Global عربي
KSA عربي
Global عربي
In a global environment swimming in uncertainty, precious metals are on a historic bull run. The price of gold is up about 60 percent year-to-date, and the price of silver is up about 80 percent. Both have been setting new records on a regular basis.
There’s a storm of reasons behind the price surge: fears over US trade tariffs, expectations of Federal Reserve rate cuts, central bank gold buying worldwide, a shortage of physical silver, and inflows into metals-backed ETFs. We address all of this below.
For investors, this complex set of factors means there’s likely still room for growth. But now more than ever, it’s critical to understand what’s driving the market. Below we unpack everything you need to know, from when and how to invest, to what unique benefits these precious metals offer.
You’ve probably heard the timeless wisdom that gold acts as a hedge against inflation. But why is that the case? In simple terms, as inflation increases, cash loses its value since it cannot buy the same amount of goods and services.
During these periods, demand for gold (and thus its price) tends to increase. That allows gold to keep its value, as its price tends to rise with the price of everything else, unlike cash.
The relationship between silver and inflation is a bit more complicated. Silver is used for industrial production – think everything from electronics and solar panels to automobiles and medical devices.
That gives the metal a complex relationship to inflation, because high inflation can also mean a down economy, which undercuts industrial demand for silver. Long story short, unlike gold, the silver price will not necessarily rise with inflation.
Inflation is strongly tied to the local market you find yourself in. But since the U.S. Federal Reserve has enormous influence on global markets via its influential interest rates, it’s worth keeping an eye on what the Fed says about inflation.
In its latest survey on inflation, it expected inflation to “tick up” in the short-term, to about 3.4% from 3.2% over the next year. While that applies to the U.S., it gives us a sense of what the Fed may be thinking on rates (more below).
Metals like gold and silver are known as non-yielding assets. In other words, you don’t earn interest by holding them.
Because of that, when interest rates are high, it’s costly to hold gold or silver, since you can instead be holding an asset that earns interest, like a bond or a CD. When interest rates are low, it’s just the opposite: holding metals makes sense because the “cost” to hold them is low.
But remember: you need to look at what’s known as the real interest rate, meaning the interest rate minus the inflation rate. When this “real” rate is positive and high, interest-earning assets are more attractive than non-interest earning metals.
The Federal Reserve cut rates by 25 basis points in September and analysts like those at J.P. Morgan expect further cuts. Precious metal prices are often driven higher simply by these expectations, meaning the future rate hike may be priced in already.
Pro tip: some analysts suggest that gold performs best when real rates fall below -2 percent (again, that means the interest rate after you subtract inflation).
Metals – and gold in particular – are known as safe haven assets, and they tend to benefit from geopolitical tensions and crises.
Capital tends to flow to gold whenever war seems imminent, a trade conflict erupts, or sanctions become a concern. This has been on display recently, with trade tensions between the US and China helping push gold and silver prices higher.
Ever since war broke out between Ukraine and Russia, central banks worldwide have also been buying up gold at a rapid clip. Now for the first time since 1996, central banks hold more gold in their reserves than US government bonds, long their go-to reserve asset of choice. Some central banks explicitly state geopolitical risk as the reason for the gold buying.
Keep in mind: these correlations don’t always pan out. They are trends, not laws of physics. During the initial crash of the Covid-19 pandemic, for example, the price of gold also fell, before later rebounding.
Once again, silver is a bit of a more nuanced story. While it’s currently benefiting from the precious metals run, global tensions don’t always push up its price. That’s because if conflict or uncertainty were to lead to a collapse in industrial demand for silver, its price can drop.
Zooming out a bit, countries are also buying up more gold as part of a long-term trend toward de-dollarization, or a push to become less reliant on the US dollar as the standard trade currency.
BRICS (Brazil, Russia, India, China, South Africa) countries, for example, are gradually pushing toward more bilateral trade in local currencies, circumventing the dollar. Eventually, they even want to replace the SWIFT banking system, another key pillar of US dollar hegemony.
These plans could mean lower demand on dollars moving forward, potentially driving gold higher – even more so if it’s used as an alternative reserve.
Read more about: Gold Investment vs Gold Trading
Industrial demand for silver has been booming. In 2024 it rose 4 percent, reaching a record high of 680.5 million ounces. Industrial demand accounts for about 55 percent of overall demand and strong demand for solar energy tech, electric vehicles, and other electronics have been pushing it ever higher.
While supply is expected to grow 2-3 percent in 2025 on the back of more mining and recycling,
the Silver Institute projects a deficit, as there’s simply too much demand to keep up with the world’s limited supply of silver, which is a fraction of gold’s more vast supply.
For gold, the primary driver of demand is for its monetary value, or its store of value (see above about central bank buying), as well for investment. Unlike with silver’s industrial demand, monetary demand is relatively more stable. That’s partly why gold is typically less volatile in price than silver.
On the supply side, gold supply from mining has remained fairly steady in recent years, and recycling tends to respond to gold prices – meaning that people tend to liquidate their gold for cash during downturns, helping supply keep up with demand.
The chart below provides a snapshot for how gold and silver tend to perform across different scenarios and for different use cases. It’s meant to provide a quick look at how they stack up as investments.
| Point of comparison | Gold | Silver |
| Volatility & Risk Profile |
Relatively low volatility.
A 30-year study found gold’s annualized volatility at 15.4%, similar to the S&P 500. Tends to recover faster after a fall. |
About twice as volatile as gold. A much smaller market makes it far more sensitive, creating sharper swings in price, but also means large potential upside growth. |
| Inflation Hedge Potential |
Strong option as inflation hedge because of central bank demand. Peak performance when real interest rates are negative. |
Not always an effective hedge against inflation. Often performs worse during recessions because it’s tied to industrial demand. |
| Liquidity & Trading Ease |
Highly liquid. Constant trading between individuals up to central banks via physical gold, ETFs, futures. |
Also highly liquid but much smaller market, about 1/10 the size. Large trades can have a big price impact |
| Industrial vs. Monetary Use |
About 20% of gold demand is monetary, the rest investment and jewelry.
Much of its value is driven by geopolitics and macroeconomic concerns. |
About 55% of demand is industrial (solar tech, electronics, etc.).
This makes its price sensitive to manufacturing downturns. |
| Storage & Transaction Considerations |
1 kilogram of gold = about $130,000
High value relative to weight. Widely accepted by vaults and institutions. |
1 kilogram of silver = about $1670
Lower value relative to weight means higher storage costs, typically more costly to vault and insure. |
| Correlation With Equities & Bonds |
Weak correlation.
This makes it a great portfolio diversifier. |
Sometimes positively correlated with equities because of industrial demand, making it less of a diversification play. |
| Price Forecasts for 2026 |
Some analysts see the price moving toward $5000/oz. in 2026 on the back of central bank buying, from about $4000 currently.
|
Some analysts see silver price jumping to as high as $60/oz from about $50 currently, owing to continued deficit.
|
No matter where you live or how much you want to invest, there’s a ton of easy ways to invest in gold and silver. Here’s your best options:
If you want to buy the physical metal (who doesn’t like a shiny object they can hold?), you can find a local bullion dealer or jewelry shop to buy coins or bars. The key thing to check is that they are registered with local authorities and have certificates that verify the authenticity and sourcing of the metals.
Pro tips: make sure they’re stamped with purity marks like 999.9 for gold and 999 for silver. Check the international spot price before you go and expect a small markup for handling, but compare rates. Some dealers will offer vaulting and insurance.
Buying gold and silver online allows you to buy fractional ownership of actual bullion. This is ideal if you don’t want to deal with storage.
You’ll get live market prices and you can invest in small or large amounts.
Check out platforms and apps like BullionVault, Glint, or OneGold.
- ETFs: Another way to invest without holding physical metals is to buy an ETF (Exchange-Traded Fund).
The funds hold physical metals in actual vaults, but you trade ownership of them like stocks on an exchange. Popular ETFs include SPDR Gold Shares (GLD), iShares Gold Trust (IAU), and iShares Silver Trust (SLV). Another great thing about ETFs? They tend to have low management fees.
- Mutual Funds: If you’re a long-term investor in precious metals and you want someone to actively manage your portfolio, you might consider a mutual fund. You’ll often get a mix of mining companies and other assets tied to precious metals like gold and silver. Examples include Fidelity Select Gold (FSAGX) and Blackrock’s World Gold Fund (0P0000AAPE.F)
- Mining Stocks: Another way to invest, albeit a bit indirectly, is by investing in mining company stocks. These stocks can potentially outperform metal prices themselves, but can also be volatile and subject to shocks tied to their area of operation or the successes and failures of their exploration.
- Home storage: If you’re storing gold and silver at home make sure you have a fireproof safe or secure lockbox.
- Bank storage: If you want greater protection, banks traditionally offer safe deposit boxes. Keep in mind, banks don’t typically insure the deposit boxes, so you may want to take out separate insurance.
- Vaulting: For larger collections, there’s specialized vaulting services that come fully insured – some examples include Brink’s, Loomis, and Malca-Amit.
- Insurance: wherever you store your metals you should consider insurance options. You can scan different options on sites like Lloyds. The cost of insuring gold is typically 1-2 percent of its value.
Read more about: Is Buying Gold With Credit Card Halal?
- Gold is an excellent choice for diversifying your portfolio. That’s because it tends to have an inverse relationship to equities and fixed income, helping protect your wealth during a downturn.
Bottom line: it’s often recommended to hold 5-15 percent of your portfolio in gold, with the higher end for those closer to retirement with more conservative goals (more detailed allocation below).
- Silver is more volatile and can move in the same direction as equities because of its connection to industry. That means it can boost your gains, or your losses. Still, like gold it can be a hedge against inflation or falling interest rates.
Bottom line: groups like the Silver Institute recommend a 4-6% allocation of silver, with lower amounts if you’re a more conservative investor (more detailed allocation below).
- For short-term trading: silver’s volatility means you can potentially earn higher returns faster – or lose money faster as well. Gold’s advantage in the short-run is that its more liquid and trades can be done quicker, with a more stable price but perhaps not as big of an upside.
- For long-term investing: gold is typically a safer choice because there is steady demand on it, particularly as central banks continue to seek it out. And in physical form it’s easier to store. Many long-term investors will hold both, with a smaller amount in silver in order to capitalize on rapid growth spurts without being overexposed to volatile swings.
Whenever you’re in a high-inflation environment or facing political turbulence, it’s generally a good time to buy gold. Even outside those conditions, gold tends to be fairly stable, meaning timing is less critical compared to silver.
Silver, on the other hand, is more sensitive to timing. What could be a profitable trade one month could turn into a loss the next. To maximize silver gains, consider buying during periods of strong industrial growth and low interest rates. Silver can hedge against inflation, but it is less effective during stagflation, meaning when high inflation coincides with sluggish economic growth.
How exactly to allocate your portfolio comes down to risk appetite. You can use these three risk profiles, based on an aggregate of recommendations, as a simple benchmark:
- Conservative Investors: 5-10% gold, 2-3% silver. You’re focused on stability and preserving your wealth. Gold will hedge against inflation and geopolitical risk, while a small allocation of silver can provide some upside during economic boom cycles.
- Moderate Risk Investors: 5-8% gold, 3-5% silver. This level balances stability with growth. You’ll benefit from gold’s safe haven status while also earning on industrial growth from silver.
- Aggressive Investors: 6-10% gold, 3-6% silver. For investors who want a lot of metals exposure, gold will offer a stable foundation and hedge while silver can amplify gains during commodity or industrial booms.
Read more about: Is Trading Gold Halal in Islam?
Disclamer:
This post is for educational purposes only, and does not constitute investment advice or a solicitation to take any financial action. It should not be relied upon when making investment or financing decisions.
