The simultaneous rise of gold and silver: history has only repeated itself twice, what is different this time?

The Market Is Boiling Over, Signals Worth Caution

The recent half-year trend has been truly astonishing. After gold stabilized above 4,500 points in early 2024, it has surged by 150%. Silver’s performance has been even more extreme—rising from 33 in early April to 72 now, also a 150% increase.

This heat has spread throughout the investment community. Even communities involved in blockchain-related businesses have started discussing precious metals’ trends, enough to show how heated market sentiment has become. When grandpas and grandmas are talking about a certain asset, historical experience tells us to be cautious—because it often means the market has entered an overheated stage.

Historical Benchmark: Only Two Instances of Simultaneous Surge in Gold and Silver

Reviewing historical data, we find that similar “gold-silver coordinated surges” are extremely rare, having occurred only twice in modern financial history.

First: The Stagflation Era of 1979-1980

At that time, the U.S. was experiencing high inflation. After the Bretton Woods system collapsed, the dollar lost its value anchor, and excessive money supply became normal. Coupled with two oil crises, the U.S. core CPI soared to 11.3% in 1979 and even higher to 14% in 1980. Against this backdrop, real interest rates remained negative for a long time—money was losing value, and tangible assets naturally surged. Gold skyrocketed from 200 to 867 (a 4x increase), and silver from 9 in August 1979 to 48 in 1980 (more than a 5x increase).

Second: The Liquidity Flood of 2009-2011

After the 2008 financial crisis, the Federal Reserve launched successive rounds of QE. The first round from November 2008 to March 2010 totaled $1.7 trillion, followed by a second round of $600 billion from November 2010 to June 2011, and a third round of $667 billion from September 2011 to December 2012. Under the impact of over $3 trillion in liquidity, gold seemed to “take drugs”—rising from around 700 points to over 1900 in 2011 (more than double). Silver went from 17 in July 2010 to 50 in May 2011 (nearly tripling in less than a year).

Underlying Common Logic: Inflation + Negative Real Interest Rates + Debt Dilemma

The core drivers behind these two surges in gold and silver point to the same factor: real negative interest rates in an inflationary environment.

In 1979-1980, excessive dollar issuance combined with oil crises directly pushed up prices, causing nominal interest rates to lag behind inflation, eroding real purchasing power.

In 2009-2011, although nominal inflation seemed manageable, massive QE injections inflated asset prices—effectively a form of devaluation. Meanwhile, U.S. debt ceiling breaches and reliance on money printing to sustain government spending were common.

A shared feature of these periods: when governments and central banks are forced to choose between inflation and debt, they often tolerate inflation to dilute debt. Gold and silver are the most direct reflections of this choice—investors are essentially voting with “precious metals” for policy.

Why Are Prices Also Soaring Now? The Environment Is Indeed Different

Some may ask: CPI is only 2.7%, interest rates are still at 3.75%, not negative, so why are prices rising?

Indeed, on the surface, the data doesn’t resemble the high-inflation environments of the previous two times. But market logic is anticipatory. There are mainly two voices:

One is that the U.S. debt ceiling issue will inevitably surface, and the Fed may have to revert to easing policies, re-igniting inflation risks. The other is that U.S. stocks are at high levels, with concerns about an AI bubble, and expectations of a large-scale financial crisis are boosting demand for safe-haven assets.

However, it must be honest to say that the current environment is fundamentally different from the previous two, and simple rules cannot be directly applied.

Future Trajectory Breakdown: Historical Patterns After High Gold and Silver Levels

Looking at the performance after the previous two gold-silver surges, what lessons can we learn?

Post-1980 Recession: Gold plummeted from 865 to 300 in 1982 (a drop of over 60%), and the following 20 years saw mediocre performance, with the 2000 low at just 250. Meanwhile, the stock market performed wildly—SP500 soared from 100 in 1982 to 1500, following a completely opposite curve to gold.

Post-2011 Long Adjustment: Gold fell from 1900 over four years to 1000 in 2015, breaking the midline. Subsequently, from 2016 to 2018, there was no significant rebound. In contrast, the U.S. stock market experienced a frenzy from 2011 to 2022, rising from 1000 to 4500.

The Core Logic of Economic Cycles

This reveals a fundamental pattern: Gold surge = inflation/money devaluation = recession or stagflation; Gold decline = currency appreciation = economic prosperity.

Based on the four-quadrant economic cycle model, we need to determine which phase we are in. Current signals are:

• CPI has fallen to 2.7%, inflation is under control
• Short-term bonds show signs of moderate QE
• Expectations of future rate cuts
• No obvious signs of recession

This points to an economic prosperity phase, not stagflation. The only black swan would be a debt ceiling breach in the U.S.—but if that happens, the whole world will be affected.

Therefore, the logic for 2025 should be: sustained economic growth → strong stock market performance → crypto assets benefiting due to high correlation with stocks.

Final Risk Reminder

Whenever gold and silver are linked in a “booming” manner, it’s usually late in the cycle. The current market heat has reached a warning line, and risks must be guarded against.

Historically, both major gold corrections took years to complete, during which large amounts of capital seek new outlets. These funds often flow into equities or emerging assets—this is the underlying logic behind the long-term optimism for equity assets.