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- Gold and silver have reached record market capitalizations of $35 trillion and $6 trillion, respectively, totaling nine times the value of Nvidia.
- The U.S. dollar’s share of global currency reserves has dropped to a 20-year low of 40%.
- Physical silver demand has caused prices to surge 275% in one year, leading to a supply-demand imbalance where delivery requests exceed available warehouse inventory.
The global financial landscape is witnessing a historic realignment as precious metals reach unprecedented market valuations while traditional monetary structures face potential shifts. Recent data indicates that the combined market capitalization of Gold and silver has surpassed significant milestones, fundamentally altering the ratio between tangible commodities and major technology equities.
Record-Breaking Valuations in Precious Metals
According to reports from The Kobeissi Letter, the market capitalization of gold has officially reached a record $35 trillion. Simultaneously, silver’s market value has climbed to $6 trillion. Together, these two precious metals now represent a combined value of $41 trillion. This surge marks a substantial increase in the valuation of traditional safe-haven assets over a relatively short period.
The magnitude of this shift is highlighted by comparing these figures to leading corporate entities. The current combined market capitalization of gold and silver is now nine times larger than that of Nvidia, a primary driver of the recent technology market expansion.
Declining Global Reserve Shares and Policy Shifts
This movement into metals coincides with a notable decline in the U.S. dollar’s dominance within global finance. The dollar currently accounts for approximately 40% of global currency reserves, marking its lowest share in at least twenty years. This represents an 18-percentage-point decrease in reserve share over the last decade, as central banks increasingly diversify into gold.
Further complicating the macroeconomic outlook are potential changes within the Federal Reserve. Reports indicate that the Chief Investment Officer of BlackRock is a leading candidate to become the next Fed Chair. Concurrently, political pressure is mounting for significant monetary easing, with calls for the central bank to target interest rates as low as 1%.
Current Market Stresses and Supply Constraints
The silver market, in particular, is exhibiting signs of extreme physical demand. Silver has rallied 275% over the past year, recently surpassing $117 per ounce. Market data shows a significant disconnect between available supply and outstanding contracts: commercial traders hold 231 million ounces in net short positions, while only 108 million ounces are available for delivery in warehouses.
Also Read: Global Reserve Shift: Gold Holdings Hit 30-Year High as Dollar Share Declines
The market has entered a state of backwardation, where immediate spot prices exceed future contract prices. In January alone, requests for physical delivery have accounted for nearly 45% of current registered inventory, a sharp increase from the 11% average seen in previous years.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m your translator between the financial Old World and the new frontier of crypto. After a career demystifying economics and markets, I enjoy elucidating crypto – from investment risks to earth-shaking potential. Let’s explore!
