Long-Term Trends in Gold and Silver

Dual Drivers of the Gold and Silver Market

Currency-Driven Factors

The trends in the gold and silver markets are influenced by two major factors: monetary policy and geopolitical risks.

Monetary Policy

The persistent expectation of interest rate cuts by the Federal Reserve, coupled with the interest rate hikes by the Bank of Japan, have made the global monetary environment more complex.

Geopolitical Risks

The current global situation is tense, not only due to increased military conflicts but also due to intertwined risks in energy and shipping. The U.S. blockade on Venezuela, as well as Ukraine’s first attack on Russian shadow fleet ships in the Mediterranean, has heightened risks related to energy prices, transportation costs, market stability, and global supply chains. Furthermore, China has resumed large-scale military drills surrounding Taiwan, further escalating geopolitical tensions. These factors have been significant drivers pushing gold and silver prices higher.

Gold Reserves and Military Conflicts

When a country prepares for military action, it often accumulates large amounts of gold in advance. Gold, as a safe-haven asset, typically sees increased demand during times of international tensions. If gold continues to rise in value, it could indicate that steps toward unification are drawing nearer.

Response from Major International Banks

With gold and silver prices continuously reaching new highs, major international banks have been expanding their precious metals trading divisions and logistics capabilities, profiting significantly from these developments. The active participation of banks and financial institutions in the precious metals market has further driven the rise in gold and silver prices.

Short-Term Adjustments and Market Risks

Although the long-term trend in the gold and silver markets remains unchanged, short-term risks still need to be addressed. The recent market adjustments are primarily influenced by the following two factors:

• Exchange Policy Adjustments:
  The exchanges have raised margin requirements for gold and silver futures. This action was taken because the rapid rise in gold and silver prices led to an increase in market leverage risks. To prevent concentrated margin calls caused by excessive leverage, which could severely impact the clearing system, exchanges implemented these precautionary measures. Additionally, this is intended to cool down the precious metals market.

• Market Volatility:
  The stronger the performance of a commodity, the more deliberate capital market influences are likely to become. Investors in the gold and silver markets may face greater uncertainty in the future.

Long-Term Potential of Silver

Silver’s Support is Stronger than Gold’s

From a long-term perspective, silver’s support will likely be stronger than gold’s, which means future volatility could be even more pronounced. In addition to its safe-haven properties, silver has numerous industrial uses, leading to tighter supply.

Industrial Applications of Silver

Silver plays a crucial role in many industrial fields, especially in photovoltaics, artificial intelligence, and aerospace:

• Photovoltaics: Silver is essential in solar panels as a key conductive material.
• Artificial Intelligence: Silver’s excellent conductivity makes it widely used in chip manufacturing.
• Aerospace: Silver demand is significant in satellite launches and deep space exploration. A medium-sized satellite requires 20 to 50 ounces of silver for its internal components, while larger communication satellites may use as much as 75 ounces or more.

Tightening Silver Supply

Silver supply mainly comes from by-products of lead-zinc, copper, and gold mining. In 2023, over 70% of global silver production came from these by-products. Over the past five years, the cumulative silver deficit has reached approximately 800 million ounces, nearly equivalent to an entire year’s supply from mining operations. More importantly, the shortage in silver supply is not a new issue, and the World Silver Association predicts that this deficit will persist over the next five years.

Silver Inventory Status

Despite the ongoing rise in gold and silver prices, the physical inventory at exchanges has not significantly increased. For example, the Shanghai Gold Exchange has maintained low silver inventories. In November 2025, silver stocks hit their lowest level since January 2016, indicating that silver is being hoarded, and this phenomenon is clearly not being driven by retail investors.

Conclusion

In this resource-driven era, gold and silver are vital investment assets and should be held with a long-term perspective.

The cover image in this article was taken at Lake Königsee, Germany.