SILVER'S CORRECTION ISN'T OVER! - NorthStar's Kevin Wadsworth

Summary

Technical analyst Kevin Wadsworth argues that gold and silver remain in a significant correction after an unusually rapid rally, and that investors should not assume a quick V-shaped recovery. He expects the correction to involve both price and time: silver has already fallen from about $121 to $54, but he says the decline may continue or take months to resolve.

His broader thesis is that precious metals could rise substantially over the long term, while energy and oil may outperform mining shares in the nearer term.

These are Wadsworth’s technical-analysis views and forecasts, not established outcomes.

Key Market Views and Forecasts

• Gold and silver correction: Wadsworth says the late-stage rally showed signs of excessive enthusiasm and that both metals had become stretched relative to long-term moving averages. He estimates a major correction could take one to two years to fully resolve. At the time of the interview, he thought another 8–12 months of consolidation was plausible.
• Silver levels: He cites a prior breakout above roughly $28, followed by a move into the $50–$55.57 area and ultimately a peak near $121. After a sharp fall to about $60, silver rebounded into the $90s before declining again to around $54. He says another test of the long-term pattern is possible; a sharp drop could take silver below $48, into the mid-$40s.
• Long-term precious-metals outlook:
  • Gold: Roughly $7,000–$8,000 by 2029, followed by a pullback around the next expected cycle low near June 2030, then potentially $15,000–$16,000 or higher in the early 2030s.
  • Silver: Roughly $200 by 2029, then potentially $400–$500 or more in the early-to-mid-2030s.
  • He describes gold’s cycle as lasting about 7–8.5 years, with the next major low expected around 2030.
• Relative performance: The gold/silver ratio compares the two metals: a falling ratio means silver is outperforming gold, while a rising ratio means gold is outperforming silver. Wadsworth considers the ratio’s current ascending-wedge setup potentially bearish for the ratio, which would imply silver outperforming gold if it breaks down. He also cautions that false breakouts are possible.
• Oil and energy: He expects crude oil could break above $100–$115, then move quickly toward $140–$150. His longer-term scenarios by 2031 are:

Crude oil price range Estimated probability $200–$250 Above 75% $250–$300 Above 50% $300–$400 25–50%

He also forecasts diesel prices could rise about 275% by 2031, while stressing that this is a multi-year projection, not a one-year prediction.

• Miners versus energy: Wadsworth says charts indicate gold and silver miners may underperform oil and energy stocks. Rising energy costs could pressure miners’ profitability, even if gold and silver prices rise. He recommends assessing mining companies individually rather than assuming broad mining ETFs will perform well.
• Stock-market outlook and capital rotation: If a “capital turnover” from stocks toward precious metals is confirmed, he expects precious metals could outperform the stock market for at least 10 years. He describes a possible stock-market correction of 30% as very likely, 40% as likely, and 50% as possible; he expects the Nasdaq could fall more than the S&P 500. He says the S&P 500 could continue toward 8,000–9,000 while it remains above a chart level he identifies as important. A break below additional levels would make him more defensive and could signal a prolonged period of stock-market underperformance.

Methodology and Trading Framework

Wadsworth’s approach, as described in the interview, includes:

• Using long-term charts and historical comparisons to identify market regimes, cycle patterns, breakouts, and potential reversals.
• Assessing stretched prices by comparing them with long-term moving averages. He highlights the distance from gold’s 36-month moving average as a correction warning.
• Using relative-strength charts to compare assets—for example, gold versus the S&P 500, miners versus oil, and silver versus gold.
• Looking for confirmation and invalidation levels. He says a third test of a trendline can strengthen its significance, while a break of a specified “line in the sand” would require reassessing the thesis.
• Separating investing styles: He distinguishes regular accumulation of physical ounces, long-term investors seeking to buy large drawdowns, and traders using defined entry, exit, and risk-management rules.
• Managing parabolic moves: He describes drawing a support line and exiting if price breaks it. In his silver example, this could have meant exiting around $90, rather than selling at the peak, while avoiding much of the subsequent decline.
• Comparing miners to oil, not only to the dollar: He suggests charting individual mining shares against oil to assess whether a company is holding up relative to rising energy costs.

Explicit Recommendations and Cautions

• Wadsworth’s stated accumulation levels are gold at $4,000 or below and silver at $55 or below. He recommends accumulating gradually rather than necessarily investing all at once, and cautions that these levels do not guarantee a profit over the next six months.
• He says traders and long-term investors may respond differently to a correction; strategies should reflect the investor’s time horizon and risk-management approach.
• He cautions against expecting a rapid V-shaped recovery and against assuming “this time is different” from historical correction patterns.
• He advises caution with broad mining-sector exposure if miners continue to underperform oil and energy, while noting that individual mining companies may still do well.
• He says technical-analysis forecasts are probabilistic, not guaranteed, and acknowledges uncertainty about timing and the depth of market declines.

Assets, Sectors, and Instruments Mentioned

• Precious metals: Gold, silver, platinum, palladium
• Other commodities and sectors: Base metals, soft commodities, energy, crude oil, diesel
• Equities and indexes: S&P 500, Nasdaq, stock market, gold and silver mining companies
• ETFs, indexes, and tickers: GDX, GDXJ, SIL, SILJ, XLE, HUI, WPM (Wheaton Precious Metals)
• Other measures: Gold/silver ratio, 10-year U.S. Treasury yield, U.S. dollar, debt-to-GDP ratio

Macro Context Discussed

Wadsworth says the 10-year U.S. Treasury yield’s long decline ended after a false downside breakout around 2020, and that rising yields since 2022 point to sustained pressure on the economy and debt servicing. He compares the setting with the 1970s, when yields reached roughly 15–16%, and notes that U.S. debt-to-GDP fell from about 70% to 31% during that decade. He contrasts this with the subsequent long period of falling yields and rising debt-to-GDP, which he says eventually exceeded 120%.

He also compares the current precious-metals and commodity environment with past rotations: precious metals and commodities significantly outperformed stocks after the dot-com crash, while stocks later outperformed precious metals after 2011–2013. He argues that gold’s long-term purchasing power has historically been more resilient than the U.S. dollar’s.

Disclosures and Sources

No explicit “not financial advice” disclaimer is heard. Wadsworth presents forecasts as conditional technical-analysis scenarios, emphasizes uncertainty, and discusses risk and money management. He also promotes NorthStar’s paid trading and investment services, which he says provide entry levels, profit limits, and stop-losses. He states that typical trades last 6–18 months, rather than being intraday.

Presenters and sources: Host Dr. John Lund of Silver Trade Insider; guest Kevin Wadsworth of NorthStar BadCharts/NorthStar Charts. Wadsworth also credits colleague Patrick Karim.