In recent months, we have seen a race to safe haven assets. Gold and other precious metals have seen huge rallies with prices near record highs. Gold’s strong run has attracted institutional and retail demand and we are starting to see that in copper and platinum too.
What’s happening? Investors are hedging against macro events like inflation and interest rate decisions and seeking to diversify their portfolios. There is also strong structural demand in metals, along with ongoing worries about geopolitics and market risk concerns. Here we look at gold, silver and the factors creating an unsettled environment:
Copper
Copper prices have been rising due to a combination of cyclical and structural factors. In the short term, there is growing optimism that economic outcomes in 2026 might be stronger than previously expected, as reflected in equity markets’ shape and performance over the last six months. In addition, copper’s intensive use in some of the economy’s hot spots, such as technology development, electric cars and green energy are positive supports. Finally, much has been made of the Chinese government (and others) stockpiling gold over the last few years as part of a attempt to move away from the US dollar, but our suspicion is that a rotation towards copper and other industrial metals, which will be vital for future economic development, is sensible and likely. All of these potential positives come at a time when many commodities are trading at relatively low prices and allocations towards the asset class are at historically low levels. We maintain an allocation to broad commodities in portfolios due to the reasons stated above, and also as an uncorrelated source of return, a diversifier and useful inflation protection.
Why is silver rising?
Silver has been rising due a combination of central bank buying, industrial demand (especially in areas like solar energy, electric cars and AI) and intense speculation. In recent times it has been the last of these that has fuelled a frenzy in silver and associated investments, as the gargantuan gains enjoyed through this turbulent year have attracted retail investors, alongside institutional and trend-following investors, hoping to enjoy some of the shine that silver has provided in the last few months.
Recent moves by the Chinese authorities to limit silver exports have added to the excitement and surging volatility. The Chinese have been buying industrial quantities of gold in the last decade as part of an asset allocation switch away from US Treasuries – it makes sense. When Treasuries are maturing, the Chinese haven’t been adding to their allocation, but diversifying into a range of different assets including precious metals. You can see the logic – when the US froze Russian assets in 2022, they demonstrated thatUS Treasuries are not the liquid safe haven they were supposed to be – if you put yourself in the Chinese government’s shoes, do you want to fund the US’s deficit to allow them to build weapons to point back at you?
Gold hitting record highs
Gold hit a fresh all-time high on Boxing Day of US $4500 per troy ounce and was up over 50% in 2025, before falling slightly in the last few days of the year. The rally in many non-fiat assets (assets not issued by governments) has accelerated because they are safe haven assets in times of uncertainty or instability.
Outlook
Long term we remain optimistic on the prospects for gold and silver, but believe that speculation has now gone too far and that the short-term outlook for further gains are limited. The meteoric rise in both gold and silver is probably overdone, whilst gains in some of the silver companies, such as London listed Mexican miner Fresnillo is up close to 450% this year.
One of the key reasons that we are more optimistic on the outlook for broad commodities in 2026 is that we expect the Chinese to add further to stockpiles of industrial commodities and oil, all of which they need to continue their economic development, and of which prices are at extraordinarily low relative prices to a la mode gold and silver.
By Tom Becket, Co-CIO, Canaccord Wealth
