Gold and silver prices have surged to extraordinary highs in recent months, defying many of the traditional metrics that typically govern precious metals markets. Speaking at the RIU Explorers Conference in Fremantle, ABC Refinery Global Head of Institutional Markets Nicholas Frappell said the drivers behind the rally extend well beyond headline explanations.
“The world has been a kaleidoscope lately,” Frappell told delegates, pointing to the sharp swings that have defined precious metals trading. “We’ve seen gold and silver rally to recent highs, followed by a percentage pullback larger than anything since the late 1980s. The speed and magnitude of those moves have been remarkable.”
While geopolitical instability, rising global debt and persistent fiscal deficits have supported prices, Frappell argued these factors alone do not fully explain gold trading at nearly three times its mid-2021 level in US dollar terms.
“Since May 2021, the broad US dollar has strengthened by almost six per cent,” he said. “US real [interest] rates - normally a headwind for gold - have risen sharply, Brent crude is weaker, and foreign exchange reserve composition has barely changed. On the surface, those factors don’t suggest gold should be this much higher.”
Instead, Frappell pointed to three structural forces underpinning precious metals: safe-haven demand amid geopolitical uncertainty, questions around central bank policy credibility, and the accelerating build-up of sovereign debt across developed economies.
International tensions, including trade disputes and shifting global alliances, have strengthened gold’s appeal as an asset without counterparty risk. “When markets face tariffs, conflict threats and uncertainty around global leadership, investors look for assets outside the financial system,” he said. “Gold sits at the top of that list.”
Concerns around Federal Reserve independence have also been cited as bullish, though Frappell noted bond markets appear less alarmed than gold investors. “Inflation expectations are elevated but nowhere near prior peaks,” he said.
More enduring, he argued, is the expansion of government debt. “US public debt continues to grow at an extraordinary pace, and similar pressures exist across developed economies,” Frappell said. “Gold’s lack of liability becomes increasingly attractive in that environment.”
Silver has amplified the move. As both a monetary and industrial metal, it has benefited from safe-haven flows alongside structural demand tied to electrification, renewable energy and advanced technologies.
“The ‘de-fiatization’ narrative is broader than just the US dollar,” Frappell said. “It reflects growing awareness that managing growth, debt and currency stability involves difficult trade-offs across multiple economies.”
Looking ahead, Frappell expects volatility to remain a defining feature but believes the structural case remains intact.
“In a world of rising debt, geopolitical friction and shifting monetary regimes, gold and silver remain unique,” he said. “They are among the few assets without liability - and that characteristic is becoming more valuable, not less.”
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