The 'old-fashioned' assets that were once mocked by cryptocurrency players are now making a stunning comeback with incredible returns.
As a seasoned crypto analyst, I must confront a shocking fact: the rise in precious metals in 2025 makes cryptocurrencies look pale in comparison. Gold skyrocketed by 70%, silver surged by 142%, while Bitcoin fell by 6% over the year, and Ethereum lost 12%. Even the traditionally strong MicroStrategy and other crypto-related stocks were halved.
What is even more thought-provoking is that this wave of precious metal market activity is not coincidental. After delving into the market fundamentals, I found that the precious metal market may just be entering a major upward trend in 2026.
01 The Glory of Gold and Silver in 2025
2025 will be a historic year for the precious metals market. As of December 23, the spot gold price is approaching $4500 per ounce, with an annual increase of over 71%; silver has also performed remarkably, with prices breaking $69 per ounce and an annual increase of up to 142%.
Platinum and palladium should also not be underestimated, with increases of 142% and 102% respectively, as the precious metals family dominates the growth charts.
This phenomenon is in stark contrast to the market logic I have observed in the past few years. Against the backdrop of the Fed's rate-cutting cycle, funds have not flowed into high-risk assets as expected, but have instead surged into precious metals as a traditional safe haven.
The central bank's gold purchasing behavior is the core force driving up gold prices. In the third quarter of 2025, global gold demand grew by 3% year-on-year, reaching 1,313 tons, setting a record for quarterly demand. Central bank gold purchases amounted to 220 tons, a quarter-on-quarter increase of 28%.
At the same time, the rise in silver has a more solid fundamental support. The global silver supply gap is expected to be between 100 million and 118 million ounces in 2025, marking the fifth consecutive year of supply gap. The demand for silver in the photovoltaic and new energy vehicle industries has significantly increased, creating a perfect resonance between the industrial and financial attributes of silver.
02 The logic of the Fed's rate cuts and precious metals market
The Federal Reserve has cut rates three times in 2025, cumulatively lowering rates by 75 basis points. The market widely expects the Fed to continue cutting rates 1-2 more times in 2026, or even more.
What does the interest rate cut cycle mean for precious metals? The traditional logic is that declining interest rates lead to lower yields on dollar-denominated assets, thereby enhancing the attractiveness of non-yielding assets such as gold and silver.
However, the current market environment is different from historical rate-cutting cycles. The Fed's monetary policy faces unprecedented complexity: on one hand, the job market has clearly slowed, with the annualized hiring rate in November dropping to about 21.5%, far below the over 30% level during the hiring boom of 2021-2022; on the other hand, inflationary pressures have not been completely resolved.
More critically, the independence of the Federal Reserve is under challenge. Trump is set to announce a new Federal Reserve chairperson early next year, and if the Fed's independence is compromised, it could undermine global capital markets' trust in the dollar.
In this context, the safe-haven attributes of precious metals and their monetary properties work together, forming a unique upward logic.
03 The logic supporting Goldman Sachs's bullish outlook of $4900
Goldman Sachs recently provided a target price of $4900 per ounce for gold in 2026, which means there is nearly a 20% upside potential. Behind this prediction is a dual-driver logic:
Firstly, there is structural demand, as central banks in emerging markets continue to make substantial gold purchases to hedge against geopolitical risks. Goldman Sachs predicts that by 2026, the average monthly gold purchases by central banks will reach 70 tons, with the total annual purchases expected to exceed 840 tons.
Secondly, there is a cyclical benefit, as the Fed's rate-cutting cycle will drive ETF funds back into the gold market. Goldman Sachs believes: "The Fed's rate cuts will drive funds into the gold ETF market, as gold is a non-yielding asset."
The biggest risk of this prediction lies in the possibility that private investors may also start to shift their asset allocations towards gold, even if the proportion is small, it could trigger a larger price increase. After all, the total scale of global gold ETFs is only equivalent to one-seventieth of the U.S. Treasury market.
04 Silver: A highly elastic variety in the gold bull market
In a precious metals bull market, silver typically exhibits greater price elasticity. The market data for 2025 perfectly confirms this rule.
Currently, the gold-silver ratio has fallen from a high of 105 on April 21 to around 72.14. From nearly 50 years of data, the gold-silver ratio has undergone six major corrections (convergence of the gold-silver ratio), five of which occurred during significant bull markets in gold. This indicates that the accelerated price increase of silver confirms the gold bull market.
The support for the supply and demand fundamentals of silver is even more solid. By 2025, the silver consumption in the global photovoltaic industry is expected to reach 7,560 tons, with the proportion of total global silver demand increasing significantly from 20% in 2022 to 55%. The silver consumption in the new energy vehicle industry is expected to be 2,566 tons, a year-on-year increase of 12%.
The silver market is also facing an inventory crisis. By 2025, the global visible inventory of silver can only cover 1.2 months of consumption, far below the safe boundary of 3-6 months. This low inventory environment makes silver prices more sensitive to increases in demand.
05 Comparative analysis of cryptocurrencies and precious metals
As a cryptocurrency analyst, I must objectively compare the performance of the two types of assets. The performance of the cryptocurrency market in 2025 has indeed been disappointing, with Bitcoin down 6% for the year, Ethereum down 12%, and stocks like MicroStrategy directly halving.
This stands in stark contrast to the booming precious metals market. The shift in capital flows indicates that in an environment of increasing uncertainty, investors prefer assets with substantive value support.
The cryptocurrency market is currently facing its own structural problems. Although the U.S. has passed the FIT21 Act and the EU has implemented the MiCA regulatory framework to provide a clearer regulatory environment for the market, this has not reversed the market's downward trend.
In contrast, the precious metals market has clear supply and demand fundamentals supporting it. Global silver supply has shown a gap for five consecutive years, with central bank gold purchases remaining strong, providing solid support for prices.
However, I believe that these two types of assets are not completely substitutable. From the perspective of asset allocation, precious metals can serve as stabilizers in an investment portfolio, reducing overall volatility.
Looking ahead to 2026, the Fed's monetary policy shift has become a foregone conclusion, global geopolitical risks continue to rise, and the trend of de-dollarization is accelerating. These factors together form the perfect storm for the precious metals market. Goldman Sachs's target of $4900 may just be the starting point, and if private investment demand is activated, the price increases for gold and silver may far exceed expectations.
Financial markets are always cyclical, and smart investors understand how to adjust their course in different cycles. In a rate-cutting cycle, precious metals are the true 'safe haven', and now may be the best time to adjust positions.
Dear friends, how are you planning your investment strategy for 2026? Feel free to share your thoughts and opinions in the comments.
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