Different precious metals (gold, silver, platinum) have distinct, multi-year cycles that do not move in tandem. Gold's cycle started earliest, followed by silver's explosive catch-up. Platinum has been dormant the longest and, despite a recent correction, may still be in the early stages of its bull run.
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The current surge in metals prices is fueled by factors like central bank buying, geopolitical tensions, and AI-driven demand, occurring *before* a significant rise in inflation expectations. This suggests the trade has a powerful secondary catalyst; if inflation re-accelerates, it will add more fuel to an already burning fire.
A consistent, lagging relationship exists where gold prices rally first, and Bitcoin follows after a period of consolidation. This pattern, observed over multiple cycles, suggests capital flows into "sound money" assets sequentially, starting with the traditional store of value before moving to the digital alternative.
Historical commodity supercycles are not smooth upward trends but are characterized by a series of distinct, sharp price spikes. This "bubbling cauldron" nature, driven by investor fear and subsequent underinvestment, can mislead participants into thinking the cycle is over prematurely.
The strategist differentiates the precious metals rally. Gold's rise is supported by structural central bank buying and a broader investor shift to real assets. In contrast, silver's recent surge is a speculative 'overrun' that is already causing industrial demand destruction, making it vulnerable to a sharp correction.
Extreme premiums on Chinese silver funds, reminiscent of the Grayscale Bitcoin premium in 2020, indicate that the marginal buyer driving the metals rally is Chinese investors seeking scarce assets outside their domestic market. This geopolitical flow is a critical, under-discussed factor.
When a commodity sector is rallying, resist the temptation to chase laggards (the "degeneracy tail" like platinum). Instead, focus capital on the established leaders (gold/silver), as chasing underperformers often leads to poor risk-adjusted returns.
Silver's dramatic price collapse was driven by an unwind of excessive retail leverage, not a fundamental reaction to Kevin Warsh's nomination. The narrative driving the speculative fervor—fears of currency debasement and a banking squeeze—is identical to previous silver bubbles in the 1980s and 2010s, indicating a cyclical pattern.
For 50 years, commodity prices moved together, driven by synchronized global demand. J.P. Morgan identifies a breakdown of this trend since 2024, dubbing it the 'crocodile cycle,' where supply-side factors cause metals to outperform while energy underperforms, creating a widening gap like a crocodile's mouth.
A long-term chart pricing the S&P 500 in gold indicates that US financial assets peaked in 2022. This signals the start of a 10-15 year cycle where hard assets like gold, commodities, and emerging market equities are poised to outperform US stocks.
Unlike oil, high silver prices do not quickly trigger more supply because most silver is a byproduct of mining for other metals like zinc and copper. This inelastic supply, coupled with surging industrial demand from sectors like solar energy, creates a classic setup for a significant price squeeze and parabolic moves.
