Gold price skyrockets, reshaping the precious metals market

Neils Christensen - an analyst at Kitco News - commented that gold has separated from the rest of the precious metal group thanks to its role as a truly monetary metal.

Central banks are boosting demand at unprecedented levels as they seek to diversify away from legal currencies and move towards more stable, tangible assets. Silver, with its high volatility, is simply not suitable for the portfolio of public sector assets.

It is this specific demand that has pushed the gold/ silwer price ratio to the extreme. In April, this rate exceeded 100 - the highest level in the year and the long-term average was about 50 - 60.

Some analysts believe that the absence of silver in the rally has really reduced investors' interest in gold in general. Because in a typical bull market, silver often increases more strongly due to high volatility.

In contrast, over the years, silver has fallen behind, creating a cloud of skepticism that engulfs all precious metals transactions. But that skepticism is fading away quickly.

Silver ended the week at a record high of over 56 USD/ounce, up to 97% since the beginning of the year. Meanwhile, gold is testing an important resistance zone around $4,200 with an increase of nearly 61% since the beginning of the year.

The ratio between the two metals - which once soared to 100 in April - has now dropped to 74, breaking a long-term support line. And some analysts believe that this decline could take the rate to 50. If the growing prediction that gold will reach $5,000/ounce by 2026 is correct, it would mean that silver could reach $100/ounce.

What has changed? Investors are finally realizing how scarce silver is.

Industrial demand associated with the accelerating electrification of the global economy has created a serious supply deficit for the fifth consecutive year. The amount of silver stored on the ground is depleted, while the available metal is often not in the right shape or in the wrong place. That imbalance has fueled a series of supply shocks in 2025.

The first major wave of demand came at the start of the year, as a huge amount of silver poured into the US as traders feared a tax on President Donald Trump's global trade program.

eventually silver is not taxed, but that worry has never gone away - especially after Washington officially put silver on the list of important metals.

The influx of silver into the US has caused inventories of materials elsewhere to be tightened, especially in the London Decentralized market. Strong buying from India has added to the pressure, pushing rental rates and price differences to record levels globally.

Neils Christensen believes that a portion of silver has left the US and China as traders seek a higher difference, but increased demand in Asia only deepened the shortage of supply. Reports show that inventory at the Shanghai Gold Exchange has now reached a decade-low level.

Silver could flow out of US warehouses, but that would only send the next supply crisis to the West.

With soaring demand and no easy supply solutions in sight, analysts believe that silver's new strength may not be just a short-term breakthrough. At least for now, the metal seems to have finally found its worthwhile spot in the spotlight.