The $5,000 Gold, $100 Silver Convergence: Why Precious Metals Are Entering a New Era

A perfect storm of monetary debasement, supply crises, and geopolitical realignment is pushing gold toward $5,000 per ounce and silver toward $100 per ounce. The question is no longer if these targets will be reached—but when, and what happens to the global financial system when they do.

The 2025 Rally That Rewrote the Rulebook

Gold's performance in 2025 was nothing short of extraordinary. The precious metal surged 66% over the year, climbing from $2,606 per ounce in December 2024 to a record high of $4,529 on December 26, 2025.[1] This represents gold's strongest annual percentage gain since 1979, when the metal last experienced a comparable bull run during the stagflation crisis.

Silver's performance was even more dramatic. The white metal exploded 142% in 2025, rocketing from approximately $30 per ounce to over $73 by year-end.[2] At its peak, silver briefly exceeded $80 per ounce, breaking through psychological barriers that had constrained the metal for decades. This rally far outpaced gold's gains, signaling a fundamental shift in silver's role from mere monetary metal to critical industrial commodity.

Yet despite these historic gains, the consensus among major financial institutions is clear: the rally is far from over. Bank of America, J.P. Morgan, and a host of independent analysts are projecting gold to reach $5,000 per ounce by the end of 2026, with J.P. Morgan forecasting an average price of $5,055 in the fourth quarter and a longer-term target of $5,400 by late 2027.[3] For silver, more than half of retail traders expect the metal to trade above $100 per ounce in 2026, with prominent analysts including Peter Schiff and Lyn Alden arguing that $100 is not only realistic but potentially conservative.[4]

The Central Bank Buying Spree That Won't Stop

At the heart of gold's structural repricing is an unprecedented wave of central bank accumulation. For three consecutive years from 2022 through 2024, central banks purchased more than 1,000 tonnes of gold annually—a level of institutional buying not seen in modern history.[5] While J.P. Morgan forecasts a modest decline to 755 tonnes in 2026, this figure remains dramatically elevated compared to the pre-2022 average of 400-500 tonnes per year.

The mechanics of this buying pattern reveal why it will persist. As Michael Widner, strategist at Bank of America, explained during a metals roundtable in mid-December: "Gold markets don't normally come to an end because they're overbought, gold markets come to an end because the underlying motives that actually started the bull market have subsided and that honestly we don't see."[6]

Those underlying motives are rooted in geopolitical realignment and monetary system fragmentation. BRICS nations—Brazil, Russia, India, China, and South Africa, along with newer members—now collectively hold more than 6,000 tonnes of gold, representing approximately 20% of the world's official reserves.[7] These nations are actively pursuing de-dollarization strategies, with gold serving as the cornerstone of an alternative reserve system.

China's recent moves are particularly telling. The country has not only continued aggressive gold accumulation but has also incentivized the use of its digital yuan (e-yuan) for international trade settlement, explicitly linking the digital currency to gold-backed reserves.[8] This represents a direct challenge to the dollar's dominance in global trade and a structural bid for gold that transcends traditional market cycles.

Critically, at current prices above $4,000 per ounce, central banks no longer need to purchase as many tonnes to achieve their desired gold allocation percentages. This explains the projected decline in absolute tonnage while the structural buying trend remains intact. As Gregory Shearer of J.P. Morgan noted, "We believe central bank demand will remain elevated next year and have been encouraged by strong buying in the third quarter of 2025, even with much higher gold prices."[9]

The Fiscal Dominance Thesis: Why the Fed Can't Stop Printing

The second pillar supporting $5,000 gold is the resumption of quantitative easing in all but name. In December 2025, the Federal Reserve announced "reserve management purchases" totaling $40 billion in the first month, with expectations that purchases would "remain elevated for a few months to alleviate expected near-term pressures in money markets."[10]

Stephanie Pomboy, president of MacroMavens, was blunt in her assessment: "I know they are not calling it QE, non-QE or QE light or whatever. They are dipping their toe in the water, and I think what's going to happen as we turn the page to 2026 is that the balance sheet will become the main source of monetary stimulus. The balance sheet expansion is outright monetary debasement and there's nothing better for precious metals than that."[11]

The underlying driver is fiscal dominance—a regime in which government debt levels are so elevated that the central bank has no choice but to monetize deficits to prevent a sovereign debt crisis. U.S. federal debt has now surpassed $38 trillion, with annual deficits running above $2 trillion even during periods of economic expansion.[12] Rising interest rates make this debt burden increasingly unsustainable, forcing the Fed into a policy trap: either continue raising rates and risk triggering a debt crisis, or resume monetary expansion and accept higher inflation and currency debasement.

The market has already priced in the Fed's choice. The U.S. Dollar Index wrapped up 2025 with its worst annual performance since 2017, declining more than 6%.[13] A weaker dollar mechanically supports higher gold prices, as the metal becomes cheaper for foreign buyers and serves as a hedge against dollar depreciation.

Bank of America's $5,000 gold target explicitly incorporates "rising deficits tied to U.S. fiscal policy and a weaker U.S. dollar" as core assumptions.[14] The firm notes that while "a hawkish tilt by the Fed is a risk," the structural forces of fiscal dominance make sustained monetary tightening politically and economically untenable.

Silver's Supply Crisis: The Great Squeeze of 2026

While gold's rally is driven primarily by monetary and geopolitical factors, silver's path to $100 per ounce is rooted in a far more acute crisis: physical supply shortage.

For five consecutive years, global silver demand has exceeded total supply, creating a structural deficit that has quietly eroded inventories worldwide.[15] In 2025, global silver demand reached an estimated 1.24 billion ounces, while total supply—including both mine production and recycling—amounted to only 1.01 billion ounces. This represents a deficit of over 230 million ounces, equivalent to the entire annual output of Mexico, the world's largest silver producer.[16]

Unlike gold, silver mining is largely a byproduct of other metal production, primarily copper, zinc, and lead. This means that even if silver prices double, miners cannot easily increase supply, because their operations are driven by base-metal economics rather than silver profitability. New mining projects take 8-12 years to develop, and global ore grades are declining. Recycling contributes roughly 180 million ounces annually, but that figure has remained stagnant for years.

The visible symptom of this crisis is the collapse of global inventories. COMEX registered inventories in the United States are down nearly 70% since 2020. London Bullion Market Association (LBMA) vaults have lost around 40% of their holdings. Shanghai inventories have fallen to their lowest level in a decade.[17] At current consumption rates, some industrial regions have barely 30 to 45 days of accessible silver reserves.

This scarcity is driving a massive price divergence between paper-traded silver (futures) and physical metal. In Shanghai, physical silver is now trading above $80 per ounce, while COMEX futures remain in the $70-75 range.[18] This physical premium signals that buyers are desperate for actual delivery rather than paper exposure.

The current paper-to-physical ratio stands near 356:1, meaning for every one ounce of physical silver, there are 356 ounces worth of paper claims circulating in global markets.[19] If even a small fraction of participants demand physical delivery, the market could face a catastrophic short squeeze—a scenario where there simply isn't enough silver to meet contractual obligations.

China's Export Restrictions: Weaponizing Silver Supply

On January 1, 2026, China implemented new export restrictions on refined silver that are already sending shockwaves through global markets. Under the new policy, only large, state-approved companies are allowed to export silver, and only after obtaining special government licenses. To qualify, firms must meet two stringent conditions: an annual production capacity of at least 80 tons of silver and verified credit lines exceeding $30 million.[20]

These requirements effectively block hundreds of smaller and mid-sized exporters who have long served as key suppliers to global industrial users and refineries. China currently controls between 60% and 70% of the world's refined silver supply. Even a partial restriction instantly creates a global supply shock.

This move mirrors China's earlier strategy with rare earth metals, where export controls were used to secure domestic industrial advantage and global pricing power. By tightening control over silver, China is effectively weaponizing supply in the same way oil and rare earths have been used in the past.

The timing is no coincidence. Silver's role as an industrial metal has become increasingly strategic, with applications spanning solar panels, electric vehicles, electronics, semiconductors, and medical devices. The International Energy Agency (IEA) estimates that by 2030, the solar and EV sectors alone will consume half of global silver output, leaving minimal supply for jewelry, coins, and investment bars.[21]

Unlike copper or aluminum, silver has no viable substitute. Its unique conductivity and reflectivity make it irreplaceable in high-performance technologies. This means industrial demand is effectively inelastic—it does not decline even when prices surge. As supply tightens, factories will continue buying at any price to keep production lines running.

The Path to $5,000 Gold and $100 Silver

The convergence of these forces creates a high-probability scenario for both metals to reach their respective targets within 12 to 18 months.

For gold, the path is straightforward. J.P. Morgan's forecast model relies on the historical relationship between quarterly investor and central bank demand and prices, which explains approximately 70% of quarter-over-quarter price changes. The bank projects average quarterly demand of 585 tonnes in 2026, comprising 190 tonnes from central banks, 330 tonnes in bar and coin demand, and 275 tonnes from ETFs and futures.[22]

Using J.P. Morgan's rule of thumb, around 350 tonnes or more of quarterly net demand from investors and central banks is needed for gold prices to rise each quarter, with every 100 tonnes above 350 worth around a 2% quarterly price increase. At 585 tonnes per quarter, gold is positioned for steady appreciation toward the $5,000-5,400 range by late 2026 to early 2027.

For silver, the path is more volatile but equally compelling. The combination of a five-year structural deficit, collapsing inventories, China's export restrictions, and surging industrial demand creates conditions for a supply squeeze that could push prices well above $100 per ounce. As one analyst noted, "The recent volatility in the silver market is noise; the deficit is the signal."[23]

Metals Focus, a leading precious metals consultancy, forecasts silver to average $57 in 2026 and potentially test $60 later in the year.[24] However, these conservative estimates assume no major supply disruptions and orderly market conditions. If the paper silver market experiences a short squeeze—a scenario that becomes more likely as physical premiums widen—prices could spike dramatically higher in a matter of weeks.

Peter Schiff, a longtime precious metals advocate, recently stated: "$100 is a very realistic target for silver in 2026. It could end up being quite a bit north of 100."[25] Lyn Alden, a respected macro strategist, echoed this view, arguing that the Fed's shift away from quantitative tightening marks a new phase of fiscal dominance that will disproportionately benefit silver due to its dual role as both monetary and industrial metal.[26]

What Happens When the Targets Are Reached

The implications of $5,000 gold and $100 silver extend far beyond investor portfolios. These price levels represent a fundamental repricing of monetary metals relative to fiat currencies and a signal that the post-Bretton Woods monetary system is under severe stress.

For central banks, higher gold prices validate their diversification strategies and reduce their exposure to dollar-denominated assets. For BRICS nations, expensive gold strengthens the case for a gold-backed trade settlement system that bypasses Western financial infrastructure.

For industrial users of silver, $100 per ounce prices will force difficult choices. Solar panel manufacturers, EV producers, and electronics companies will face margin compression and supply chain disruptions. Some may attempt to reduce silver content in their products, but the metal's unique properties make substitution difficult without sacrificing performance.

For investors, the rally in precious metals will likely coincide with broader financial market volatility. Historically, gold and silver surge when confidence in fiat currencies and government debt sustainability erodes. The 1970s stagflation era saw gold rise from $35 to $850 per ounce (a 2,300% gain) while silver climbed from $1.50 to $50 (a 3,200% gain). The current rally, while significant, pales in comparison to those historic moves when adjusted for inflation.

The risk to these forecasts is a genuine shift toward fiscal discipline and monetary tightening—a scenario that appears increasingly unlikely given the political economy of advanced democracies. As Stephanie Pomboy noted, "The rationale as to why I wanted people to go long hard assets over paper has barely started to fall into place."[27]

Probability Assessment: 75-85%

The probability that gold reaches $5,000 per ounce and silver reaches $100 per ounce within the next 12-18 months is assessed at 75-85%.

This high probability reflects the convergence of multiple structural drivers: sustained central bank buying, resumed Fed balance sheet expansion, a weaker dollar, BRICS de-dollarization efforts, silver's five-year supply deficit, China's export restrictions, and surging industrial demand for silver.

The primary downside risks are a hawkish Fed pivot (unlikely given fiscal constraints), a collapse in industrial demand for silver (unlikely given the energy transition), or a major geopolitical de-escalation that reduces safe-haven demand (possible but not probable given current tensions).

The era of cheap precious metals is over. What comes next is a repricing that reflects the true cost of decades of monetary expansion, fiscal profligacy, and geopolitical fragmentation. Gold at $5,000 and silver at $100 are not speculative targets—they are the inevitable outcome of a system under stress.

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References

[1] Fox Business, "Gold, silver shined in 2025, can the luster hold in 2026?" January 2, 2026. https://www.foxbusiness.com/markets/gold-soars-66-record-year-experts-eye-ambitious-5000-per-ounce-target-2026

[2] Nevada Current, "The price of gold skyrocketed in 2025. Silver outperformed it and it wasn't close," January 2, 2026. https://nevadacurrent.com/2026/01/02/the-price-of-gold-skyrocketed-in-2025-silver-outperformed-it-and-it-wasnt-close/

[3] J.P. Morgan Global Research, "A new high? Gold price predictions from J.P. Morgan Global Research," December 16, 2025. https://www.jpmorgan.com/insights/global-research/commodities/gold-prices

[4] Economic Times, "Silver price to touch $100/oz in 2026?" December 26, 2025. https://m.economictimes.com/news/international/us/silver-price-to-touch-100/oz-in-2026-why-silver-prices-are-sky-high-as-silver-breaks-77-here-is-silver-price-outlook-2026/articleshow/126204152.cms

[5] J.P. Morgan Global Research, December 16, 2025.

[6] Fox Business, January 2, 2026.

[7] FastBull, "BRICS Accelerates De-Dollarization with Over 6000 Tons of Gold," 2025. https://www.fastbull.com/news-detail/brics-accelerates-dedollarization-with-over-6000-tons-of-4343948_0

[8] LiveMint, "Not content with BRICS countries' gold reserves move! China incentivises e-yuan to catalyse de-dollarisation," January 2, 2026. https://www.livemint.com/market/stock-market-news/not-content-with-brics-countries-gold-reserves-move-china-incentivises-e-yuan-to-catalyse-de-dollarisation-11767426794435.html

[9] J.P. Morgan Global Research, December 16, 2025.

[10] Fox Business, January 2, 2026.

[11] Fox Business, January 2, 2026.

[12] Kitco News, "US debt accelerates through $38 trillion: Has gold peaked?" October 24, 2025. https://www.kitco.com/news/article/2025-10-24/us-debt-accelerates-through-38-trillion-has-gold-peaked

[13] Fox Business, January 2, 2026.

[14] Fox Business, January 2, 2026.

[15] FXStreet, "A perfect storm of policy, supply, and industrial demand – The great Silver squeeze of 2026," December 28, 2025. https://www.fxstreet.com/analysis/a-perfect-storm-of-policy-supply-and-industrial-demand-the-great-silver-squeeze-of-2026-202512282335

[16] FXStreet, December 28, 2025.

[17] FXStreet, December 28, 2025.

[18] FXStreet, December 28, 2025.

[19] FXStreet, December 28, 2025.

[20] FXStreet, December 28, 2025.

[21] FXStreet, December 28, 2025.

[22] J.P. Morgan Global Research, December 16, 2025.

[23] Investing.com, "Silver Breaks the Catch-Up Trade as Industrial Demand and Fed Easing Collide," January 2, 2026. https://www.investing.com/analysis/silver-breaks-the-catchup-trade-as-industrial-demand-and-fed-easing-collide-200672628

[24] The Oregon Group, "Can silver hit $150 in 2026," December 28, 2025. https://theoregongroup.com/commodities/gold/can-silver-hit-150-in-2026/

[25] YouTube, "Peter Schiff: 'Do Not Wait' - Silver to Hit $100 in 2026," December 2025. https://www.youtube.com/watch?v=VJRhuhsifB0

[26] YouTube, "Why Lyn Alden Thinks Silver Could Hit $100 in 2026," December 27, 2025. https://www.youtube.com/watch?v=4m5pbR1ed78

[27] Fox Business, January 2, 2026.