[Vantage Point] Gold and silver’s record-breaking run: A boom built on fear

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Gold and silver are on a tear — breaking records and defying gravity. Gold has soared past $4,100 an ounce, while silver has rocketed to more than $52, its first record in nearly half a century. The surge is but a reflection of global anxiety, as trade tensions between the United States and China flare anew. Now, investors are flocking to the oldest safe havens known to man.

The rally is precipitated by a new chill between Washington and Beijing. Fresh tariff threats, tighter export controls, and brewing disputes over rare earth minerals have revived fears of another trade war. These are not minor skirmishes — port fees, sanctions, and supply-chain disruptions are once again reshaping global trade flows. Every time rhetoric hardens, investors run for cover — and the first shelter they find is in precious metals.

Here are the key drivers:

• Safe-haven demand amid US–China friction

Trade war rhetoric has escalated again, with the US signaling tougher tariff and export control postures on China, especially in high-tech and rare earths. Investors, fearing supply chains shocks and global growth disruption, have bid up precious metals.

• Expectations of US rate cuts/easing monetary conditions

The more the market anticipates that the Federal Reserve will shift toward looser policy (lower rates), the more attractive “non-yielding” assets like gold become (since their opportunity cost falls). 

What it means for us

The Bangko Sentral ng Pilipinas (BSP) holds ~130 tons of gold (Q2 2025), up from ~127.5t in Q1. When global prices jump, the peso value of these reserves rises, improving the BSP’s balance sheet and the country’s perceived external buffer. But that’s a valuation gain, not spendable cash — helpful for confidence and reserve adequacy, but it doesn’t directly fund the budget. 

Why it matters: 

1. Stronger reserve position 

A stronger reserve position can stabilize foreign exchange (FX) expectations during risk-off episodes tied to US-China flare-ups and precious-metals volatility. If the rally reverses, those gains can evaporate just as fast; the BSP treats this prudently.   

2. Tailwinds for domestic gold mining (jobs, taxes, LGU shares)

High gold prices improve margins for producing mines (e.g. OceanaGold’s Didipio; Philex’s Padcal with gold in copper concentrates). Their latest disclosures highlight robust free cash flow and ongoing reserve life, which high prices further support. More cash flow → more royalties, taxes, community shares, and potential capex. 

Small-scale miners benefit too. Since the promulgation of the Implementing Rules and Regulations (IRR) of Republic Act 11256, gold sold by registered small-scale miners to the BSP is tax-exempt and the BSP pays ~99.5% of the preliminary assay value — encouraging formalization and local sales. With record world prices, incentives to sell to BSP strengthen, pulling production into the legal channel and boosting rural incomes. 

Macro effect: More formal gold sales lift rural cash flows, raise Local Government Unit (LGU) royalty shares, and can modestly improve the current account if exports increase. It also deepens the BSP’s domestic bullion pipeline — strategically useful in volatile times. 

3. Silver’s boom is a mixed bag for industry

Unlike gold, silver is a critical industrial input (electronics, solar, electric vehicles). 

The present run — fueled by tight London inventories, elevated lease rates, and strong investment/Indian festive demand — pushes up component costs and squeezes manufacturers’ working capital. The squeeze has been severe enough to trigger air shipments and premiums over futures in London. For a country where electronics dominate exports, pricier silver can raise input costs for local assemblers/electronics manufacturing services (EMS) firms. 

Macro effect: In the short run, higher input costs can pressure margins and delay orders. Over time, exporters try to pass on costs to buyers; success depends on contract structures and global demand. With the Philippine Statistics Authority (PSA) showing electronics as the linchpin of exports, sustained silver tightness is a mild headwind. 

4. Jewelry, pawnshops, and household balance sheets

Retail jewelry prices rise when bullion does. That hurts discretionary jewelry demand but raises collateral values for households which use jewelry for short-term liquidity via pawnshops. In a high-price regime, loan-to-value amounts improve — useful during income squeezes — though ticket sizes and interest terms still dominate outcomes. (Industry commentary has highlighted Filipinos’ inflation hedging instincts with gold.) 

Inflation channel: The Consumer Price Index (CPI) weight of jewelry is small, so direct CPI impact is muted. Indirect effects — via electronics and imported durables using silver — are more relevant but typically gradual.

5. Financial markets and the peso

Gold up, silver squeezed, and US–China tensions typically tighten global risk appetite. That can support local miners’ equities on earnings upgrades, but broad equities might face risk-off flows if global growth fears resurface. For foreign exchange (FX), outcomes are path-dependent: if safe-haven dollar strength outweighs gold’s reserve optics, USD/PHP can still drift weaker; if the Fed easing narrative dominates, emerging markets (EM) FX (including PHP) can stabilize.

Key swing factor: The Fed path: If real yields fall on dovish guidance, gold remains underpinned and global financial conditions ease — a friendlier setup for the peso and risk assets; a hawkish surprise would do the opposite. (Global coverage flags that 2025’s “gold mania” is already stretching beyond traditional drivers — raising reversal risk if the macro narrative turns.) 

BSP Gold Valuation (Sensitivity)

Gold price ($/oz)	BSP gold value (US$ bn)
3900.0	16.262812152678
4100.0	17.096802519481997
4300.0	17.930792886286

Illustrative Mining Revenue Uplift (per quarter)

Company	Assumed quarterly gold output (oz)	Price delta vs Q2 realized ($/oz)	Illustrative revenue uplift at $4,100 (US$ m)
OceanaGold (Didipio) – illustrative for Q2-like volume	24500.0	807.0	19.7715
Philex (Padcal) – illustrative gold in conc.	10000.0	807.0	8.07

Electronics Exporter: Silver Shock Sensitivity (Illustrative)

Silver price shock	Incremental cost  (% of sales)	Gross margin change (pp)	New gross margin (%)
+10%	0.05	-0.05	11.95
+20%	0.1	-0.1	11.9
+40%	0.2	-0.2	11.8

What it means for you

Imagine that you have ₱1 million idling in the bank. The interest barely keeps up with inflation. You decide to divide it evenly: ₱500,000 in gold, ₱500,000 in silver.

At today’s prices — ₱7,700 per gram of gold and about ₱70 per gram of silver — you acquire real, portable wealth. But what happens one year from now?

Gold is trading near US$4,150 per ounce, up nearly 13% in the past month and over 50% year-on-year. Analysts like Bank of America now project $5,000 by 2026, driven by global uncertainty, central-bank buying, and fading confidence in fiat currencies.

If this plays out, your ₱500,000 in gold could be worth roughly ₱600,000 — a 20% gain. Even in a moderate case (+12%), that’s ₱560,000, comfortably above inflation. The only major risks are a strong US dollar or stubbornly high interest rates that make yield-less metals less attractive.

But gold rarely disappoints those who wait. It’s the “sleep-sound” asset — quiet, heavy, and timeless.

If gold is the wise old sage, silver is its restless cousin — volatile, brilliant, and full of surprises. Currently priced at US $52 per ounce (₱3,030), silver has skyrocketed 67% in the past year. Industrial demand from solar panels, electric vehicles, and battery production keeps driving it higher.

Should it reach $65 per ounce by 2026, your ₱500,000 stake would climb to ₱625,000 — a 25% jump. A moderate 15% rise still nets you ₱575,000. The metal’s volatility can cut both ways, but its long-term fundamentals are silver-solid.

The blended outcome

In a balanced portfolio, the metals complement each other — gold steadies, silver sprints.

Here’s how your ₱1 million could look in a year:

Scenario	Portfolio Value	Gain/Loss	Annual Return
Bullish (gold + 20 %, silver + 25 %)	₱1,220,000	+₱220,000	+22 %
Moderate (gold + 12 %, silver + 15 %)	₱1,130,000	+₱130,000	+13 %
Bearish (gold – 8 %, silver – 10 %)	₱910,000	–₱90,000	–9 %

Even in the middle case, you outperform most local investments and bank deposits several times over.

Beyond the numbers

Gold and silver move not only with charts and central-bank cues, but with emotion — fear, hope, distrust, and belief. When governments wobble, investors instinctively run to the metals that never lie. Every peso you park in bullion is a quiet protest against uncertainty, a hedge against the manipulations of paper wealth.

If you invest today, your story will not be about chasing speculative highs — it will be about preserving value while the world experiments with digital currencies, debt ceilings, and geopolitical gambles.

A year from now, whether gold hits $5,000 or silver flirts with $65, you’ll hold something heavier than paper: peace of mind. Because when markets burn, the metals don’t melt—they shine. – Rappler.com

Sources: Bangko Sentral ng Pilipinas, Bureau of Internal Revenue, Philippine Statistics Authority, Reuters, The Economic Times, Bloomberg, AP News