Despite significant volatility following record-breaking rallies, the bull market in precious metals is far from over, according to Kristy Akullian, iShares Americas Investment Strategist at BlackRock. She highlighted that rising government debt, heightened geopolitical uncertainty, and strong industrial demand for silver continue to support gold and silver prices. From a portfolio allocation perspective, precious metals serve not only as defensive assets but also offer differentiated exposure to long-term structural growth trends.
Akullian noted that precious metals have delivered unprecedented gains in recent months. Although the market has entered a phase of increased volatility, the current bull cycle remains in its early stages. She raised two key questions: "Where are precious metals headed after record surges and subsequent pullbacks, and how should investors incorporate them into their portfolios?"
To address these questions, Akullian first reviewed the performance and volatility of gold and silver. Over the past year, gold prices surged by 75%, briefly surpassing $5,000 per ounce in January before retreating by 12% by month-end. Demand for gold has been diverse, ranging from central banks to cryptocurrency investors. Silver, meanwhile, rose 148% in 2025 and gained an additional 19% in January, despite a 26% drop on January 30. This strong performance reflects robust investment and industrial demand, compounded by lower market liquidity.
She added that volatility for gold and silver has increased by 46% and 106%, respectively, since the start of the year, indicating that while the rally is strong, it is not without risk.
Akullian identified three key drivers behind the recent strength in precious metals. First, rising government debt has enhanced the appeal of gold and silver as stores of value. Global government debt has reached concerning levels, with U.S. federal debt exceeding 120% of GDP and annual fiscal deficits remaining around 6–7% of GDP. Other major developed economies, including Japan, the U.K., France, and Canada, also have government debt exceeding 100% of GDP. Gold has historically performed well in such environments, while silver often acts as a high-beta extension of this theme, though its pricing is also influenced by industrial demand.
The second driver is safe-haven demand fueled by geopolitical uncertainty, whether domestic or international. Periods of policy transition and global realignment tend to increase demand for defensive assets. However, Akullian emphasized that precious metals should be viewed not merely as safe havens but as portfolio stabilizers. Historically, they have exhibited low or negative correlation with equities during market stress. Since 2020, in months when the S&P 500 declined by more than 5%, gold delivered an average return of 2%, while U.S. aggregate bonds remained nearly flat. This asymmetry makes gold particularly valuable during market downturns.
The third catalyst is specific to silver: surging industrial demand combined with relatively low market liquidity. Approximately 60% of annual silver consumption is linked to electronics, solar panels, and semiconductors, with electronics alone accounting for about 445 million ounces per year. Expanding data centers, rising electricity demand from AI workloads, and broader electrification trends contribute to silver's cyclical and growth-sensitive characteristics.
Regarding future price trends, Akullian acknowledged that forecasting precious metals is challenging due to their lack of cash flows or earnings. Instead, she focused on structural shifts in demand. From a macro perspective, lower real interest rates reduce the opportunity cost of holding non-yielding assets like gold and silver, creating a favorable environment for further allocation. Even after the strong gains in 2025, many demand drivers are expected to persist.
She pointed out that new sources of demand—such as central bank purchases, cryptocurrency-related interest, and AI infrastructure development—are still in their early stages, though a repeat of 2025's sharp rally is unlikely. Central bank gold buying has fundamentally altered gold's demand structure. Central banks now hold 20% of all above-ground gold, and from 2022 to 2025, they continued to increase reserves to diversify away from the U.S. dollar. In 2025, gold surpassed U.S. Treasuries as the largest component of global reserves for the first time in three decades.
BlackRock does not expect central bank gold demand to slow significantly this year. A 2025 survey showed that 95% of central banks anticipate further increases in global gold reserves in 2026, up from 81% in 2024 and only 52% in 2021. Economies like China and Brazil still hold less than 10% of their reserves in gold, suggesting room for continued central bank accumulation.
Significant growth potential also exists in consumer markets. Private wealth allocation to gold is approximately 50% lower than a decade ago, indicating room for increased demand. In recent years, India and China accounted for nearly 60% of global consumer gold demand, while North America and Europe combined represented only about 15%, suggesting under-allocation in Western households. Gold exchange-traded products (ETPs) currently make up only about 0.17% of U.S. private financial assets, still below early-2010s peaks.
Another emerging source of demand comes from new categories of buyers. Tether, the largest stablecoin issuer, holds approximately 140 tons of gold, equivalent to the 33rd largest national gold reserve. The stablecoin sector has grown from $28 billion in 2020 to over $280 billion in 2025, with projections ranging from $1.9 trillion by 2030 under a baseline scenario to as high as $4 trillion in a bull case. Further growth in stablecoins could drive additional gold demand through diversification into gold by issuers like Tether or increased investor interest in tokenized gold or "gold-backed stablecoins."
For silver, demand is primarily driven by industrial applications, including solar power and AI data center construction. Global data center capacity has expanded from about 1 gigawatt in 2000 to nearly 50 gigawatts today, supporting substantial silver-intensive computing infrastructure. Going forward, silver's role in new technologies is expected to keep industrial consumption structurally high. In 2024, photovoltaic solar technology accounted for nearly 29% of silver's industrial demand, up from about 11% in 2014. Along with electric vehicles, expanding data centers, and AI infrastructure, solar energy is projected to remain a key driver of silver demand growth through 2030.
Physical silver ETP flows also reflect growing demand. Global gold ETP holdings now exceed 4,000 tons, having increased by about 25% in 2025, with assets surpassing $650 billion.
In the current economic and geopolitical environment, BlackRock believes gold and silver offer more than just defensive qualities. Combining both metals in a portfolio provides differentiated exposure: gold acts as a strategic diversifier and store of value, while silver offers higher volatility with significant industrial demand support. This allows investors to benefit from both portfolio resilience and long-term structural growth trends.
Gold has historically served as a strategic anchor, exhibiting low or negative correlation with equities during market downturns when diversification is most critical. In an environment where stock-bond correlations have become less reliable, gold offers important portfolio benefits. Silver, though less consistently defensive, enhances diversification by offering greater upside potential during economic expansions, reflationary periods, and industrial growth phases. Due to its higher volatility, silver is typically allocated in smaller proportions than gold.
In summary, gold and silver can help investors balance resilience and opportunity, combining diversification with exposure to long-term structural demand trends.
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