After the fairly resent ban of the cryptocurrency transactions by the People’s Bank of China, three largest and most

Gold supply crunch

Turning from gold demand to gold supply, it appears that AOTH’s predictions of peak gold are bang on.

The concept of peak gold should be familiar to most readers. Like peak oil, it refers to the point when gold production is no longer growing, as it has been, by 1.8% a year, for over 100 years. It reaches a peak, then declines.

At The Northern Miner’s International Metals Symposium in London on Dec. 2, a presenter from CRU Consulting said global gold production will peak at 3,250 tonnes, or 105 million ounces, next year, before entering a period of prolonged decline.

From 2025 onward, according to gold and base metals analyst Oliver Blagden, reserves will deplete, ore grades will decline and aging mines will close. Even if all planned projects come online, production could drop by up to 17% by 2030, Blagden noted.

China and Russia both face challenges in maintaining output levels, while in West Africa there has been a rise in resource nationalism, particularly Mali and Burkina Faso which have nationalized operations thus deterring foreign investment.

North America, while politically stable, remains the highest-cost region for gold mining.

None of this is new to Ahead of the Herd. Regarding our wheelhouse, the junior mining sector, the Northern Miner quotes Blagden saying that, despite the industry being on strong financial footing, with 97% of gold producers operating at positive margins and average all-in-sustaining cost margins at 47%, there is not enough investment in exploration. He said high-grade, well-located projects are harder to find, and he called for miners to act decisively during this period of high profitability. “Without new projects, mines will close, production will fall, and profits will shrink,” he said.

According to S&P Global, funds raised by junior and intermediate mining companies fell in December to $890 million. Despite a 2% increase in transactions, fewer high-value gold and other metals financings weighed down the monthly totals, resulting in year-to-date financings dropping 12% to $10.27 billion, the lowest since 2019.

De-dollarization

Some central banks are diversifying to currencies other than the US dollar following Russia’s invasion of Ukraine. When the United States punished Russia by freezing half of its $640 billion in gold and FX reserves, other countries thought “the same thing could happen to them”. Among the countries on a path to “de-dollarization” are Russia, China, India, Turkey and Saudi Arabia.

While the BRICS block of countries consisting of Brazil, Russia, India, China and South Africa has rejected the idea of forming a common currency to challenge the US dollar, they have also made significant strides in reducing dependence on the dollar by establishing a cross-border payment system and expanding the use of local currencies in trade, reports Natural News.

An October 2024 report by Ernst & Young India projected that coordinated BRICS policies could gradually diminish the dollar’s dominance in global trade and foreign exchange reserves. However for now, the US dollar remains the world’s primary reserve currency.

Trump has said that any country that tries to abandon the US dollar “should say hello to tariffs and goodbye to America!” he wrote on his Truth Social platform.

Remember, anything that puts downward pressure on the US dollar is good for precious metals.

US government needs to find $28 trillion

Schiff Gold notes that gold rocketed to an all-time last year because central banks and foreign governments reduced their dollar holdings.

But the greater risk to the US federal government is the maturation of US government bonds, aka Treasuries:

According to Federal Reserve data, there will be roughly $28 trillion worth of US government bonds maturing over the next four years, i.e. now through the end of 2028.

That’s more than 75% of the government’s $36+ trillion national debt.

This is an absolutely staggering figure, averaging $7 trillion per year for the next four years.

And remember, we’re just talking about the existing debt that is set to mature. It doesn’t even include new debt that has to be issued over the next four years, which could easily be another $7-10 trillion.

This is an enormous problem for the Treasury Department, because they clearly don’t have $28 trillion to repay those bondholders.

Usually when a government bond matures, the investor simply rolls the proceeds into a new bond. This is referred to as the debt “rolling over”. The problem for the US government is that most of the bonds that are maturing over the next four years were issued when interest rates were much lower. If they were previously issued at 3%, for example, now the government has to refinance that debt at say 5%, meaning an extra 2% in interest charges per year.

That’s almost $600 billion in additional interest EACH YEAR on top of the $1.1 trillion interest bill that they’re currently paying.

The question is not only how will the government find the $28 trillion — likely they will print it, which is hugely inflationary — but who is going to buy the new bonds? Enter the de-dollarization trend.

The Treasury Department relies on foreign individuals and governments to buy US Treasuries, which helps fund the national debt. Traditionally, countries are forced to buy US government bonds because the dollar is the world’s reserve currency. Most commodity transactions are conducted in dollars. But over the past several years, a number of countries have started to trade in currencies other than the dollar.

Schiff Gold then poses the question: If you’re a foreign central bank and you have $100 billion of US government bonds that are about to mature, what are you going to do?

Are you going to reinvest that entire $100 billion back into a country that might already be threatening you with economic penalties?

Or do you quietly let the treasuries mature, take the money, and find someplace else to invest that $100 billion?

A lot of foreign governments and central banks are going to be giving serious consideration to option two.

But they are going to have to invest that money in an asset that, like US dollars, is widely accepted, and has universal value and marketability around the world.

Gold is one of those assets. And that’s why central banks have been buying so much of it for the past couple of years.

I think there’s an obvious case to be made, given the prospects of tariffs and further trade wars, or even just the threats thereof, they are going to keep buying gold and send the price even higher.

Silver

Spot silver narrowly beat spot gold in 2024, with an annual gain of 27% to gold’s 24%. Silver has benefited mostly due to physical buying in India and China. Silver ETFs have also been a factor.

Silver, like gold, is a precious metal that offers investors protection during times of economic and political uncertainty.

However, much of silver’s value is derived from its industrial demand. It’s estimated around 60% of silver is utilized in industrial applications, like solar and electronics, leaving only 40% for investing.

The lustrous metal has a multitude of industrial applications. This includes solar power, the automotive industry, brazing and soldering, 5G, and printed and flexible electronics.

A report by Oxford Economics commissioned by the Silver Institute found that demand for industrial applications, jewelry production and silverware fabrication is forecast to increase by 42% between 2023 and 2033.

The Silver Institute expected demand to grow by 2% in 2024, led by an anticipated 20% gain in the solar PV market.

Total silver supply should decrease by 1%, meaning 2024 should see another deficit, amounting to 215.3Moz, the second-largest in more than 20 years.

In fact it’s the fourth year in a row that the silver market would be in a structural supply deficit.

As for what’s in store for silver in 2025, UBS financial markets strategist Julian Wee says that silver could enjoy a spillover effect from gold, which he expects will reach $2,900 around September 2025.

He suggested stronger industrial demand could propel silver higher, especially if China lowers interest rates, sparking a recovery in global manufacturing. The People’s Bank of China lowered its benchmark lending rates by 25 basis points in October.

Wee said on the supply side, mining output should remain constrained in 2025. “We thus expect prices to reach USD$36-38/oz in 2025, and advise investors to stay long the metal or use it for yield pickup opportunities,” he said via Kitco.

In fact there is evidence to suggest that silver could be on the verge of its biggest breakout in history, with projections of $50 an ounce by mid-year.

Silver’s growing importance

The Jerusalem Post reports that governments and central banks are taking an increasing interest in silver for both its monetary and industrial purposes. For example, some central banks are considering adding silver to their portfolios, while several countries are stockpiling silver supplies for high-tech and defense applications. Silver’s use in solar power has made it a strategic metal.

Gold-silver ratio

The gold-silver ratio shows how many ounces of silver equal one ounce of gold. The ratio is a good indication of whether silver is under- or over-valued. To find it, simply divide the price of gold by the price of silver.

As of this writing, the gold-silver ratio sits at 88.5. Historically, when the ratio is this high, silver tends to outperform gold in the following months. The historical average for the gold-to-silver ratio has typically ranged between 50 and 70, meaning silver is significantly undervalued relative to gold at current levels.

In an interview on CapitalCosm, precious metals analyst Peter Krauth argues that the Federal Reserve’s policy of keeping interest rates near zero for an extended period has contributed to the current inflationary pressures and that recent rate hikes may not be enough to control it.

He cited instances where silver prices tripled within a few years and mentioned silver companies that witnessed gains of 16 times and 17 times their share price within a two to three-year period.

The author of ‘The Great Silver Bull’ thinks a new bull market in silver will be driven by inflation, rising interest rates and the impact of the Trump tariffs. He sees the current economic climate as similar to the 1970s when silver prices skyrocketed amid high inflation.

Consumer prices rose 2.6% in December from a year earlier, up from 2.4% in November and the third straight monthly increase. AP notes the Jan. 31 figures arrived two days after the Federal Reserve paused interest rate cuts in part because inflation has been stuck at about 2.5%, above their 2% target, for the past six months.

Gold Price Exclusive Update - October 27, 2025

Despite their well-earned reputations as stable assets and safe havens, gold and silver have become highly volatile in recent weeks, with sharp moves in both directions. 

This marks a significant change in behavior and has sparked widespread discussion across the financial world, particularly after last week’s steep declines. Gold dropped from $4,400 to $4,000, a loss of about 9%, while silver fell from $54 to $48, or roughly 11%, all within just a couple of days.

This volatility was entirely foreseeable, however. I explicitly called for it back in August, at a time when the precious metals space was eerily calm and before gold’s $1,000-per-ounce surge in the fall. Today’s piece follows up on that earlier analysis, contextualizes the recent swings in precious metals, and explains why the current wave of volatility should settle down soon.

Volatility in financial assets and markets is highly cyclical. While asset prices like precious metals and stocks may not follow clear cycles, the volatility of those prices does, consistently moving through repeating phases of low and high volatility. 

Periods of quiet, low volatility tend to build pressure that leads to sharp spikes in volatility, which then eventually subside, starting the cycle again. See the diagram below for a visual of this repeating pattern.

Next, let’s discuss how volatility can be measured and monitored in the real world. While there are a number of ways to do this, one of the most efficient and widely followed is to use an indicator called Bollinger Bands, which, when applied to a chart of an asset such as platinum in the example below, envelops the price.

The way the Bollinger Bands indicator works is that it takes a 20-period moving average of the asset’s price (the blue line in the chart below), and then upper and lower bands (the red lines in the chart below) are plotted two standard deviations above and below the moving average.

There are several ways to use Bollinger Bands, such as treating the upper band as a resistance level and the lower band as a support level. However, that’s not the focus today. 

Instead, I’m going to focus on the width of the Bollinger Bands as a way to measure the volatility of the asset they’re applied to. Simply put, when the bands are close together, the asset has low volatility; when the bands are wide apart, the asset is experiencing high volatility—based on the past twenty trading periods, whether measured in days, weeks, or another time frame.

While it’s easy to eyeball the Bollinger Bands to gauge their width and the asset’s volatility, there is another helpful related indicator called Bollinger Band Width that makes this even easier. 

You can see it plotted on platinum’s weekly chart below. The chart shows clear periods of normal volatility, low volatility, and high volatility. When an asset moves sideways for a while, volatility is low, and when it trends strongly either up, as platinum has in recent months, or down, volatility is high.

Now that we’ve briefly covered the theory behind how volatility works in financial markets and how to monitor it, I want to discuss the powerful concept of a volatility squeeze. As mentioned at the start of this report, volatility is highly cyclical: periods of low volatility are followed by periods of high volatility, and vice versa.

More specifically, periods of extremely low volatility, known as a volatility squeeze, often precede explosive volatility, known as a volatility breakout. This makes volatility squeezes highly valuable to watch for, as they frequently occur just before large, tradeable moves in either direction. 

In fact, a high percentage of major bullish and bearish moves in markets are preceded by these squeezes. Volatility squeezes can be thought of as a spring compressed under pressure that snaps back violently once released.

It’s also important to understand investor and trader psychology during volatility squeezes. During these periods, the asset drifts sideways within a range, news flow is minimal, and boredom and discouragement set in as traders lose interest and shift their attention to more active markets. It’s often at that very point, when most eyes are elsewhere, that a major catalyst appears and propels the asset out of its volatility squeeze into a strong new trend.

Returning to the platinum example below, from March to May, the metal entered a clear volatility squeeze, visible in the narrowing Bollinger Bands and confirmed by the Bollinger Band Width indicator beneath the chart. During this period, traders grew bored and shifted their attention to more active markets.

Then, on May 20th, platinum broke out explosively, surging nearly 50% over the following two months and sending volatility sharply higher. This is a textbook example of a volatility squeeze, and they occur regularly, yet most traders are unfamiliar with the concept and are often caught off guard by these powerful moves.

Now that the background is out of the way, let’s get into the recent and current action in precious metals. Hopefully, you read the two articles I published back in August, where I highlighted that both gold and silver were in rare volatility squeezes that I expected to lead to explosive moves.

This is the follow-up to what happened next. As predicted, those volatility squeezes during the summer gave way to powerful volatility breakouts in the fall. That breakout was reflected in the sharp price surges in both gold and silver. 

To my knowledge, no other analyst was calling for this scenario. 

Let’s start by looking at what happened with gold. In August, it formed a clear volatility squeeze, followed by a breakout as prices surged by roughly $1,000 per ounce. This breakout is clearly visible in the widening of the Bollinger Bands around the price, as well as in the rise of the Bollinger Band Width indicator below the chart. 

The heightened volatility over the past two weeks occurred in both directions, up and down, which explains why the recent pullback over the past few trading sessions was so sharp.

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