Gold Reasserts Itself

The world of precious metals is on fire, behaving like I've never experienced before in my 33 years of investing. In just the past 12 months gold prices have risen from around $2,800 an ounce to over $5,000 an ounce. Silver has risen from around $30 an ounce to over $105. These are huge moves in traditional stores of value, and the questions I am hearing from investors are more focused on "why."

Gold is what I would view as a physical "macro" asset. While gold certainly has utility value for use in electronics as well as jewelry, it's difficult for me to believe industrial and retail use has the potential to move the metal the way it has moved over the past year. Instead, I think we need to look to the other large purchasers of gold: the world's central banks.

Central banks have always used gold as a strategic reserve asset. The World Gold Council, using data derived from the IMF, states central banks have consistently held about 20% of the world's above-ground gold. While the U.S. may be the largest holder of gold, it is not the largest buyer. This title, as of November 2025, belongs to the central bank of Poland, followed by Kazakhstan, Turkey, Brazil, and China.

Once again turning to IMF data, central banks are generally not increasing money supply to buy gold. Rather, the trend is swapping foreign currency reserves for physical gold, and the primary foreign currency reserves being sold are U.S. dollars and U.S. Treasury securities. To put a fine point on it, central banks — particularly in emerging markets — are diversifying their balance sheet reserves away from U.S. dollars and toward gold, a trend which started in 2022 and is not forecast to reverse.

Now, before the apocalyptically minded among us panic, let's take a breath. Yes, the time of the U.S. dollar serving as the dominant reserve asset on the planet looks to be passing. The idea of the United States as the uni-polar world power and single market-dominant economy simply no longer reflects reality. The world has diversified — why shouldn't central banks diversify as well?

I think I may be more concerned if these central banks were diversifying heavily into a different national currency, but diversifying into gold seems almost natural. For most of history gold served this purpose, and to see the yellow metal reasserting itself in this capacity is logical, and marks more of a transition than an ending. Will this trend continue? I believe it will. Does this mean gold prices will continue to rise? I am not qualified to make that call, but I think it will be increasingly important to understand the logic underlying these trends.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The fast price swings in commodities will result in significant volatility in an investor's holdings. Commodities include increased risks, such as political, economic, and currency instability, and may not be suitable for all investors.

Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.