Silver is leading the way
Jul 11, 2025·Alasdair MacleodFor the first time in recent trading sessions, overnight demand from Asia drove gold and silver higher this morning. It should be a wake-up call for western bullion markets.
Gold was almost unchanged over the week, but silver gained in subdued post-July 4 holiday trade. This morning in Europe, gold was $3335, down $2 on balance from last Friday’s close. Silver at a new high for the year at $37.45 was up 70 cents on the same timescale.
Both contracts continue to trade differently, with general indifference in gold reflected in low open interest on Comex while the price remains close to all-time highs:
The credible explanation is that we in the west are in our summer slumbers while Asian demand is accumulating physical on the dips. That appeared to change slightly this morning, when in Asian demand during Hong Kong and Shanghai trading hours both metal prices rose for the first time in weeks, indicating that buying the dips has probably drained liquidity.
This week, HSBC’s Affluent Investor Snapshot revealed that investors with $100,000—$2,000,000 portfolios have doubled their allocations to gold from 5% to 11%, with the survey indicating “one in two” affluent investors plan to buy more.
But hang on — how can this be right when interest in gold in western capital markets is close to zero? The answer is that only 4 of the twelve markets surveyed were outside Asia: US, UK, Mexico, and Australia. We have no information on whether any country weighting was applied. But clearly, this survey represents Asian interest: China, India, Hong Kong, Singapore, Indonesia, Malaysia, Taiwan, and UAE being the other jurisdictions.
No wonder Asians are driving the gold price if their affluent investors are buying gold. Their numbers are increasing rapidly as well. And there are other categories buying physical gold, — central banks, government agencies, family offices, and even the millions of Chinese housewives through gold accumulation bank accounts.
In the four non-Asian jurisdictions gold is not even a regulated investment and has therefore been off the table. In our cosy dollar-driven fiat currency world, we fail to grasp what the Asians understand: our currencies are failing, and the only way out is to sell them for gold.
The few of us who understand this are buying silver instead as the cheap way in to escape declining currency values, given that gold has already risen. We can see this reflected on Comex, where silver has been rising with futures demand behind it:
But the recent fall in open interest while silver is hitting new highs is particularly notable. This is immensely bullish, indicating capitulation by the shorts. This being the case, the price is likely to move significantly higher in the short-term. Next up is the technical chart, which confirms this analysis:
Not only is $40 in sight, but even higher prices beckon, with the gold/silver ratio falling like a stone from the time of Trump’s liberation day of 2 April (in other words triggering buying of silver relative to gold). It is a trend likely to continue, with Trump still threatening new tariffs. This week it was 50% on imported copper.
There is little doubt that US trade policies and the uncertainty surrounding them is driving the dollar lower, not just against gold and silver, but against other commodities as well. The dollar’s trade weighed index tells the story best:
Foreigners own 40 trillion dollars, 30% more that the entire US GDP, and are underwater in all their investment categories. It is probably only a matter of very little time before they begin to liquidate their dollar exposure in earnest, driving gold and particularly silver considerably higher priced in those declining dollars.