Safe-haven rally masks deeper drivers in gold and silver markets- Bawden Capital
The ebb and flow of geopolitical uncertainty continues to create unprecedented volatility in the precious metals space, as rising tensions in the Middle East has driven gold prices to $5,200 an ounce and silver prices to $86 an ounce.
However, one fund manager is warning investors to avoid the noise and focus on the broader fundamentals driving the long-term uptrend.
In her latest commentary, Jen Bawden, founder and CEO of Bawden Capital, said that she sees President Donald Trump’s threats against Iran as part of his broader negotiation tactics, and believes they are unlikely to escalate.
Even as tensions rise, negotiators from the U.S. and Iran are reportedly set to meet Thursday in Geneva to try to find a solution that would avoid military conflict.
“If we get a handshake in Geneva or a breakthrough in the Middle East, the 'safety trade' will unwind with the force of a hurricane,” said Bawden. “But here is the secret: once the war fear is gone and the political risk premium has forced silver and gold down, the market will wake up to a cold, hard physical reality. Even in a peaceful world, there simply isn't enough silver to power the AI data centers, the global solar rollout, and the next-gen defense industry.”
Bawden said that she expects the post-Iran correction in silver could push prices to $50 an ounce.
“I won’t be caught up in the noise or the panic when the headlines hit. I’m waiting for that "Sale of the Century" because I know who is waiting on the other side of the world,” she said.
Bawden said that she sees several fundamental factors that continue to support higher prices. First, the physical deficit remains a powerful structural driver, as the world has consumed more silver than it has mined for six consecutive years. At the same time, the U.S. debt-to-GDP ratio continues to balloon, with neither political party demonstrating the will to implement meaningful austerity, leaving inflation — effectively a hidden tax — as the most likely path forward.
She also expects silver demand to be fueled by the rapid expansion of AI infrastructure and high-voltage data centers, which require significant amounts of silver for its unmatched conductivity, alongside uranium to power the energy-intensive systems underpinning the digital economy.
Finally, mounting stress in the financial system — particularly as commercial real estate loans reset and regional banks confront mark-to-market pressures — raises the risk of a credit crunch, a scenario that could drive investors back toward hard assets with no counterparty risk.
At the same time, Bawden said that she expects to see a 40% correction in junior silver explorers. She added that during this correction, she would be looking to buy North America-based projects.
Among the major producers, Bawden said that she also holds positions in Wheaton Precious Metals (NYSE: WPM; TSX: WPM), Hecla Mining (NYSE: HL), First Majestic Silver (NYSE: AG), and Silvercorp Metals (NYSE: SVM; TSX: SVM).
Bawden added that she expects to see demand from Asia when Chinese investors return to the marketplace after their Lunar New Year holiday.
However, if there is a broader conflict in the Middle East, Bawden said she could see gold prices quickly push back to $5,500 an ounce and silver prices return to last month's highs around $120 an ounce, saying that she would also look to take profits during such a rally.
“If the US goes to war with Iran and silver tests its highs, I will sell my silver stocks when silver hits $100 to $125 to take my profits, as I will also do with my uranium portfolio due to the unprecedented possibility of the deflation of the de-dollarization trade,” she said.
