Gold and silver both hit new all-time highs, with spot silver surpassing $70 per ounce on Tuesday evening—far exceeding the price per barrel of crude oil.
Although silver had already been on an upward trajectory—gaining over 140% year-to-date—two key triggers this year accelerated its rally.
First, Federal Reserve Chair Jerome Powell’s speech in August at Jackson Hole signaled a shift toward looser monetary policy. Second, New York Fed President John Williams’ remarks in November laid the groundwork for a December rate cut. Between these two speeches, silver surged 25%, and shortly after Williams’ comments, it skyrocketed another 40%.
The market’s message seems clear: Traders are betting that central banks in Western nations, facing soaring deficits, will resort to money printing to dilute debt. To hedge against fiat currency devaluation, investors are flocking to assets whose supply is beyond the control of any central bank or government.
Equally noteworthy are assets not participating in the rally—such as "digital gold." During most of the post-2008 era of cheap money, they thrived on currency devaluation trades. But now, this trade appears to have entered a new, potentially riskier phase, with traders turning to humanity’s original crisis hedges. The implication is profound: When choosing between human-made constructs like fiat currencies and ancient stores of value like gold and silver, investors are placing their trust in the latter.
This presents central banks with a dilemma in 2026: Stick to relatively accommodative plans, risking further currency collapse, or reinforce defenses to uphold their ultimate duty—maintaining public trust in the money they manage.
If currencies continue depreciating against gold, the effects will eventually spill into other commodities like industrial metals, infiltrating economic supply chains. Inflation could worsen, government bonds might fall, driving up interest rates and ultimately triggering market panic. Just in the past month, long-term debt yields in most developed nations have risen by 0.15%-0.25%, hardly a vote of confidence in fiat money.
The stability of modern economies hinges on public trust in currency value—a point that cannot be overstated. Yet today, that trust is wavering. While not yet in crisis, central banks have been warned: If they remain complacent amid gold and silver’s meteoric rise, markets may abandon them.
Notably, the last time silver was this expensive relative to oil was in the early 1980s. What followed was hyperinflation, soaring rates, market crashes, and recession. This future isn’t inevitable, but similar fiscal crises are now a very real possibility.
The views expressed belong to John Rapley, a political economist at the University of Cambridge and senior fellow at the Johannesburg Institute for Advanced Study, author of *Why Empires Fall: Rome, America, and the Future of the West* and *Twilight of the Money Gods: Economics as a Religion*.
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