Gold and silver have long been considered the bedrock of financial security in times of turmoil, but 2025 has seen these precious metals not just reclaim, but redefine their place in global markets. In April, gold prices surged past $3,500 per ounce, eclipsing even the most bullish forecasts, while silver broke above $40 per ounce by the end of August, closing at $40.20—a 10% gain for the month, according to Financial Sense. These record-setting moves have sent shockwaves through the investment world and sparked a reexamination of what drives the value of these metals in an era marked by persistent inflation and mounting geopolitical risks.
At the heart of gold’s and silver’s resurgence lies a potent mix of psychology, macroeconomics, and global power plays. As reported by AInvest, the behavioral economics principle known as the reflection effect has been a key driver. When investors perceive losses or heightened uncertainty—like the ongoing U.S.-China trade disputes or U.S. sanctions on Iran—risk aversion takes hold. Instead of chasing higher returns in equities, investors flock to gold, seeking its reputation as a safe haven. Loss aversion amplifies this tendency, pushing both institutional and retail investors to reallocate assets toward gold and, increasingly, silver as buffers against perceived losses.
This psychological dimension has real-world consequences. Gold-backed ETFs such as the iShares Gold Trust (GLD) attracted inflows of 397 tonnes in the first half of 2025, with Chinese ETF holdings jumping by 70%. Central banks have also been major players: J.P. Morgan Research estimated that 710 tonnes of gold were purchased quarterly this year by countries including Türkiye, India, and China. Their motivation? Diversification away from the U.S. dollar, whose global share slipped to 57.8% by the end of 2024, making gold an ever-more attractive alternative.
Silver, too, has entered the strategic spotlight. In late August, the U.S. government proposed adding silver to its list of critical minerals, a move that underscores the growing recognition of silver’s role not just as a monetary metal but as an industrial necessity. Financial Sense’s Jim Puplava drew parallels between today’s scramble for strategic resources and the infamous Hunt Brothers’ attempt to corner the silver market in the late 1970s and early ’80s. But this time, it’s not just a pair of speculators—it’s the world’s two largest economies, the U.S. and China, vying for control over the minerals that will power the next generation of technology and infrastructure.
"Very few people are picking up on this," Puplava observed. "But if we go back about 45 years ago, you had two brothers, the Hunt brothers, who tried to corner the silver market... Fast forward, and you have the two largest economies in the world, the US and China, in a race to corner strategic minerals."
This rivalry has real consequences for supply chains and investment strategies. China, already dominant in rare earths, has expanded its reach into Africa and South America, securing crucial mineral supplies. The U.S., meanwhile, is playing catch-up, with the Biden administration (and, as Puplava notes, echoes of Trump-era policies) pushing to reindustrialize the country. This includes investments estimated at $15 trillion to bring shipbuilding and manufacturing back onshore—a process that will require vast amounts of raw materials like copper, silver, and steel.
The urgency of this scramble was highlighted by a warning from Zijin, one of China’s largest mining companies, which cautioned of "unprecedented risks" and a global race for critical minerals as nations compete to secure strategic supplies. According to Bloomberg, Zijin specifically cited not just rare earths but also copper, silver, and gold as flashpoints in this escalating competition. As the Geopolitical Risk (GPR) Index remained elevated throughout 2025, its contribution to gold’s returns was estimated at 4%, according to AInvest—evidence that investors are responding to these signals by seeking safe havens.
Technical factors reinforce the fundamental and psychological story. COMEX non-commercial long positions in gold futures hit record highs, even as ETF holdings remained below their 2020 peaks, suggesting room for further accumulation. The Heterogeneous Autoregressive (HAR) model, adjusted for investor sentiment, has shown that gold’s volatility becomes more predictable and stable as global optimism fades—another reason why gold is increasingly seen as a psychological anchor in turbulent times.
But it’s not just gold and silver themselves that are benefiting. Mining stocks—dubbed the "Shiny Seven" by Puplava—have outperformed even the most hyped tech stocks in 2025, with some climbing from $9 to $90 or from $5 to $45 since 2019. "We’ve seen stocks go from $9 to almost $90. We’ve seen stocks go from $5 to $45. I mean, it’s absolutely amazing," Puplava said on Financial Sense. These companies, which specialize in extracting the metals that underpin both financial security and industrial progress, are increasingly recognized as critical assets in diversified portfolios.
Persistent and structural inflation is another force reshaping the investment landscape. Core inflation hit 2.9% in July, the highest since February, and is expected to remain above historical averages for the remainder of the decade. According to Financial Sense, five macro forces are likely to keep inflation elevated: fiscal dominance and easy monetary policy, the reshoring of manufacturing, tariffs and trade policies, labor market constraints, and the ballooning national debt. The traditional 60/40 equity-bond portfolio, once a staple of retirement planning, is proving increasingly vulnerable. In 2022, both stocks and bonds suffered double-digit losses—a scenario that challenges the wisdom of relying on fixed income as a safe harbor.
In response, Puplava and other advisors are advocating for a shift toward blue-chip dividend stocks, short-term bonds with equity kickers, and a greater allocation to commodities and inflation hedges. "The industry, in my opinion, has the whole picture on investing and especially for retirement all wrong," Puplava argued. "Because the idea is, as you retire, the older you get, the more you should have in bonds. How is that going to work in an inflationary environment?" Instead, he recommends focusing on income-generating assets that can keep pace with rising costs, such as dividend aristocrats and best-of-breed mining stocks.
For those navigating this new macro environment, the lessons are clear: gold and silver are more than just relics of a bygone monetary era—they are dynamic tools for managing risk, capitalizing on global trends, and protecting wealth against both psychological and economic shocks. As the world’s superpowers race to secure the resources of the future and inflation continues to gnaw at purchasing power, the psychological and strategic edge of precious metals has never been more apparent—or more essential.
