Why Gold and Silver Are on a Historic Rally

Gold just breached $5,300 per ounce. Silver punched through $100 for the first time ever. Over the past twelve months, gold is up roughly 80%, and silver has more than tripled with a staggering 225% gain.

This isn’t a speculative bubble or retail FOMO. Multiple structural forces are hitting precious metals simultaneously—and understanding them explains why analysts at Goldman Sachs, Deutsche Bank, and JP Morgan keep revising their price targets upward.

The Five Forces Behind the Rally

1. Central Banks Are Buying at Record Pace

Since 2022, global central banks have purchased over 1,000 tonnes of gold annually—roughly double the decade-long average. In the second quarter of 2025 alone, they added 166 tonnes, a 41% increase from the typical quarterly haul.

The buyers aren’t who you’d expect. China, Russia, India, Turkey, and Poland are leading the charge. Combined BRICS gold reserves now exceed 6,000 tonnes, representing about 20% of all central bank gold holdings worldwide. Russia holds 2,336 tonnes; China follows closely with 2,298 tonnes.

Why are emerging market central banks hoarding gold? They’re diversifying away from the U.S. dollar—a trend that accelerated after Western sanctions froze Russian foreign exchange reserves in 2022.

2. De-Dollarization Is No Longer Theoretical

The BRICS bloc isn’t just talking about reducing dollar dependence. They’re building infrastructure to make it happen.

In October 2025, BRICS launched a pilot program for a gold-backed currency called the “Unit”—pegged to 1 gram of gold and backed by a 40/60 mix of physical gold and member currencies. The bloc also announced BRICS Pay, a blockchain-based payment system designed to circumvent SWIFT, plus a new precious metals exchange for trading gold without dollars.

With the expanded BRICS-10 now representing 46% of world population and 37% of global GDP, these aren’t fringe experiments. The bloc controls approximately 50% of global gold production, giving it critical mass to establish independent pricing and settlement systems.

A recent World Gold Council survey found that 73% of central bankers expect the dollar’s share of global reserves to decline over the next five years. Gold is the obvious beneficiary of that shift.

3. The Fed Remains the Single Most Powerful Price Driver

Whenever the Federal Reserve hints at easing—or slows rate hikes—gold historically surges. The relationship is straightforward: lower real interest rates reduce the opportunity cost of holding a non-yielding asset like gold.

With markets expecting further rate cuts and real yields trending lower, the monetary policy backdrop strongly favors precious metals. Gold hit its all-time high of $5,395 on January 28, 2026, following the Fed’s decision to hold rates steady at 3.5-3.75%.

The inverse also holds: if the Fed surprises with hawkish policy, expect a pullback. But the current trajectory points toward continued accommodation.

4. Silver’s Industrial Demand Is Structural, Not Cyclical

Silver isn’t just a monetary metal. Over 60% of annual demand now comes from industrial applications—and that share keeps growing.

The green energy transition is the primary driver. Solar panels alone consume more than 200 million ounces per year. Electric vehicles, 5G infrastructure, and high-efficiency semiconductors add millions more. AI data centers are particularly silver-hungry: servers optimized for AI workloads use two to three times more silver than traditional data center equipment.

In January 2026, the U.S. Department of the Interior designated silver as a “critical mineral”—a classification that signals long-term strategic importance.

Meanwhile, supply isn’t keeping up. The silver market has been in continuous deficit since 2021. Cumulative shortfalls from 2021 to 2025 total roughly 820 million ounces, largely covered by drawing down above-ground inventories. When those buffers run out, prices must rise to balance the market.

China’s recent export controls add another constraint. Starting in 2026, Chinese companies need government licenses to export silver, with only 44 firms currently authorized. This has reduced the flow of silver into the global market precisely when demand is spiking.

5. Geopolitical Risk Premium Is Back

Gold’s role as a safe-haven asset during uncertainty is textbook—but the current environment offers an unusually dense cluster of flashpoints.

Recent tensions involving Greenland, Venezuela, Iran, and broader Middle East instability have all supported gold’s price floor. When the U.S. warned of possible military action against Iran, gold climbed over 2% in a single session.

Beyond specific crises, investors are pricing in a more fragile geopolitical order. The rules-based international system looks less stable than it did a decade ago, and gold benefits whenever that uncertainty rises.

The Gold-Silver Ratio: What It Tells Us

The gold-silver ratio currently sits near 50:1—meaning one ounce of gold buys about 50 ounces of silver. That’s well below the long-term historical average of around 60:1, suggesting silver has outperformed on a relative basis.

Some analysts argue the ratio could compress further toward 40:1 if silver’s industrial demand keeps accelerating. Others think the ratio’s decline indicates silver is now fairly valued relative to gold, and gold may be the better relative performer going forward.

Either way, both metals are riding the same macro tailwinds. The ratio mostly affects portfolio allocation decisions, not the overall direction.

What Analysts Are Forecasting

The consensus keeps moving higher:

Goldman Sachs raised its December 2026 gold forecast to $5,400/oz (from $4,900)
JP Morgan projects gold averaging $5,055 in Q4 2026, rising toward $5,400 by end of 2027
Deutsche Bank and Societe Generale now see gold reaching $6,000 by year-end
ICBC Standard Bank floats a bull case of $7,150

For silver, forecasts range widely—from a conservative $65/oz to GoldSilver’s call for prices above $100 to hold as supply deficits deepen.

Bank of America’s Michael Widmer sees silver potentially topping out between $135 and $309 in an optimistic scenario, depending on how aggressively industrial demand scales.

Risks to Watch

No rally lasts forever. Here’s what could derail the trade:

Hawkish Fed surprise: If inflation resurges and the Fed pivots to tightening, real yields rise and gold typically falls.

Economic slowdown: A severe recession would crush industrial silver demand, potentially outweighing safe-haven flows into gold.

De-dollarization stalls: If BRICS infrastructure fails to gain traction, the structural bid from central banks could moderate.

Profit-taking: After a 225% run, silver is technically overbought. Roukaya Ibrahim, chief strategist at BCA Research, has warned against chasing the rally at current levels, even while remaining long-term bullish.

What This Means for Investors

The rally reflects something deeper than short-term trading flows. It’s a global market recalibrating around a more fragile geopolitical order, a shifting monetary outlook, and tightening physical supply. These forces may keep precious metals elevated well beyond 2026.

For portfolio positioning, most advisors suggest precious metals comprise 5-10% of diversified portfolios. The exact allocation depends on your risk tolerance and conviction about the macro themes driving this rally.

If you’re already positioned, consider whether your exposure matches your thesis. If you’re not, the entry point matters—but the structural case for precious metals looks stronger than it has in decades.

TL;DR

Gold hit $5,300+ and silver broke $100 for the first time—both up dramatically over the past year
Central banks are buying gold at record pace, led by BRICS nations diversifying away from dollars
De-dollarization is now infrastructure, not just rhetoric: gold-backed BRICS currency, new payment systems, precious metals exchanges
Silver’s industrial demand (solar, EVs, AI) keeps growing while supply deficits compound
Analysts project gold reaching $5,400-$7,000 and silver holding triple digits through 2026