To The Moon

Historical Trends and Factors Influencing Gold and Silver Prices

1. Gold Price Trends and Influencing Factors

Gold is widely recognized as a store of value and a popular hedge against inflation, political issues, and economic uncertainty.In 2025, gold's value significantly increased by 67%. This strong momentum is anticipated to continue into 2026, with predictions of gold prices reaching $5,000 per ounce.

Key factors influencing gold prices include:

Geopolitical conflicts: Ongoing international conflicts contribute to gold's appeal as a safe-haven asset.

Central bank and institutional buying: Renewed interest and purchases from central banks and large institutional investors bolster gold demand.

Monetary policy and fiscal debt concerns: Worries about monetary policy and expanding fiscal debts often drive investors towards gold.

Weakened U.S. dollar: During periods when the U.S. dollar loses value, gold often gains strength. For example, the U.S. dollar lost 10% of its value during a previous administration's first year, contributing to gold's gains. Ray Dalio notes that money supply has exploded since the U.S. abandoned the gold standard in 1971, leading to a 90% decline in the purchasing power of the U.S. dollar.

Government debt and devaluation fears: The U.S. national debt climbing to new highs, such as $38.5 trillion with a $1.8 trillion budget deficit in fiscal year 2025, leads to fears of dollar devaluation through increased money supply, prompting aggressive gold buying. Billionaire investor Ray Dalio warns that all major fiat currencies are "in trouble" due to unsustainable debt loads, predicting a significant currency devaluation cycle similar to the 1930s and 1970s. He suggests that central banks are increasingly selling debt-based assets and buying gold as a defensive move against the coming devaluation of paper money.

2. Silver Price Trends and Influencing Factors

Silver prices have also seen significant gains, with an increase of over 194% in the past year.

Key factors influencing silver prices include:

Multi-year supply deficit: Recent demand for silver has far outpaced its supply, leading to a multi-year deficit that drives up prices.

Industrial applications: Silver's extensive use in various industrial applications, such as solar panel photovoltaic cells, catalytic converters, water purification systems, and aerospace thermal control systems, contributes to its demand.

Market volatility: The silver market can experience extreme volatility due to tight physical supply, shifting trade flows, and rising geopolitical frictions.

3. General Trends in Precious Metals

Precious metals, including gold and silver, have surged in recent years, outperforming other asset classes like stocks. This trend suggests a shift from their traditional role as hedges to becoming leadership assets. Analysts suggest that it is not too late to invest in precious metals, as the prolific runs often occur at the beginning of a bull cycle.

Summary

Both gold and silver have demonstrated strong performance, driven by geopolitical uncertainties, economic policies leading to currency devaluation concerns, supply-demand dynamics, and increased institutional interest. Gold benefits from its role as a safe haven during economic and political instability, while silver's industrial demand and supply deficits are key drivers. Investors are increasingly looking to precious metals as a hedge against fiat currency devaluation and as a leading asset class.