Like most market narratives, these precious metals trades started in a very fundamental place. Here are some of the fundamentals for each:

Gold

- Central banks across the world have been buying gold to hold on their balance sheets.

 -  Investors have flocked to gold as a hedge for the falling dollar. Peak to trough, the dollar has fallen in value by about 11.6% since early 2025 relative to other developed market currencies while gold doubled in value in dollar terms.

 - The price of gold ran well below the level of inflation post-COVID. It finally caught up in early 2024. Gold is a metal with thousands of years of history as a store of value. It makes sense that it should, at the very least, keep pace with inflation.

 - The Fed seems somewhat resigned to cutting rates without having achieved a return to their 2% inflation target. If the Fed is okay with a higher level of inflation going forward, it makes sense that gold should appreciate at a faster than usual rate.

 - There is a substantial amount of geopolitical risk, trade policy volatility, and political volatility around the world. When investors become worried, they often flock to gold as a safe-haven asset. During this same period, both the dollar and Treasury bonds have sold off and are not acting as the safe havens they typically have been. It should be noted, however, that stocks have done well during this period, which is at odds with the “safe haven” narrative.

 - Roughly $300 billion in Russian assets (denominated in US dollars, Euro, and British pounds) were frozen by western countries at the beginning of the Ukraine war. There is significant fear that this tactic could be used again against western adversaries, so some assets held by these countries and entities have been directed toward precious metals rather than western currency.

Silver

-  Silver trades at a lower price than gold due to its relative ubiquity, but it often tracks the price of gold, albeit in a more volatile way.

 - Unlike gold, silver has many industrial uses in growing sectors globally such as electronics and electric vehicles, healthcare, and solar energy.

The fundamentals for these moves in metals clearly exist. However, the markets seem to have moved far beyond the fundamentals, and we reached a phase of rampant speculation. Silver and Gold ETFs have recently been among the most discussed securities on the internet and the moves in the metals look parabolic to us.

We do our best to avoid obvious areas of the market where investor hype is driving prices rather than fundamentals. It can often be difficult to separate the wheat from the chaff, but when we see any asset moving nearly vertically in price, that’s usually a good indication that things have gotten out of hand.