Gold and Silver Bull Run Continues

Key Takeaways

• Gold Posts Sixth Monthly Gain: Gold continued its strong performance in June, rising for the sixth consecutive month and up 25.86% year-to-date, as investors were drawn to its safe-haven appeal amid persistent structural risks.
• Global Rotation from Dollars to Gold: The central banks of Emerging Markets and Developing Economies (EMDE) are the biggest buyers of gold and are increasingly using gold as a tool of financial sovereignty while reducing exposure to the U.S. dollar.
• Weaker U.S. Dollar as Policy: The U.S. is increasingly sacrificing currency strength for fiscal manageability by tolerating dollar weakness to support exports, inflate away debt and maintain lower real yields.
• Silver’s Breakout Continues: The silver bull market continues with June’s breakout above $35. The metal is up 24.94% YTD, joining gold as one of the strongest-performing assets.  

Performance as of June 30, 2025

Source: Bloomberg and Sprott Asset Management LP. Data as of June 30, 2025.
* BPS stands for basis points. **ETF holdings are measured by Bloomberg Indices; the ETFGTOTL is the Bloomberg Total Known ETF Holdings of Gold Index; the ETSITOTL is the Bloomberg Total Known ETF Holdings of Silver Index.

Gold’s Positive Gains in June Mark Sixth Consecutive Monthly Rise 

For the month ending June 30, 2025, gold bullion rose by $13.89 per ounce (or 0.42%) to close at $3,303.14 and has now increased every month this year. Year-to-date for the first six months of 2025, gold is up 25.90% and has been one of the strongest-performing assets in the world (see Figure 1), continuing 2024’s trend. For June, gold maintained a high level of consolidation despite the recovery of U.S. equity markets to new all-time highs. Gold remains well supported by central banks and sovereigns, while investment fund positioning remains at modest levels. In Figure 2, the technical chart highlights that gold has remained comfortably inside a rising channel since 2023, with bullish⁷ confirmation from the MACD indicator⁸ (rising trend of higher highs with higher lows).

Gold’s bull run continues, powered by sovereign demand and global instability.

While markets continue to recover from the early April selloff, the longer-term policy and structural risks remain in place and mostly unresolved. These include the unsustainable and worsening trajectory of the U.S. fiscal debt and deficit situation, a weakening U.S. dollar policy, institutional erosion, rule of law and corruption, ongoing trade and tariff tensions, unilateral and capricious policy actions, and the list grows. Taken in its entirety, we believe gold is being bought as a safe haven asset due to the U.S. dollar's eroding store of value role and the fracturing of trust across nearly all global monetary and political orders and systems.

The broader equity market, as measured by the S&P 500 Index, continued its remarkable recovery to close at all-time highs. After one of the quickest 20% declines on record, the S&P 500 has now recorded the fastest recovery from a 20% selloff. Despite the rebound, overall equity positioning remains muted as investors holding long (bullish) positions were caught flat-footed by the abrupt policy reversals. Aiding the recovery was a surge in corporate buybacks⁹, now expected to reach $1.1 trillion in 2025, up from ~$1 trillion in 2024. As policy uncertainty over trade and tariffs continues, some capital previously destined for capital expenditures has been redirected to buybacks. Furthermore, buybacks tend to accelerate into selloffs, which in turn act as an equity put¹⁰ and as a volatility suppressor, aiding volatility-control systematic funds to reengage from the long side. While the current Trump Administration has vociferously advocated for significant interest rate cuts, the market is beginning to price in the possibility of a 25 basis points interest rate cut for the July Federal Open Market Committee (FOMC). The recent better-than-expected inflation data also aided the drift to lower yields.

Figure 1. 2025 YTD Returns for Various Asset Classes

Source: Bloomberg, as of June 30, 2025. The EURO STOXX 50 Index tracks 50 large, blue-chip European companies operating within eurozone nations. The MSCI World Index tracks large and mid-cap representation across Developed Markets countries, while the MSCI World ex USA excludes the United States. Bitcoin is measured by the S&P Bitcoin Index, designed to track the performance of the digital asset. The Nasdaq 100 Index tracks the 100 largest, most actively traded companies listed on the Nasdaq stock exchange. The U.S. Treasury Index, based on recent auctions of U.S. Treasury bills, is commonly used as a benchmark when determining interest rates. Please see Footnotes for additional index definitions.

Figure 2. Gold Bullion in a Rising Channel with MACD Higher Highs and Higher Lows (2021-2025)

Source: Bloomberg. Gold bullion spot price, US dollar/oz. Data as of 6/30/2025. Moving average convergence/divergence is a trend-following momentum indicator that shows the relationship between two exponential moving averages (EMAs). Past performance is no guarantee of future results.

Part 1. WGC Central Bank Gold Reserves Survey 2025

The World Gold Council (WGC) released its annual central bank gold survey in June. This Survey provides invaluable information on the most substantial and critical buyers of gold over the past few years. This year, the WGC drew 73 responses, its highest number in a year, and offers considerable insight into gold reserve management from the overall central bank community. 

Summarized Key Highlights from the WGC Survey:

• 95% of central banks expect global gold reserves to rise over the next year, consistent with past surveys.
• A record 43% plan to increase their gold holdings; none expect a decline.
• Crisis resilience, diversification and inflation hedging remain core reasons for adding gold.
• 73% foresee lower USD reserve shares in five years, with gold, euro and renminbi (the official currency of China) gaining.
• More banks are actively managing gold (44% vs. 37% in 2024), with risk management rising in priority.
• The Bank of England is still the top vault (64%), but domestic storage rose to 59% in 2025; only 7% plan further increases.

We also summarized central banks’ factors for owning gold in 2025, categorizing them into four main categories and ranking them (see Figure 3). However, there has been a growing divergence between Emerging Markets and Developing Economies (EMDEs) and Advanced Economies (AEs) in the reasons for owning gold.

Figure 3. WGC Central Bank Survey Results Summarized

Source: World Gold Council, Central Bank Gold Reserves Survey 2025, published 6/17/2025. 

Central Banks Are Rewriting the Role of Gold in a Fractured World

Over the past two years, central banks around the world have begun to divide in their approach to gold. The divergence is particularly stark between Emerging Markets and Developing Economies (EMDEs) and Advanced Economies (AEs). While gold has historically played a steady role in reserve management, survey data from the World Gold Council shows that for EMDEs, gold is increasingly being redefined not just as a financial asset but as a strategic instrument of geopolitical and monetary independence, an increasingly critical function in a rapidly deglobalizing world. In contrast, AEs appear more anchored in legacy positions, with less relative urgency to reframe gold's relevance in a rapidly changing world. While AEs are the largest holders of gold, EMDEs are the largest buyers of gold and are setting the price.

The EMDE Repricing of Gold

From 2024 to 2025, EMDEs showed a significant increase in the number of central banks citing gold as highly or somewhat relevant for a wide range of reasons. The most dramatic gains were observed in the categories of geopolitical risk (up 14%), use as a policy tool (up 21%), concerns about sanctions (up 22%), and as a vehicle for domestic trust (up 16%). These shifts reflect a broader strategic recalibration. For EMDEs, gold is no longer just a hedge against market volatility but a barrier against extraterritorial financial control and damage from global sanctions regimes.

The idea of gold as a sovereign asset, immune to counterparty risk and free from the control of Western institutions, has gained renewed appeal in a multipolar world. EMDEs appear to be using gold to assert their autonomy, not just in monetary terms but also in political terms. This theme was further confirmed by a growing number of central banks in these economies listing gold as relevant due to anticipated changes in the international monetary system and as part of an explicit de-dollarization policy.

Advanced Economies: Passive Anchoring to Legacy Holdings

In contrast, Advanced Economies (AEs) have shown a softening stance on several traditional reasons for holding gold. Between 2024 and 2025, AEs reported meaningful declines in relevance for categories such as geopolitical risk (down 21%), no default risk (down 16%), and gold's liquidity (down 16%). The only stable support reason remained the "historical position" category, which rose to 92% in 2025, suggesting that for many AEs, gold's role is an ongoing, secure legacy.

This passive approach may stem from the relatively stable institutional and financial environments in developed markets, where the necessity to rethink reserve assets is less urgent. However, it also may indicate a possible underestimation of broader systemic shifts occurring globally, especially if these shifts continue to reshape trade and currency alliances. Gold reserve activity in the EMDEs suggests that this cohort is far more vulnerable than the AEs to these risks.

Gold vs. USD Sentiment and Strategic Rotation

A "Gold-USD sentiment spread" can be used to compare the share of central banks expecting a higher proportion of reserves in gold versus those expecting a lower share in U.S. dollars. From 2022 to 2025, EMDEs show a consistent upward trend in favor of gold, with the spread projected to reach +35 percentage points by 2027. Advanced Economies also show a similar trend (31% by 2027).

This data underscores a strategic rotation away from U.S. dollar dependency and toward gold as a neutral, unencumbered reserve asset. Notably, this trend is not driven primarily by inflation concerns or portfolio diversification goals but by structural distrust and risk hedging in an increasingly fractured geopolitical landscape.

Future Implications for Gold

The evolving motivations of central banks have far-reaching implications for the gold market. First, official-sector demand will be increasingly EMDE-led and less sensitive to price volatility. Purchases driven by geopolitical or sovereign motivations tend to be strategic and long-term, offering a floor of sticky demand even during market pullbacks (the central bank gold put).

Second, gold's identity is bifurcating. In the West, it remains largely a historical asset, valuable in portfolio construction but less vital in managing systemic or geopolitical risk relative to EMDEs. In the EMDE world, however, gold is being actively re-monetized and re-politicized, becoming both a sign of monetary sovereignty and a hedge against financial coercion from other nations. China's massive gold purchases would be the most significant example of this development.

For emerging markets, gold represents monetary self-determination and a safeguard against geopolitical financial leverage.

Lastly, this divergence suggests a more fragmented reserve landscape. As EMDEs continue to build gold reserves while simultaneously reducing their exposure to U.S. dollars, we could see a slow erosion of dollar-centric global reserves. While gold will not replace the dollar as a transaction medium, it may well regain prominence as the trust anchor of last resort. As the world deglobalizes with the end of the former U.S.-led global order and as we see a return to great power competition, EMDEs, due to their weaker power status, are increasingly moving their reserves into gold, seeking to hedge, protect and insulate themselves from the potential fallout from the changes in the monetary world order.

Part 2. U.S. Dollar

Domestic Financial Repression and Lowering the U.S. Dollar

U.S. policymakers need to confront a mounting debt trajectory that the current tax-reconciliation bill will intensify. Because neither political party shows any desire for spending restraint, it seems the easiest political path forward is to protect the Treasury market while allowing the U.S. dollar to weaken. The Trump Administration's persistent urging for the Federal Reserve to cut rates, the proposal to relax the enhanced Supplementary Leverage Ratio (eSLR)¹¹ and growing talk of steering domestic savings into government bonds all point toward supporting bond prices and sacrificing dollar strength.

Bond Markets Come First

Several considerations make the bond market the apparent priority. Containing interest expense is critical, given that roughly 30% of marketable debt matures or reprices each year, and a 1% rise in the 10-year Treasury yield would swiftly add tens of billions of dollars to annual coupon costs. Maintaining stable bond prices helps preserve the balance-sheet capital of banks and insurers, which collectively hold over $5 trillion in Treasuries and agency mortgage-backed securities (MBS). Without this stability, mark-to-market losses could spark liquidity panics reminiscent of the Silicon Valley Bank crisis in March 2023. A more politically acceptable route to long-run sustainability likewise hinges on keeping real rates below zero, which quietly erodes the debt load. Voters and officials are far more sensitive to sudden market turmoil than to the gradual purchasing-power loss that follows a weakening currency. Finally, a cheaper U.S. dollar offers limited but practical macroeconomic benefits by nudging inflation upward, inflating away nominal debts and giving domestic manufacturers a marginal trade edge.

Fiscal Dominance and Financial Repression

The fiscal math underscores how little policy space remains. Annual interest expense is about $1 trillion, while combined Social Security and Medicare costs already top $2.5 trillion, which is roughly equal to federal tax revenue (~$3.5 trillion). With defense spending currently at $850 billion and climbing, and liabilities growing faster than receipts, monetary policy has become subordinate to Treasury funding needs. In short, the U.S. has reached a state of fiscal dominance whereby monetary policy must remain servile to the Treasury's funding needs (fiscal policy dictates monetary policy). Persistent negative real yields, and thus structural dollar weakness, are the most likely path. The appointment of the next Fed Chair, widely expected to be politically amenable to aggressive rate cuts, will crystallize this dynamic.

Policy is shifting from fighting inflation to financing deficits, at any cost.

Officials will likely also tailor broader policies to increase domestic demand for Treasuries. The June eSLR proposal would exclude or down-weight Treasuries when banks calculate capital leverage ratios, granting them the capacity to absorb an additional estimated $5-6 trillion of government bonds at far lower regulatory cost. Parallel initiatives would encourage stablecoins¹² backed exclusively by Treasury bills, effectively monetizing short-term issuance at a zero yield. Another avenue is to offer tax incentives that make long-bond holdings more attractive for banks and insurers. And if voluntary uptake disappoints, the government can compel pension funds and retirement plans to increase their long-end Treasury exposure. Each measure reallocates duration risk from foreign to domestic balance sheets and deepens a policy of financial repression. Financial repression is a policy mix that permits governments to fund themselves more cheaply than free markets would allow, usually by pushing savers' returns below the rate of inflation and by directing private funds into government bonds. 

Currency Consequences

The combination of fiscal dominance leading to domestic financial repression carries currency consequences. Capped yields compress the real return on U.S. assets relative to those available abroad, eroding a key support of dollar strength. Stablecoins that hold T-bills expand the stock of “dollar-like” instruments without increasing direct demand for the currency itself, diluting its scarcity premium. With fewer foreign investors anchoring the market, the exchange rate also loses a natural stabilizing bid during global risk-off episodes. In short, the falling U.S. dollar becomes the market stress release valve for the new funding model.

Confirming the Turning Points

There are possible signposts to confirm whether the U.S. has fully embraced this strategy. A permanent eSLR exemption would signal that banks have been cemented as buyers of last resort. The rapid expansion of T-bill-backed stablecoins into the multi-trillion-dollar range would reveal that deficits are being monetized (essentially a form of stealth quantitative easing) outside the Fed’s balance sheet (see the pending Genius Act, aka the Guiding and Establishing National Innovation for U.S. Stablecoins Act). Legislation forcing pensions or insurers into additional long-term Treasuries would make explicit the policy choice of domestic financial repression in exchange for cheaper public financing.

Fiscal arithmetic now stresses that the U.S. protects its bond market and accepts a weaker currency. Any combination of the above in size would demonstrate the Administration is fully embracing domestic financial repression and has acknowledged a weaker U.S. dollar as the price of financing an ever-larger national debt. Financial repression, a weak U.S. dollar, negative real yields and a steepening yield curve could likely be the next catalyst for higher prices in gold, other precious metals and hard assets once the market begins to price these policy outcomes.

Part 3. Silver

Silver Breaking Out

For the month ending June 30, 2025, silver bullion rose $3.13 per ounce (or 9.48%) to close at $36.11, the highest monthly close in 13 years. YTD for the six months of 2025, silver is up 24.94%, joining gold as one of the strongest-performing assets. In June, silver broke out of the $35 resistance level on no headline news. In Figure 4, we highlight that silver broke out from a much larger cup and handle pattern¹³ last year, with a projection target of $40. Breaking above the $35 level increases the likelihood of reaching the $40 target.   

Figure 4. Silver's Long-Term Bullish Chart, Clearing the $35 Resistance (2005-2025)

Source: Bloomberg. Silver bullion spot price, US dollar/oz. Data as of 6/30/2025. Moving average convergence/divergence is a trend-following momentum indicator that shows the relationship between two exponential moving averages (EMAs). Past performance is no guarantee of future results.

Investment Flows Drive Silver

Silver is still driven by investment flows, unlike gold, which central banks and sovereigns now dominate. In prior commentaries, we noted that the potential amount of free trading silver inventory has likely been significantly depleted, and silver prices should behave more convexly with incremental buying demand. There are many possible explanations, but we believe the main reason was the cumulative drawdown of silver inventories throughout the 2020s, as noted by the Silver Institute. With less available silver inventory to trade, positioning becomes a more critical price driver.

With inventory under pressure, the potential for a silver squeeze is rising.

There are several ways to express the relationship of silver prices to positioning. Figure 5 is a scatter plot that measures the amount of silver held in ETFs plus Commodity Futures Trading Commission (CFTC) (y-axis, millions of ounces) and the silver price (x-axis). There are two time plots: 2021 to 2023 and 2024 onward. The curved lines are polynomial-fitted regression lines.¹⁴ The 2021-23 regression line has a convex-up shape, meaning it takes much more buying power to raise silver prices. The 2024-onward plot has more of a concave-flat shape, meaning it theoretically takes far less silver buying in ETF and CFTC to increase silver prices. Silver price dynamics have changed in the 2020s as an estimated +800 million ounces have been drained from silver inventory stocks. Another way of expressing this is that it took roughly 10.6 million ounces of silver buying to raise silver prices by 1% from 2021 to 2023. From 2024 onward, it took ~7.2 million ounces to lift silver prices by 1%. The potential of a silver price squeeze remains.

Figure 5. Silver Price vs. ETF Plus CFTC Silver Holdings: Signs of a Squeeze Forming

Footnotes