Gold and silver are on track for their largest yearly increases in more than four decades.

Surge in Gold and Silver Prices

Gold and silver are on the verge of marking their largest annual gains since 1979.

This year, gold prices have skyrocketed nearly 70% since late April, particularly after President Trump’s challenging implementation of global tariffs. Meanwhile, silver saw an impressive rise of over 30% in December alone, totaling more than 160% for the year.

The surge can largely be attributed to worries over the unpredictable trade policies introduced by the Trump administration, raising concerns that these actions could weaken the U.S. dollar and diminish its global appeal. Investors typically shift towards precious metals—often deemed “safe haven assets”—when they seek stability away from more volatile investments like stocks.

In stark contrast, the value of the U.S. dollar has declined by more than 9% this year compared to major currencies like the euro and yen.

This year, gold has particularly benefited, with analysts at RBC Capital Markets noting that “central banks and investors have embraced the precious metal’s nature as a non-sovereign asset.”

In a December 22 note, they mentioned that “the broader economic environment continues to provide multiple factors that have historically influenced gold price trends.”

According to the World Gold Council, central banks globally, which accumulate gold as a reliable asset for reserves, have increased their purchases recently. For instance, in October, they added 53 tonnes of gold to their reserves. Such bulk purchases can restrict the supply of gold, potentially driving prices higher.

Following President Trump’s so-called “Liberation Day” in early April, traders and some major banks hurriedly transported metal stocks to the U.S. to avoid the impending tariffs. This rush occurred because London serves as a leading clearing house for gold and other precious metals, and New York City has also expanded its storage facilities in recent years, likely still harboring some of the metals that arrived before the first wave of tariffs.

Conversely, silver plays a vital role in electrical circuits, switches, electric vehicles, and solar energy products. Unlike gold, silver is generally more volatile, leading investors to view gold as a safer long-term store of value to diversify their portfolios.

However, silver’s dramatic climb encountered a brief setback after Tesla CEO Elon Musk commented on December 26 that the rising price of silver was “not good.”

“Silver is needed in many industrial processes,” Musk noted.

Despite an 8% drop on Monday, silver experienced a resurgence in the following days, climbing 10% by midday Tuesday. Unlike gold, which is trading above $4,300 per ounce, silver prices remain below $77, contributing to its susceptibility to fluctuations and retail trading.

Gold also dipped over 4% on Monday but slightly rebounded on Tuesday. Chris Waterbury, derivatives manager at Charles Schwab, mentioned that “profit-taking and reports of progress on the Ukraine peace deal could be significant factors in the decline.”

On Monday, President Trump met with Ukrainian President Volodymyr Zelenskiy to discuss the ongoing conflict with Russia. Post-meeting, the two leaders expressed optimism, with Zelenskiy describing the meeting as “great” in a press conference.

The well-known gold ETF, trading under the ticker symbol “GLD,” has seen over $20 billion in inflows from investors this year, while silver’s prominent ETF, known as “SLV,” has attracted nearly $3.5 billion this year. These funds typically facilitate average investors’ participation in the precious metals market.