Author: Evie Soemardi

Precious metals like gold, silver, and platinum have served as anchors of value for centuries, yet today they occupy only a fraction of global wealth. Spot prices currently stand at AUD $5,145 for gold $58.76 for silver, and $2,098 for platinum — levels that, when viewed against other asset classes, suggest precious metals have a long way to go despite enjoying record pricing. Meanwhile, vast sums are concentrated in asset classes where valuations are flashing warning signs.

Real Estate – The Global Asset Juggernaut

Real estate remains the preeminent asset class worldwide, often seen as an essential first goal for most retail investors. The industry totals at an estimated $300–400 trillion. This includes everything from owner-occupied homes and farmlands to multi-billion-dollar commercial developments. Although real estate is traditionally viewed as a stable, inflation-protected asset, there are emerging vulnerabilities. Post-pandemic, office spaces face structural demand shifts, and financing costs are tightening as central banks recalibrate interest rates. Demographic shifts and a mixed outlook for commercial use further cloud the picture. Added to this, the 18.6 year economic and real estate cycle suggests there could be up to another twelve months of high times for estate agents as they squeeze the last commissions out prior to the expected correction.  As a case in point, Sydney now “stands alone” as the most expensive city in the world for housing.  Extrapolate this around the country and it suggests the real estate bubble in Australia could be the largest elephant in the room.

Bonds – A System Under Strain

The global bond market remains the second largest financial asset class, valued at $130–150 trillion, encompassing government, corporate, and municipal debt. What’s particularly striking is how the debt ceiling has evolved from a legal limit into a baseline expectation for perpetual government spending. With central banks expanding their balance sheets and inflation proving sticky, policymakers appear trapped, facing a lose-lose between maintaining credibility and ensuring solvency. These are problems that cannot simply be printed away and this, in turn, chips away at confidence in fiat currency systems.

In this context, traditional safe-haven assets like U.S. Treasuries lose their appeal as yields drop. In comparison, physical gold and silver (non-counterparty, tangible, and historically resilient) emerge as rare stores of value that are not subject to the same fiscal pressures.  And despite not offering regular yields, they don’t rely on sovereign promises and are immune to default or devaluation risk, reinforcing their role as essential portfolio hedges.  As central bank interest rate cutting cycles ramp up look to see if there is a transfer of capital away from bonds and into precious metals.

The Equity Bubble – $100–120 Trillion

The global stock market, valued at USD $100 to 120 trillion, is not just large — it is historically expensive. A Bank of America survey indicates 91% of global fund managers believe U.S. stocks are overvalued, the highest since 2001, reflecting widespread concern about a potential bubble.  The Buffett Indicator (total stock market capitalisation divided by GDP) is now above 170% globally and over 210% in the U.S., far beyond the long-term average of approximately 100%. This signals a market priced for perfection to take profits but also highly vulnerable to economic shocks.

U.S. equities dominate with USD $50 to 60 trillion in value, and a staggering 55% of that is now tied to technology and tech-related companies. The “Magnificent Seven” alone account for 34% of the S&P 500’s total market capitalisation, up from 12% just a decade ago. Such concentration not only inflates valuations but also magnifies systemic risk; if one sector falters, the ripple effect could be severe.

While equities are celebrated for their growth potential, the current valuations imply minimal margin for error. For investors seeking safety, this is a time to question whether they are overpaying for future returns.

Precious Metals – The Overlooked Hedge

Despite their enduring role as stores of value, gold and silver account for just 2 to 3% of global financial assets (approximately USD $12 to15 trillion), with physical bullion holdings representing a tiny 0.1%. Retail investors typically allocate about 1% of their portfolios to gold, with silver allocations even smaller; professional wealth managers often hold none at all.

This low allocation stands in stark contrast to expert recommendations of 10 to 20% in precious metals. The material reality is that financial advisors simply do not recommend physical metals to retail investors because there is no commission on offer.  And if an investor prioritises regular yields (as opposed to wealth preservation) then capital gains may not be appealing enough to recommend.

Historically, gold and silver have preserved purchasing power through recessions, inflationary spikes, and market collapses. With stocks trading at historically stretched valuations and sovereign debt at record highs, the opportunity cost of holding bullion has rarely been lower. For patient investors, precious metals may be one of the few undervalued, time-tested safe havens left.

The Bigger Picture

Currently capital is skewed towards risk-on assets.  Of the estimated $500 to 600 trillion in global financial assets, the vast majority is concentrated in real estate (50 to 60%), bonds (20 to 25%), and equities (15 to 20%). Precious metals occupy a fractional share, far smaller than cash, private markets, or even cryptocurrencies. Given the extreme valuations in stocks and the lowering yield prospects for bonds, this imbalance raises a simple question: when the tide turns, will capital flow back to the one asset class that has proven itself for over 5000 years?

Gold and silver have long been viewed a crisis hedge (assets that hold or gain value when markets turn volatile).  Over the last two decades, two major crises—the 2008 Global Financial Crisis (GFC) and the 2020 COVID crash—have tested this thesis.  Gold currently trades at $5,210, silver at $58.81, and platinum at $2,092.  All have offered significant gains to investors year to date.  Today, as global markets show signs of slowing and gold enjoys support above $5,100 in Australian dollars, it’s worth examining how these metals performed during those past upheavals and what the current technical landscape reveals about their evolving role in investor portfolios.

Gold crisis case study one: the GFC, a golden opportunity

During the Global Financial Crisis (GFC) gold proved its mettle. As with all asset classes it experienced a brief correction of 11.5% in late 2008 as liquidity evaporated and investors sold off assets indiscriminately to protect their wealth.  This sell off is typical of all major corrections and occurs in almost all asset classes, a knee-jerk reaction triggered by market panic. The only difference is that some asset classes bounce back faster than others.  Gold rebounded quickly and by 2011 (just over two years later) it reached a then-record high of AUD $1,714 (or an 85% increase), driven in Australia mainly by central bank easing, near zero interest rates, and ballooning sovereign debt.

The increase was amplified by a weakening AUD, offering domestic investors exceptional returns; however, note how currency exchange is the one variable that affects local precious metal prices beyond the spot price which is in USD.  The graph below illustrates the difference in gold prices in AUD versus USD.  Since the GFC, gold increased an additional 27% in local markets compared to the American market to date.  This is due to the Australian dollar weakening against the Greenback over the same period.  In fact, the difference in the two prices directly reflects the variation in the exchange rate between the two currencies.

For example, if gold was to remain steady in USD and the Australian dollar weakens against the U.S. dollar, more local currency is needed to purchase the same amount of metal. Hence it increases in Australian dollars.

Gold crisis case study two: the Covid 19 Pandemic Era, the shock and the surge

The COVID financial crash of March 2020 initially hit all asset classes, including gold and silver. But by mid-year, gold had broken through AUD $2,700 for the first time, with the gold price in American dollars also reaching unprecedented highs. Massive global stimulus, near-zero interest rates, and fears of long-term inflation turbocharged the move.  This time gold initially increased as the stock market crashed, providing protection for those investing in safe haven assets; however, it did eventually correct as the pandemic unfolded and then travelled sideways until the end of 2022 when it started its current climb to new heights.

So why was this time different?  Simply put, markets were unable to play out the expected way due to government interference. The purpose of the interference was to maintain confidence in the economy and it worked: Australia avoided a formal recession that many parts of the world endured.  In this time the government gave away free money through a raft of measures such as Job Keeper payments, Job Seeker supplements, cash flow boosts for businesses, early access to Superannuation, cash payments to households, home-builder grants, loan guarantees and more.  Similarly, the Reserve Bank of Australia engaged in quantitative easing measures such as bond buy backs, cheap funding for banks, and record low rates.

While every government aims to avoid recession, the cost shows on the RBA’s balance sheet.  From AUD $180 billion, it ballooned to $640 billion at the height of the pandemic by early 2022.  It is a similar story in the U.S.  To learn more about the Federal Reserve’s predicament read our article, The Fed is Boxed In While Gold and Silver Look Ready to Fly.  While quantitative easing was employed after the GFC, the significance of its use during Covid is its cumulative effects.  Neither balance sheets for the RBA or the Fed are as healthy as pre-GFC and the Covid 19 Pandemic Era conditions.  It has been exacerbated despite attempts to curb the debt. The problem with holding too much debt is that eventually markets will lose confidence in the RBA or the Feds ability to honour their debt obligations which leads to a precarious financial position that could end in an almighty shakedown in various sectors of the economy.

Precious metals in 2025: consolidation or take off?

Today, gold and silver are again in focus but under different conditions. Gold in AUD terms has climbed over 400% since 2008, while silver is up over 280%. Technical data indicates a strong upward channel for gold, with repeated breakouts followed by consolidations, suggesting a healthy bull market rhythm. Furthermore, a comparison between 2024 and 2025 reveals striking symmetry, where both years saw explosive moves into April followed by mid-year consolidation, setting the stage for potential spring breakouts.  We first predicted this in May and the three months since has proven the theory to be true.

Silver’s technical analysis is also compelling. The recent push above AUD $58 comes after a bullish recovery from $56.18. Historical patterns show that silver tends to outperform gold in the final stages of a bull cycle. The gold-to-silver ratio, now around 1:88, remains far above historic norms such as 1:60 – 70, or the 2024 ratio of what is coming out of the ground at 1:15, implying further upside for silver if a true bull leg begins.

The Broader Market Context

Compared to the equity markets, gold and silver have offered resilience, but not the staggering gains of tech-heavy indices. The NASDAQ has risen over 1,173% since the 2008, while gold has increased 403% in AUD and 266% in USD. However, such growth in equities comes with significant risk, especially as the current cycle nears what the 18.6-year economic model identifies as the “Winner’s Curse” phase: the euphoric end of expansion before correction.  For example, the NASDAQ (tech stocks) has expanded almost six times faster than the M2 money supply (current cash available in America).  This indicates that the NASDAQ is probably at the top end of valuations.  Those invested in tech stocks may feel constrained if the financial corrections are quick and violent, whereas real estate investors are more likely to experience a slow burn as capitulation unfolds in stages over time.

With global debt at record levels and central banks approaching the end of their tightening cycles, conditions are ripe for a return to the monetary expansion playbook, one that historically favours precious metals. If rate cuts resume and inflation expectations rise, the setup may mirror the post-GFC years (early 2010s), where metals staged strong gains in response to policy shifts.

Final Thoughts

History does not repeat, but it often rhymes. During both the GFC and COVID, gold and silver offered protection. As we approach another inflection point, facing economic fragility, shifting rate expectations, and historically strong technical setups, precious metals may once again be poised to outperform.  With September approaching, which is traditionally viewed as crash season in the stock markets, the coming months may determine whether gold and silver are simply pausing… or preparing to leap.

As rumours swirl about Federal Reserve Chairman Jerome Powell’s potential resignation, investor sentiment has become increasingly fragile. Market volatility has spiked as concerns grow that the Fed’s independence may be under threat. Spot gold is trading at AUD $5,126, silver at AUD $58.79, and platinum at AUD $2,278, all buoyed by the growing sense of unease. At the heart of this turbulence is the escalating tension between President Trump and Powell, with the President publicly calling for immediate rate cuts and expressing open dissatisfaction with Powell’s neutral stance. Political interference in central bank policy is rare; open demands for leadership change are even rarer. The implications, however, are far-reaching and merit close examination.

Why Target Powell Now?

President Trump’s criticism of Powell is not new, but it has intensified markedly in recent weeks. The President insists interest rates should be at least 3% lower than their current level, down to 1.5% from 4.5%. The motivation is clear: lower rates would significantly reduce the cost of servicing the U.S. national debt, especially with $9 trillion maturing in 2025. In theory, such a reduction could save the Treasury tens of billions in annual interest.

However, cost control is not part of the Federal Reserve’s dual mandate, which is to maintain price stability and maximise employment. Cutting rates now, while inflation remains sticky and the labour market tight, could undermine that mandate.

There is also a secondary and possibly more important motive: a weaker U.S. dollar. Declining interest rates typically push the dollar lower, giving American exports a competitive boost — a longstanding Trump priority, and one that his administration relies on if their tariff policy is to succeed.

What Happens If Powell Leaves?

If Powell resigns and a new, more compliant Fed chair is installed, rate cuts would likely follow swiftly. This could trigger a rapid unwinding of U.S. Treasuries. If investors anticipate deeper or faster cuts, they may sell off bonds to avoid locking in low yields — especially if inflation is expected to rise. The result? A spike in yields, falling bond prices, and capital flight out of the U.S. debt market.

As Treasuries weaken so does confidence in the U.S. dollar. This typically pushes gold higher in American dollars, both as a hedge against inflation and as a store of wealth in times of monetary instability. A lower dollar also stimulates exports, helping the trade balance. But such gains come at the cost of long-term market trust in the independence and discipline of U.S. monetary policy.

What If Powell Stays the Course?

If Powell remains, and the Fed maintains current rates, it would signal a vote of confidence in the U.S. economy and the central bank’s independence. This would support the Greenback and likely put a ceiling on precious metals in the short term in US dollars; however we do know that a strengthening U.S. dollar is favourable for Australian investors. Treasuries would remain attractive, particularly to yield-seeking investors, and global capital flows would likely stabilise.

While this may temper gold’s near-term gains, it reaffirms the Fed’s commitment to data-driven decision-making. It would also buy time to observe how current inflation dynamics and fiscal policies play out — a prudent move given the Fed’s limited options in a high-debt, high-volatility environment.

AUD vs USD: Why It Matters Locally

From an Australian perspective, the USD-AUD exchange rate is critical. If the U.S. dollar strengthens, precious metals priced in USD become more expensive in AUD — driving local prices higher. Conversely, a falling Greenback can soften metal prices here, even if global spot prices remain stable.

Right now, the Australian dollar has slumped back below USD $0.65 following a surprise rise in unemployment to 4.3%. With 33,600 Australians becoming unemployed in June and the labour force growing only slightly, markets are now pricing in a 98% chance of a rate cut from the RBA as it was last month.  Lower rates will likely weaken the AUD further, setting the stage for precious metals to remain firm in local terms.

Conclusion

The current standoff between Trump and Powell represents more than a political spat.  It signals a broader clash between fiscal ambition and monetary integrity. Should Trump succeed in reshaping the Fed to suit short-term political or fiscal goals, the consequences for Treasuries, the USD, and precious metals could be profound. For Australian investors, the interplay between these forces may well determine whether this is a moment to wait, or to act. When central bank independence is under siege, gold, silver, and platinum become more than just commodities; they become a lifeline of certainty in an increasingly uncertain world.