The main logic behind the rise of gold and silver

The primary reason for the increase in gold is that global central banks' debt levels are continuously expanding. In just the first seven days of 2026, global central banks issued over 200 billion USD in bonds.

Currently, the US debt ceiling has been raised to 41 trillion USD. The US national debt is about 38 trillion USD, leaving significant room for further expansion.

However, according to statements from US Treasury Secretary Bensent, future issuance may mainly consist of long-term bonds. Once the US adjusts its debt issuance structure, the pace of debt expansion will slow down. Of course, this might have to wait until the Federal Reserve lowers interest rates, which would attract more incremental funds into long-term bonds.

Therefore, after the US Treasury adjusts its debt issuance structure, even if gold and silver continue to rise, it probably won't be as crazy as now. Recently, the speed of gold's increase has slowed down, but silver remains very volatile.

Secondly, the reason why gold and silver are currently favored by the market is that funds are not flowing into the real economy. The scale of government bonds keeps expanding, and government spending continues to grow. However, due to the sluggish real economy, these excess liquidity cannot be lent out and can only circulate within the financial system. Gold and silver are excellent targets for this.

During the US interest rate hike cycle, these funds actually flowed into US reverse repurchase agreements. As interest rates kept rising, the returns from reverse repos became more stable and lucrative. At its peak, the reverse repo market reached 2 trillion USD.

Since the end of the US interest rate hike cycle, funds have been continuously flowing out of the US reverse repo market and into precious metals and US stock markets.