Founder’s Note: We count on Senior Analyst Jason Perz for his clarity and insight on even the most basic topics.
What’s more basic than rocks, even the shiny ones?
Here’s Jason on what’s happening with precious metals. – JC
By Jason Perz
- Gold is rewriting the rules. Its share of global reserves just jumped to 30% while the dollar slips — a quiet vote against paper.
- Silver’s running out. Borrowing costs are spiking, liquidity’s gone, and inventories are collapsing — the squeeze is real.
- Volatility isn’t fear. It’s the sound of the system shifting from fiat to finite.
Most of the time price action and positioning tells the story better than any economist ever could.
Right now, gold and silver are that story.
Gold Is Leading the Way
Take a look at this first chart:
The line that used to barely register, gold’s share of global reserves has gone vertical.
In just six months, it jumped from 24% to 30% of total foreign exchange plus gold holdings. Over the same period, the U.S. dollar slipped from 43% to 40%.
That may sound like a rounding error, but in reserve management terms, it’s a geological shift.
Central banks aren’t speculating, they’re diversifying. They’re doing it quietly, methodically, and with conviction.
If this continues, the world edges toward a monetary balance we haven’t seen in generations.
To match the dollar’s share, gold would need to rise above $5,790 per ounce — a symbolic parity between metal and money.This isn’t just price action or positioning.
It’s a vote of no confidence in paper.
Understanding the Silver Squeeze
There’s a saying in commodities: “You can short paper, but you can’t print metal.”
And right now, the silver market is living proof.
The physical shortage emerging in London is what happens when a financial system built on leverage and futures meets the hard limit of physical supply.
We’re watching that collision unfold in real time.
Borrowing costs are exploding:
Historically, silver lease rates hover near zero. They barely move.
Now? They’ve gone parabolic — spiking above 30%.
That’s not a technical glitch. That’s panic.
When traders are willing to pay that much just to borrow metal, it tells you everything: there’s not enough physical silver available to meet immediate demand.
Lease rates are the heartbeat of the bullion-lending system — and that heart is racing.
Liquidity Dries Up in London
Liquidity in London — the world’s core bullion hub — is drying up fast.
The bid/ask spread, which normally sits near 2 cents to 3 cents per ounce, has exploded 25x higher, touching 80 cents:
When spreads blow out like that, it means market makers are stepping away.
They can’t source the physical to settle trades.
That’s the textbook definition of a squeeze.
And it’s happening at the same time silver broke above its historic $50 level — a zone that capped bull markets in both 1980 and 2011.
Inventories Are Collapsing
The shortage didn’t appear overnight — it’s been building for years:
London vault inventories have dropped from 1.18 billion ounces in 2021 to just 790 million today — a 33% decline.
But the real stress point is the “free float” — silver actually available for trade.
That number has fallen off a cliff, now near its lowest level in over a decade.
When available supply dries up, any rise in demand from investors, solar, or industrial users creates a feedback loop:
Prices rise → inventories drain → confidence collapses → crices rise again.
That’s how every commodity squeeze begins.
Volatility Is the Cost of Transition
Gold and silver might be volatile right now — but that volatility is structural, not emotional.
It’s the friction of a system shifting from financial assets to hard collateral.
- Central banks are accumulating gold.
- Industrial demand is outpacing silver supply.
- Paper claims are being tested against physical limits.
These are not temporary dislocations.
They’re the early tremors of a monetary realignment — one that puts real assets like gold, silver, and copper back at the center.
So yes, the metals may swing.
But step back, and you’ll see what’s really happening: Confidence is rotating from promises to proof — from fiat to finite.
As JC says, “Let them dance.”
Save the bees,
Jason Perz
Senior Analyst, TrendLabs