Gold, silver, platinum, and copper had historic returns in 2025, but there are risks for 2026

Key Concepts

• Gold & Precious Metals: Strong performance in 2025, driven by central bank buying, geopolitical factors, and potential dollar de-dollarization. Debate exists regarding continuation of parabolic rise.
• Gold Miners (e.g., Barrick, Freeport): Considered a potentially more conservative play than direct gold investment, benefiting from stabilized gold prices through higher margins.
• Silver: Significant gains (150% YTD) due to both precious metal and industrial (electrification, AI) demand.
• Copper: Driven by AI buildout and electrification, experiencing its largest annual gain since 2009. Concerns about frothiness in price due to industrial demand not fully supporting current levels.
• Cryptocurrency (Bitcoin, Ether): Underperforming precious metals, facing volatility and questions about its role as a neutral reserve asset. Potential for a bounce in January.
• AI & Electrification: Key drivers of demand for copper and, to a lesser extent, silver.
• Central Bank Buying: A significant factor supporting gold prices.
• Dollar De-dollarization: A global narrative contributing to gold demand.

Gold’s Performance and Outlook

The discussion began with gold’s outperformance compared to the S&P 500, with Goldman Sachs predicting a price of $4,900 by the end of 2026. Bob, a long-term gold investor, expressed continued confidence in gold, attributing its strength to central bank buying, geopolitical instability, and a broader trend of dollar de-dollarization. However, he cautioned against initiating new positions, anticipating a substantial pullback but not expecting the parabolic move to continue. He stated, “I’ve been long gold for a couple years…and I’ve seen no reason to get out of that position at this point.”

He differentiated his view from Goldman Sachs, arguing their prediction wasn’t particularly bold given the recent rally and that the risk-reward for new longs wasn’t favorable. Instead, he advocated rebalancing portfolios, taking profits from gold and reinvesting in sectors like AI, which had leveled off later in 2025.

Investing in the Gold Trade: Miners vs. Commodity

The conversation then shifted to alternative ways to play the gold trade, specifically gold miners like Barrick and Freeport. Bob suggested that investing in miners could be a more conservative approach for 2026. He explained that while the commodity price might stabilize, miners would still benefit from higher margins, reflected in their P&Ls. He emphasized a long-held belief: “If you have a thesis in the commodity, you should be invested in the commodity, not in the oil drillers or in the large oil companies…I feel the same thing for gold except when you end up in a situation where the price of gold might stabilize.”

Silver and Copper: Momentum and Drivers

Silver experienced a remarkable 150% return YTD, driven by its dual nature as both a precious and industrial metal. Bob highlighted that silver uniquely benefits from both the safe-haven demand of precious metals and the electrification and AI-driven demand for industrial metals. He noted, “Silver has the precious metal component not as strong as gold but it also has the electric electrification story…it’s become this is the first time in recent history where silver has gotten to take advantage of that.” He suggested that even a 15% drop in silver’s price could still present a buying opportunity in 2026.

Copper is on pace for its largest annual gain since 2009, fueled by the AI buildout. While the “green energy story” has lost some momentum, the demand from AI and electrification remains strong. Bob identified AMD as a key stock pick for the coming year, linked to this trend. He believes copper will operate in a structural deficit due to the projected demand, stating it’s “one of the best commodity plays for the medium to long term.”

Market Sentiment and Potential Risks

The discussion acknowledged the significant gains in precious metals, with silver up 40% in the past month. Strategists are noting a deficit in the silver market, differentiating this rally from past short squeezes. However, caution was also expressed, referencing the silver price spikes of 1979-1980 followed by a crash.

Keith, another market participant, noted the charts show a “straight up and to the right” trajectory for gold and silver. He described gold as a risk mitigator against global macroeconomic risks, including fiscal policy in the US and potential monetary policy mistakes in 2026. He expressed some concern about “froth” in copper prices, suggesting industrial demand doesn’t fully justify current levels. He stated, “We feel like gold and silver have a little more risk-reward to it even at these levels to our clients portfolios than than some of industrial metals like copper.”

Regarding trading strategy, Keith explained they had trimmed some gold positions to buy silver and monetize profits, maintaining a bullish outlook but practicing responsible portfolio management.

Precious Metals vs. Cryptocurrency

Ines Fay reported on the stark contrast between the performance of precious metals and cryptocurrency. Gold is up over 70% YTD, silver 165%, and platinum 175%, while Bitcoin is down 7% and Ether down over 12%. This disparity is leading some investors to consider switching from crypto to metals, citing metals’ lower volatility and higher liquidity.

She noted that Bitcoin is trading like a high-risk tech stock rather than a neutral reserve asset. However, strategists like Sean Ferrell from Fundstrat predict a potential bounce in Bitcoin in January if December marks its third consecutive month of losses, a historically rare occurrence. Despite this, Wall Street is revising down its price targets for Bitcoin, with Fundstrat projecting $115,000 and Standard Chartered projecting $150,000 by the end of 2026.

Conclusion

The conversation highlighted the strong performance of gold, silver, and copper in 2025, driven by a combination of geopolitical factors, central bank activity, and the growing demand from AI and electrification. While optimism remains for these metals, particularly gold and silver, caution was advised against initiating new positions at current levels. The underperformance of cryptocurrency contrasted sharply with the gains in precious metals, prompting discussion about a potential shift in investor sentiment. A key takeaway is the importance of strategic portfolio rebalancing and considering alternative investment avenues like gold miners to capitalize on market trends while managing risk.