May 2026 - Week 2 Edition
Silver Leads the Way … Again
Silver leads the precious metals, year-to-date, and for the past 12 months … and last week, too:
Silver is up from just $73 per ounce a week ago (May 5) to $87 on May 12 (+19% in a week), while gold is up a lesser percentage (+3%), from $4,555 to around $4,700, peaking at $4,783 in early trading on Tuesday, May 12. Gold and silver are reacting in part to the Consumer Price Index (CPI) coming out hotter, or higher, than expected (+3.8%, year-over-year). Additionally, U.S. crude oil rose over $100 again, to $101.60 mid-day Tuesday, while Europe’s Brent crude traded over $107 per barrel.
In the biggest historical bull markets, silver led and gold followed along. In 1979, silver tripled in short order, leading to a doubling of gold’s price. Then, silver peaked at nearly $50 per ounce in April 2011, while gold waited until September of that year to surge to its cyclical peak above $1,900.
This time around, silver is once again leading gold upward, not the other way around. Unlike gold, silver has a massive industrial demand as well as its precious metal status.
In April, The Silver Institute published its annual Silver Survey, which forecast a sixth straight year of supply deficits, this time with a supply/demand deficit of 43 million ounces.
After rising so fast, silver was bound to take a pause to breathe a bit before resuming its advance, but sure enough, the trigger-happy traders are headlining silver’s latest “decline” as proof that the bull market is over. When will they ever learn to just “buy and hold” and then Go Fishing?
Federal Debt is Rising Fast … So is Inflation
In the second week of each month, we see the official government debt and inflation numbers and with that information, we often publish a debt and inflation update in the middle of the month, similar to our month-ending market summary of metals vs. stocks. With the conflict in Iran now running over 10 weeks, and no end in sight, it’s time to highlight these mid-month reviews.
On Tuesday, May 12, we heard about both debt and inflation. So, here is the budget debt situation:
Debt: Debt during April usually shrinks due to our annual April 15 tax deadline but the size of the monthly surplus is shrinking fast. For April 2026, the government took in $215 billion more than it spent but that was a 17% decrease from the $258 billion surplus recorded in April 2025. That $43 billion shrinkage mostly came from higher-than-expected tax refunds, rising government spending on defense and higher costs to service the increasing federal debt due to rising interest rates. (The 10-year Treasury rate rose from under 4% before our actions in Iran to around 4.4% now).
For the first seven months of Fiscal Year 2026, which ends September 30, cumulative federal debts stand at $955 billion, a $1.6 trillion annual rate but $94 billion less than last year’s total. Longer term, the National Debt Clock reveals the total accumulated Treasury debt topped $39 trillion this month, amounting to $115,000 debt per person or $460,000 for a family of four.
Inflation: The Consumer Price Index (CPI) was also released on Tuesday, May 12. It was “hotter” than expected, showing a 3.8% gain over the past 12 months, nearly double the Fed’s stated goal of reaching 2% inflation before they attempt to cut key interest rates much further.
The 12-month rate was nearly the Fed’s goal, at just 2.4% at the end of February, before the U.S. took action in Iran. April’s rise was the worst since May 2023 and well above the 3.3% rate in March or the 2.4% in February. In April, energy costs rose by 18%, the steepest rise since September 2022. Energy prices also rose by double digits in March (+12.5%), mostly due to a rise in fuel oil (+54.3%). In April, inflation also rose in housing (+3.3%) and food (+2.3%). After subtracting energy and food, “core” inflation was still up 2.8% year-over-year, the highest rate since September 2025.
The Producer Price Index (PPI) will be released on Wednesday morning, May 13, but it is already rising faster than the CPI, which is historically unusual. Through March 31, producer prices were up 4% over the previous 12 months. The PPI is rising fast due to commodity price gains:
Through May 12, precious metals are still leading stocks, year-to-date, although gold’s edge over the S&P 500 currently sits at one point, +9% vs. +8%. I expect that gap to increase as gold continues to pick up steam with projections by some major banks (JPMorgan at $6,300 and UBS at $6,200) that it could hit $6,300 per ounce by the end of the year. And, as we have traditionally observed, when gold prices rise, that brings in more buyers to the precious metals market, where about one-in-six turn to rare coins as a further means to protect their wealth. As silver (+23.6% in 2026) continues to run rings around most other investments, I expect to see gold follow as it has for decades. Silver is even sneaking up on gold’s 26-plus-year performance since Y2K. So far, in the month of May, Silver is up 18.7% vs. +2.3% for gold.month of May, Silver is up 18.7% vs. +2.3% for gold.
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