Gold and Silver: Foundational to a New Era of Trustless Assets as US Bonds Fall Out of Favour

Key Takeaways

• Gold and silver are rallying even though high bond yields would normally hold them back.
• The trust premium on US government debt is eroding after repeated credit-rating downgrades.
• Central banks are buying gold at a historically elevated pace, reportedly around five times their usual rate since 2022.

Gold and silver have put in historic rallies in an environment of high bond yields and interest rates, conditions that traditionally favour interest-bearing assets over hard assets. That both metals have risen anyway suggests the "trust premium" once placed on US bonds, amid consecutive downgrades by primary credit-rating agencies, is now favouring hard, independent assets while confidence in some human-built financial systems shows cracks too large to ignore.

Central banks appear to understand this better than most, and are adding gold at a faster pace than US bonds. Central-bank gold purchases have run at roughly five times their usual rate since the SWIFT system was used against Russia in 2022.

Why did the classic yields-versus-metals relationship break down?

From the early 2000s, the inverse relationship between real yields and metals was reliable: rising real yields, as measured by Treasury Inflation-Protected Securities, typically pressured gold lower. In the post-2022 period, through elevated Fed policy rates and stubbornly high Treasury yields, both metals posted substantial gains. Gold recorded multi-year advances that at times exceeded 60% annually in US dollar terms in peak years, while silver often amplified the move with higher beta. The classic correlation broke down.

Gold is physical, jurisdiction-neutral when vaulted domestically, and carries no counterparty or default risk of the sort attached to any sovereign bond. This is visible in reserve composition. Reports from the European Central Bank and others indicate gold's share of global central-bank reserve assets has risen sharply, reaching around 27% by the end of 2025 in one assessment, while the share of US Treasuries declined. Surveys of central banks indicate that a majority expect dollar allocations to keep falling and gold allocations to rise over the coming years.

What happens if rates and yields turn lower?

The current backdrop looks supportive of central bank rate cuts, with unemployment steadily trending up and inflation steadily trending down. Long-term US bonds appear to be carving out a major low, a pattern seen roughly once every 7.5 years on average. An uptrend in bonds would mean a downtrend in yields. The question worth asking: if that downtrend in yields and rates sets in, with gold and silver already performing well in an unsupportive environment, how might they perform in a macro environment that supports higher prices?

A macro tailwind here could act as gasoline on the fire of the gold and silver bull runs. From a timing perspective, it lines up within the window of the four-year half-cycle low of the roughly eight-year cycles cited for both metals. On a macroeconomic and cyclical view, that positions 2027 as a potential year of significant growth for both metals.

As one financial system gives way to the building of the next, vehicles like gold and silver offer individuals, investors and central banks a way to step around the transition and enter the new arrangement on their own terms. For Australian investors weighing that shift, Ainslie Bullion offers physical gold and silver, and Gold Silver Standard provides a tokenised route into the same hard assets.

This article is general information only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial adviser before making investment decisions.