Key insights
- Gold’s rise isn’t random — central banks are buying a lot of it, and steady demand helps keep prices firm even when markets calm down.
- Silver’s jump is tied to everyday technology, especially solar panels, EVs, and electronics, which means its price swings are linked to real‑world trends, not just investor mood.
- Both metals can swing sharply, because they don’t produce cash flow and their prices rely heavily on supply and demand. Big gains can fade quickly.
- Long‑term investors may benefit more from stocks, bonds, and select alternative assets, which tend to provide steadier performance and income than precious metals.
Review your portfolio mix to build steadier long‑term performance.
Note: For supporting research and data, refer to the source list at the end of this article.
Until recently, gold and silver created a buzz with their dramatic rallies in the past year. Through January 27, 2026, gold was up 88% and silver soared 260% in less than a year.
Many investors wondered what’s driving the move — and still continued to chase it at these highs. Then came the crash: in just three days from January 28 – February 2, 2026, silver crashed 34% and gold collapsed 16% intraday.
Source: MorningStar, CLA Wealth Advisors (Grey areas denote recessions)
This is a stark reminder that commodities are notoriously volatile. Gold and silver may reflect deeper shifts in the global economy, monetary policy expectations, and investor psychology. However, investors need to consider the unpredictability these assets can have in their portfolio.
Why gold has been rallying
Strong central bank buying
These banks don’t buy gold to make quick profits; they buy it to safeguard national reserves, providing steady, long‑term demand that has supported prices even during calmer markets.
At the same time, new gold supply grows slowly — around 1% per year — so rising demand tends to place upward pressure on prices.
Global uncertainty
Periods of geopolitical tension, trade disputes, and political stress often push investors toward defensive assets. Even if you’re not directly exposed to global conflicts or policy risks, their ripple effects can still show up in your portfolio.
When uncertainty rises, investors often crowd into gold. That can drive prices higher quickly — but it can also lead to sharp reversals when sentiment shifts, increasing volatility rather than reducing it.
Inflation
Gold is often seen as an inflation hedge. Yet this recent rally occurred while inflation eased from its COVID-era peak of 9.0% to a December reading of 2.7 %. When inflation is cooling, gold’s traditional role becomes less straightforward. In those environments, expectations — rather than fundamentals — can play an outsized role in pushing prices higher.
Why silver has been rallying
Real world demand
Silver isn’t just a precious metal. More than half of annual demand comes from industrial uses. Solar panels, electric vehicles, electronics, and data centers all rely heavily on silver’s exceptional conductivity.
As the global push toward clean energy, electrification, and AI accelerates, silver demand has surged to record levels — helping fuel its outsized gains.
Constrained supply
The silver market is on track for a fifth straight year of supply deficits, meaning more silver is being used than produced. Because most silver is mined as a byproduct of other metals, supply can’t easily respond to higher prices.
That imbalance can create fast, sharp price moves — but it can also reverse quickly if industrial demand cools or if mining output rises due to stronger copper or zinc production.
Should gold and silver be part of your portfolio?
After such dramatic gains, it may be tempting to chase the rally. But it’s important to consider returns relative to the risk involved.
Gold and silver may face headwinds in a world of declining inflation —as COVID-related supply disruptions fade and productivity gains from AI help restrain prices. Commodities driven primarily by supply-and-demand dynamics tend to move in powerful cycles that can swing far more dramatically than stocks or bonds.
Precious metals investing can look most attractive after big rallies — often just as risk is rising.
Our perspective at CLA
At CLA, we favor high‑quality equities and fixed income as long‑term building blocks. These investments are supported by actual cash flows (income), which can anchor prices during uncertain periods.
We also believe that select alternatives, in modest amounts, can add meaningful diversification— without the extreme volatility often seen in commodities like gold and silver.
How CLA can help with portfolio diversification
We take the time to understand what matters most to you and build portfolios with clarity and purpose. By thoughtfully combining equities, fixed income, and select alternatives, we aim to create balance, smooth the ride, and support your financial path through a wide range of market environments.
If you’re curious how your current investment mix aligns with where you want to go, we’re here to help you look at the full picture and make confident, informed decisions.
Contact us
Review your portfolio mix to build steadier long‑term performance and explore strategies that support a steadier financial path. Complete the form below to connect with CLA.
Sources:
- World Bank — Commodity Markets Outlook / Data Blog (“When Uncertainty Rises, Gold Rallies,” Nov 12, 2025)
https://blogs.worldbank.org/en/opendata/when-uncertainty-rises--gold-rallies - The Silver Institute and Metals Focus — World Silver Survey 2025 / Supply & Demand pages
https://silverinstitute.org/silver-supply-demand/ - The Silver Institute and Oxford Economics — “Silver, The Next Generation Metal” (Dec 9, 2025)
https://silverinstitute.org/silver-demand-forecast-to-expand-across-key-technology-sectors/ - Money Metals / Silver Institute recap — “Silver on Track for Fifth Straight Supply Shortfall” (Jan 20, 2026)
https://www.moneymetals.com/news/2026/01/20/silver-on-track-for-fifth-straight-supply-shortfall-and-other-silver-news-004626 - Morningstar/MarketWatch — “Historic silver rally in 10 charts” (Jan 17, 2026)
https://www.morningstar.com/news/marketwatch/20260117144/heres-everything-investors-need-to-know-about-the-historic-silver-rally-in-10-charts