Gold And Silver Likely To Post Strong Gains As Debasement Trade Gains Momentum: Report

New Delhi: Gold and silver are set for a significant price surge as economic dominance and changing real yields transform the financial landscape, according to a recent report. Gold reached its highest price in three months on Friday, while silver surged to its highest level in two months. The report from Vallum Capital suggests that the recent market correction merely adjusted ownership rather than disproving the investment case for precious metals.

The threshold of a 2 percent real yield and the reversal of the Dollar Index are seen as structural indicators of a lasting shift rather than just a temporary price pattern. The US Federal Reserve faces challenges in raising interest rates to service $9.2 trillion in rollovers and maintaining negative real rates at the front end with CPI above the target.

The report posits that either scenario ultimately leads to currency devaluation, which has historically favored gold. Central banks increased their gold reserves by 288.9 tonnes in the second quarter of 2026, representing a 411 percent quarterly surge. Meanwhile, Western ETF outflows amounted to 44.8 tonnes, and jewelry demand declined by 17 percent.

Silver has historically outperformed gold in every cycle where gold experienced a sustained advance. However, the current period from 2021 to 2026 has already seen silver outperform gold by a substantial margin, with gains of 263 percent compared to gold's 164 percent, a 99-point difference. Following the appointment of Kevin Warch as Federal Reserve Chairman, gold experienced a 25-30 percent decline, resulting in a loss of approximately Rs 23,000-28,000 crore in mark-to-market terms.

Gold subsequently rebounded from around $4,196 to approximately $4,359, reinforcing the role of ETFs and gold funds as the most rapidly growing retail access route into the metal, even amidst market volatility.