Precious Metals Turmoil: The Dollar Dilemma Behind One Ounce of Gold and Future Opportunities

From the end of last year to early 2025, precious metals such as gold and silver experienced a significant upward cycle. Over the course of 2025, gold prices increased by more than 40%, while silver soared by over 150%. Rare earth elements, copper, aluminum, tungsten, lead, zinc, and other valuable metals also collectively rose, with gains generally surpassing the performance of the A-shares index. Behind this rally, both international geopolitical shifts and a reevaluation of the traditional monetary system are reflected.

Market Shock: Silver Plunges 36%, Gold Rapidly Declines

However, at the end of January 2026, the global financial markets suddenly underwent a sharp correction. Spot silver prices plummeted by 36%, marking a rare intra-day volatility in modern financial history; spot gold fell from $5,600 to below $4,700, a nearly 20% decline. For investors, this adjustment meant a rapid shrinkage of account net worth.

This volatility immediately manifested in the domestic A-share market. Dozens of precious metal stocks, including Hunan Silver and Yunnan Copper, hit limit-downs. Subsequently, in the spot market, domestic gold jewelry prices crashed, with the price of one gram of gold dropping by over 100 yuan, and silver falling from over 30 yuan per gram to just over 20 yuan. Consumers who once queued up to buy gold and silver turned into return customers.

Three Factors Triggering the Correction: Easing Tensions and Dollar Rebound

The direct causes of this collective decline in precious metals are mainly threefold. First, signals of easing in international geopolitical tensions emerged, alleviating some previously tense situations and restoring market risk appetite. Second, the Federal Reserve’s policy stance shifted, causing the US dollar index to rebound and strengthen; traditionally, dollar appreciation often coincides with adjustments in gold and silver. Third, profit-taking pressures accumulated—after over a month of rapid gains, the precious metals market had built up substantial profit margins. Coupled with the approaching Spring Festival, many investors chose to lock in profits and cash out.

Fundamentals Remain Unchanged: The True Value of an Ounce of Gold

However, this correction does not imply a long-term crisis for the precious metals market. From a fundamental perspective, the value logic of one ounce of gold remains solid. Compared to Bitcoin at $100,000 per coin, the price of $5,600 per ounce of gold still has room for growth—after all, gold is a tangible asset with thousands of years of monetary credit backing.

Moreover, the uses of gold and silver in global industry are increasingly widespread. From electronics, new energy, medical devices to aerospace, demand for precious metals continues to rise. At the same time, civilian enthusiasm for gold and silver jewelry remains high, boosting actual demand and leading to relatively tight global supply. Whether from industrial or collectible demand, the short-term supply-demand imbalance for precious metals is unlikely to change.

Lessons from History: The Long-Term Appreciation of Gold

Historically, the long-term trend of gold is very clear. Before the dollar decoupled from gold in 1971, gold was priced at $35 per ounce. In just eight years, by 1979, gold soared to over $800, achieving more than a 20-fold increase.

Over the 45 years from 1979 to 2024, China’s GDP skyrocketed from over 360 billion yuan to 140 trillion yuan, a growth of over 300 times; the US GDP increased from $2.63 trillion to $29 trillion, an 11-fold rise. In comparison, gold only rose from over $800 to around $2,000, a little over 2 times. This indicates that relative to global economic growth, gold’s appreciation has been far below what it should be.

Therefore, interpreting recent gold gains as “future debt” or “detachment from fundamentals” is less accurate than viewing it as a reasonable rebound after long-term suppression by dollar hegemony. Considering the long-term trends of global economic expansion and dollar pressure, reaching $100,000 per ounce within the next decade is not impossible—this target, while aggressive, is not entirely inconsistent with historical gains and fundamental conditions.

Diversification of Reserves: The Strategic Role of Precious Metals

From the perspective of global central banks and institutional investors, gold, silver, and other precious metals are becoming important assets outside of the US dollar. This not only reflects concerns about the traditional dollar system but also a pursuit of hard assets—under extreme circumstances of currency collapse, gold and silver will retain their purchasing power.

In contrast, although Bitcoin is scarce, its value foundation is far less connected to the real economy than precious metals. Precious metals are indispensable in industrial production, providing a solid fundamental support.

Future Outlook: Precious Metals Are Still in the Early Stage of a Bull Market

This round of precious metals rally is unlike any previous cycle. It not only reflects the long-term pressure on the dollar but also signifies a global reevaluation of real assets. From supply chains, industrial demand, monetary policies, to geopolitical tensions, gold and silver are still in the early stages of a long-term upward trend.

In the coming years, gold, silver, and other precious metals are expected to continue reaching new highs. This process will be accompanied by ongoing long-term pressure on the dollar. Historically, hyperinflations and currency devaluations—from the Mark in Weimar Germany to the fiat currencies and gold-backed notes of the Republic of China—have all been swept into history’s trash heap. There are no new tricks under the sun; this rule applies to any monetary system.

Investment Perspective: Opportunities in the Correction

The current correction actually offers investors a chance to reassess precious metals. For those optimistic about their long-term prospects, such pullbacks are often good entry points. Whether it’s gold, silver, or other related assets like copper and aluminum, the fundamental logic remains intact.

In the face of the declining dominance of the dollar, the deep significance of this precious metals rally lies in the ongoing global shift in reserve asset structures—from reliance on a single dollar to diversification into gold and other hard assets. For investors seeking asset preservation and appreciation, understanding the true value of one ounce of gold may be key to capitalizing on this wave.