Historically, gold has surged at rates similar to the present several times in history after the adoption of the fully fiat system in the US. However, the reasons have been entirely different each time, and hence the extent of volatility in gold prices has had no reasonable correlation. The demand and supply of gold in the retail market, annual global mining statistics, technologies adopted in mines, global currency outlooks, debt repayment strategies of countries, international order dynamics, and international fiscal systems have been different each time gold prices surged. Trends alone are not the right indicators to predict or understand movements in gold prices. What remains is analyzing the current realities of global supply and demand of gold to better understand the situation.
If we go by overall numbers, gold prices have never surged below 600% in an up cycle lasting on average around 8–10 years, and have never fallen more than 70% in a down cycle lasting around 2–4 years. The data mentioned specifically ignores the 1970s, which was an anomaly of its kind when the fiat system was adopted in the US. In the 1970s, gold was discovering its real price in the new monetary system. It marked the beginning of a new international fiscal order; a reset or dictat is never a continuing trend afterward. Considering all the preliminaries mentioned, the present up cycle started in 2016, including the building of momentum in a positive direction, and gold has gained over 300%. Now, spotting the exact point of reversal is impossible for the reasons stated above, but the average ups and downs can be reasonably assumed, especially in the present times. This is the eleventh year of the present up cycle, and previously up cycles have lasted over 12–13 years, which suggests there is more room to rise if average trends are assumed.
Coming to stakeholders, it is very evident that central banks globally are accumulating gold in reserves to cover the decline of local currencies against the dollar. However, correlation data shows that China did not buy much in 2024–2025 compared to 2023. Similarly, data from other central banks does not show trends that directly correlate with prices. On top of that, overall purchases of gold by central banks have remained in the range of around 1000 to 1100 tonnes consecutively, which shows no significant change compared to year-on-year changes in prices. In other words, changes in gold pricing trends are far more volatile than changes in central bank gold reserve trends.
Coming to the next stakeholders viz. ETFs, institutional/hedge funds, and investment flows. This category shows the real correlation. This category is struggling to allocate money globally and accrue profits. Net changes in various currency exchange rates and investments in respective countries are not generating reasonable overall returns. The Big Tech/AI rally has largely been the result of a circular economy, as visible in the P/E ratios of these companies. In some sub-sectors, smaller “mule” companies have become heavily indebted, while profit margins in bigger companies have continued increasing through the use of these mule companies and complex transaction webs among big tech firms. From the bull’s point of view, gold and silver become the “last resort of profit.” Trump’s unprecedented and opinionated policies, along with regional war flare-ups, have damaged futures market bulls, creating high uncertainty even in holding wealth in US dollars. This is forcing this category to allocate money to gold and silver. On top of everything, AI is disrupting 10-year predictability in markets, as its effects directly question the relevance of the fundamental monetary systems under which humans have operated. Treasuries around the world are not trusted at all. This is troubling the consumption powerhouse, the USA, in maintaining dollar stability. Therefore, Donald Trump is attempting to increase the VIX across major global avenues by disrupting their futures markets. This is US led macro manipulation of the global markets to keep the USD stable. This in a nutshell is the core reason behind the Gold and Silver rallying.
