Gold Is Rising Even as Central Banks Sell: This Is Why

Key Concepts

• Precious Metals Market Dynamics: Analysis of gold, silver, and platinum group metals (PGMs) as both financial assets and commodities.
• COMEX Delivery Process: The mechanism of rolling contracts and the role of depository receipts in physical settlement.
• Market Surplus vs. Deficit: The distinction between fundamental supply/demand balances and investor-driven "artificial" deficits.
• Trade-Weighted Dollar: A measure of the U.S. dollar's value against a basket of foreign currencies.
• Branch Banking: A historical financial innovation (attributed to Jacob Fugger) to mitigate risks in transporting physical bullion.

1. Market Updates and Economic Context

Jeffrey Christian of CPM Group provides an update on the precious metals landscape as of March 6th.

• Gold: Prices have rebounded to approximately $5,151 after a sharp decline from January highs. Investor sentiment remains bullish due to global economic and political instability.
• Central Bank Activity: Central banks were net sellers of gold in January (less than 1 million ounces), largely to capitalize on the price spike. China was a notable exception, acting as a net buyer of 40,000 ounces.
• U.S. Dollar: The trade-weighted dollar has declined 9–10% from its January 2025 peak but remains 38% higher than its July 2011 cyclical low.

2. Silver Market Analysis

Silver experienced extreme volatility, spiking from $70 to $122 in January, dropping below $70 in February, and rebounding to $98 following geopolitical tensions (U.S./Israel conflict with Iran).

• Commodity Reality: Despite its role as a financial asset, silver is subject to physical constraints. Mine production is expected to grow long-term, with 18 billion ounces of reserves profitable at prices above $25/ounce.
• Refinery Bottlenecks: High prices and increased volume have created credit constraints for coin dealers and refineries. Consequently, smaller investor-grade bars (1–100 oz) are being melted down and recast into 1,000 oz "good delivery" bars for the bullion banking market.
• COMEX Mechanics: The March contract saw a massive roll-over into May. Delivery notices (approx. 32 million ounces) represent the transfer of depository receipts rather than physical movement of metal, a standard procedure in commodity markets.

3. Platinum and Palladium

• Platinum: The market is currently in a surplus, projected to exceed 200,000 ounces this year. Christian argues against the "deficit" narrative often used by marketers, noting that true deficits are rare (only 7 of the last 50 years). Investors should focus on the balance between total supply and fabrication demand rather than speculative investment flows.
• Palladium: Shows more vulnerability than platinum, though recent data indicates a growth in gross long positions and a reduction in short positions, suggesting potential price resilience.

4. Historical and Economic Perspectives

• Alan Greenspan: Commemorated for his 100th birthday and his tenure as a Federal Reserve Chairman.
• Jacob Fugger: Highlighted for inventing the double-entry ledger and branch banking in the 16th century, which revolutionized finance by eliminating the need to physically transport gold and silver between cities, thereby avoiding banditry.

5. Notable Quotes

• "Silver, like gold, like other commodities, is in fact a commodity. And while it's also a financial asset and trades primarily as a financial asset, it has commodity realities." — Jeffrey Christian
• "If you want an honest approach and honest analysis of the platinum market, you're going to look at total supply less fabrication demand." — Jeffrey Christian

6. Synthesis and Conclusion

The precious metals market is currently driven by a tension between geopolitical fear-buying and fundamental commodity realities. While prices for gold and silver remain elevated, they are likely entering a period of temporary plateaus. Investors are cautioned to look past "deficit" marketing—particularly in the platinum market—and focus on the underlying supply-demand fundamentals. The COMEX delivery process is functioning normally, and the current market environment reflects a mature economy facing significant structural and geopolitical challenges.