After a fantastic bull run, gold and silver investors are still hoping for the crazy vertical they’ve enjoyed to restart. Sadly, that is seldom how markets work. Meanwhile the narrative that most gold and silver investors cling to is that the dollar, at the very least, is going to die. To some it’s the whole global financial system that is going to perish and as such Gold is going to be money again.
To me this is painfully wrong.
Firstly, the US dollar will have to get weak first even before it gets very weak. It is currently strong, too strong. Many people will hate this observation but there it is in the charts of its performance against the Euro, Yen and pound.
The dollar is likely to get weaker but nothing near enough to shake any economic foundations. If that view wasn’t simple enough, we could look at some weak currencies and say what would that mean for the dollar if the buck went that way. Lets look at the Turkish Yen or even the Icelandic Krona or any money with loads of zeros after it, like the Japanese Yen and consider the future of the dollar if it was to follow that trajectory. Those currencies did not die and while 1000 yen has 2 more zeros on it for buying power than the dollar, its fall from a 1 yen golden coin didn’t kill the currency and in fact all it did was knock the gold out of the Japanese currency in the process and make the ‘Sen’ (Japanese pennies) obsolete.
So Gold is not going to appreciate wildly because ‘fiat’ currencies are going to die. However if currencies go down in purchasing power all things physical will go up in nominal terms alongside Gold.
While the ‘death of the dollar’ is a popular narrative. I have called Gold’s moves here in Forbes since that restart below $2000 using a completely non-correlated theory to the ‘death of fiat’ meme.
My theory is ‘Gold is for War.’ The use case governments buy Gold for is for reserves for use in the extremities of conflict. As global tension rises countries must increase their reserves of the currency of war. Its that simple and nothing will stop the price rising if soverigns want warehouses full of Gold. We have more than enough global stress to make that a trend and global stress keeps going up and with it the price of Gold. The major stress is ‘US v China’ the ultimate unhappy-ending and this makes for a very long term trend upwards for gold ahead of us.
… oh look China, which mines plenty of Gold internally is loading up on Gold….
Right or wrong, this thesis has plenty of evidence to back it up. Russia selling gold to fund its War. Poland loading up on Gold because its next door to Russia, etc……
So while the ‘death of the dollar’ audience follow that ancient meme, for me it remains the US v China idea that I navigate by.
So the market isn't looking at today's issues but next year's and for a time their the later spring 2027 window for trouble in Taiwan was fast approaching. Then suddenly as that window approached back here in 2026 the Chinese leadership seemed to have ‘discipline issue’ with its Army. Suddenly the Gold vertical ends. Could it be that the Taiwan denouement is now delayed?
If you have to fire your top generals, it certain might put back military plans quite a bit, especially if the reason for the problem was realism or foot dragging by the army.
So what does this mean for Gold and Silver in this model?
So I predicted during the correction that Gold would settle down and go back on trend. Here is a chart of that and Gold has indeed gone back on trend.
Silver meanwhile will resync with gold at some point and here is a chart of how that could pan out. Gold looks heading for $6000 on this trend and it won’t do Silver any harm in the long run. Silver is FOMO Gold, so when Gold gets around $6000 or more it may well go on another vertical rise and following crash. That’s what Silver does.
So this is a chart of how Silver could resync with Gold as Gold grinds on up. It not going to make many silver holders happy as they see Silver as the wonder horse of the precious metals. Not as just a high beta Gold proxy and the thought of Gold grinding on slowly upwards is not the show they bought a ticket for.
However meanwhile for the patient, the AI revolution is precious metal’s friend. AI will create disruption, it will boost inflation, and to top it all, AI will hoover lots of Gold and Silver into its high tech maw.
The dollar doesn’t have to die for Gold to rise further, however the monetary millennial-ists awaiting Armageddon will be left waiting and no doubt disappointed.