and $3.1 billion for counter-drone technologies, active warfare has shattered those boundaries.
Because the conflict has significantly depleted U.S. interceptor and drone stockpiles, the Pentagon has pivoted toward a landmark defense fiscal blueprint for 2027 — a total request of $1.5 trillion — that includes $53.6 billion for autonomous platforms and drones and another $21 billion for counter-drone systems and advanced capabilities.
That’s nearly $74 billion combined.
In context, the Pentagon’s drone office – the Defense Independent Warfare Group – received just $225.9 million this fiscal year. The proposed jump to $54 billion is one of the most dramatic single-year spending increases in Pentagon history.
Once capital of this size reaches the market, supply chains take shape, contracts increase, and multi-year industrial demand tends to follow.
The broader strategic issue has been shaping up for years. And Jonathan has been in it all, helping his readers make triple-figure returns on drone stocks over the past year. Looking to the future, he says the fundamentals remain constructive:
Drones are rapidly becoming essential military infrastructure – a key pillar of the next global defense build.
And the data backs it up: Drones accounted for 27% of civilian deaths in Ukraine as of early 2025, according to the United Nations, surpassing all other weapons systems. Meanwhile, New York Times It was reported to account for at least 80% of Russian front-line losses.
But here’s the problem: Despite all this, drone stocks are down this year.
It’s a reminder that timing is as important as the thesis…which brings us back to Jonathan and Mark and their relationship Convergence operator.
Drone penetration driven by defense contract flows and geopolitical escalation is exactly the kind of move that appears in their system before it appears on… CNBC.
Bottom line: Although the timing of the next surge is unclear, the fundamental case for drone stocks is incredibly strong.
finally, This bull market just got a name
In recent weeks, we have shown that bears’ predictions of a market crash remain incorrect because they are reading reactionary valuations in a market driven by futures earnings momentum.
On our May 28th digestwe went through exactly this argument using micron(in) As a prime example – while the trailing P/E ratio looks alarming, the forward P/E ratio, based on large forward earnings expectations, tells a very different story.
Last week, veteran market strategist Ed Yardeni put a name to this dynamic.
Yardeni – president of the Yardeni Research Foundation and Louis Navellier’s favorite economist – coined the term “FEMO” in Bloomberg TV.
To be clear, this is not “FOMO” – “fear of missing out.” This is FEMO: “Fantastic Earnings Momentum.”
“The big difference is earnings,” Yardeni said, adding that the S&P 500 forward price-earnings ratio, at 20 to 22, looks reasonable if the economy avoids a recession over the next few years.
This is exactly the distinction we were drawing. The bears point to an extended trailing multiple and call it a bubble. Yardeni – and the numbers – point out the direction in which profits are headed and call it a rational uptick.
His 2026 target for the S&P 500 stands at 8,250 — the highest among the analysts he tracks. Bloomberg — with a path to 10,000 by the end of the decade in what he calls a “Roaring Twenties” scenario.
Hopefully he’s right.
Coming full circle
While the bears are reading yesterday’s numbers, FEMO is all about tomorrow’s earnings.
In a market where AI capex could be about to spike again, and where drones are underfunded compared to a $74 billion political mandate, “remarkable earnings momentum” is a valuable framework for what’s to come.
The more difficult question is not whether these trends will materialize. When the spark goes, it pushes them upwards – and whether you’re really in your position when that happens.
This is the challenge that Jonathan and Mark set out to solve with Convergence operator.
We will continue to track these stories here at digest.
I wish you a good evening,
Jeff Remsburg
(Disclaimer: I own MU.)
