Gold and Silver new records. Bubble or new normal?

 WHY ARE MONETARY METALS RISING?

INDICATION OF FUTURE INFLATION?

Today gold is trading at $4487 per ounce, silver is at $69.64 per ounce, a truly remarkable phenomenon. Gold has risen 71% in the last year and 11% in the last 30 days, silver rose over 100% in 2025. It many ways it resembles other bubble mania's of the past. In the late 1970's we saw a similar rise with daily records and buying with long lines of people selling jewelry and coins. Much of the rise at that time was due to double digit inflation brought on by new social policies with big deficits and momentum from the Vietnam war.

While some are tempted today to sell off their holdings of metals, many have doubts of replacing their metals with deteriorating dollars or other fiat currencies all with a doubtful future of being a store of asset value. 

In the 1970's much of the buying was retail collectors, today much of the buying is by Central banks and large investors. The wild ride was halted in 1980 when the federal reserve raised interest rates to near 20% and 30 year mortgages exceeded 18%. At that time the debt held by the nation, industry and consumers is infinitesimal compared to today. The U.S. debt had mushroomed from $286 billion in 1960 to over $900 billion in 1980 and 26% of GDP.

Today the national debt is $38 Trillion and 123% of GDP. Any attempt to raise interest rates substantially would result in total economic collapse. That is one huge difference between 1980 and today. 

Prior to the decoupling or ending the redemption of dollars for gold in 1971 gold was set $35 oz. and then reached $800 in 1980 and silver to $48 at that time. The price then traded down until a low in 2000 of $267 oz. Much of this decline was realized by changes in trading rules and then the massive liquidation by Eurozone central banks to obtain a certain credibility of their fiscal solvency to qualify to adopt the Euro which began in 1999 and was completed in 2002. It was a massive buying opportunity for those who understood the fiscal future of the western democratic socialist countries.

Today much of the buying is in the global south and the BRICS countries and they are taking physical possession of these metals, not just trading paper contracts.  Many now are expecting push back from the Comex and the London Bullion exchange to raise margin requirements and possibly even suspend buying in an effort to reduce the price. There is speculation that these Bullion banks in New York and London have been trading more contracts than physical metal exists and if the buying continues they will be exposed and ruined. 

In 1980 the Comex and London exchange had total control of the price of these commodities today there are new exchanges in Shanghai and Moscow that trade actual metal and not paper contracts. Today silver is trading in Shanghai for $73 and oz. compared to $69 for future contracts in western exchanges. This is called backwardation and indicates a shortage of the physical product.

Much of the price hikes we see is the effects of the desire by investors and banks to lower their holding of dollars and U.S. debt, this may only be stemmed by actual balanced budgets in countries with fiat currencies and that is now a political impossibility. They are in fact betting large on very high increases in inflation in these countries.

Another possibility is that U.S. has been able to, in fact, export inflated dollars around the world thereby allowing running massive deficits without suffering from the usual inflation caused by these deficits. Importing lower priced goods for these dollars kept inflation at a manageable level and still allowed massive increases in government spending. 

That is now changing as many countries are now trading in their currencies and often settling in gold, thereby reducing the need for dollars in many of these trades. Those so called excess dollars then are being exchanged for gold or silver and other commodities and U.S. stocks and even real estate investments thus causing a rise in the stock market and real estate above the ability of many citizens to afford.

While this phenomenon is ongoing it may continue and actually escalate, until it runs out of buyers. The quickest way to eliminate those excess dollars is a massive decline in Stock and Real Estate prices, thus destroying Trillions of inflated dollars and even the price of gold and silver, but the gold and silver will still translate into increased buying power but at lower prices. Dollar or other fiat assets can be wiped out entirely.

More and more countries and big investors see that these trends brought on by decades of fiscal irresponsibility and mismanagement are no longer controllable or reversible. You have to decide if this is just another asset bubble or an actual resetting of the global financial system.