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Gold and silver have recently achieved a series of new record highs, as global uncertainty pushes investors towards these traditional safe havens.
Currently, the local prices for gold and silver stand at approximately $7,610 and $166 per ounce, respectively. This marks a significant increase from their values of $5,100 and $58 just six months ago.
As a result of this price surge, there has been a notable uptick in interest from smaller investors. In October, The Perth Mint saw a significant rise in customers eager to purchase bullion or sell their jewelry. More recently, reports have emerged of people lining up at bullion dealers in Sydney’s central business district.
With the soaring prices, one might wonder if it’s too late to invest. What considerations should potential investors keep in mind?
While the allure of rising prices is tempting, investing always comes with risks. The federal government’s MoneySmart platform provides advice on what to consider before investing and suggests consulting with a financial adviser.
Price rallies can be alluring, but investing carries inherent risks. The federal government’s MoneySmart offers guidance on what to consider and also recommends speaking to a financial adviser before you invest.
When it comes to gold, Ole Hansen, head of commodity at Danish Investment Bank Saxo Bank, said the drivers behind the rally are “largely concern-driven”.
“Geopolitical uncertainty remains elevated, amplified by an increasingly unpredictable US political backdrop, and inflation concerns have proven stickier than many policymakers had hoped,” Hansen said in a statement this week.
He said demand for safe-haven assets like gold might start to cool, but does not believe a “major” price correction is on the horizon.
Daniel Hynes, a senior commodity strategist for ANZ, echoed similar price drivers, and also believes there is likely to be a “pullback in value in the not-too-distant future”.
“But the drivers that we have seen pushing [gold and silver] to these levels are not going to disappear soon,” Hynes said.
Silver, he said, has “the best of both worlds”, with an industrial link as well as being a safe-haven asset.
“When silver was included on the US critical minerals list just recently, that has raised some concerns that the US will start to strategically stockpile and potentially put tariffs on the metal as well,” Hynes said.
Silver also has uses in artificial technologies and the solar industry, he added.
Michael Wayne, managing director at Medallion Financial Group, is more cautious. He said when there was a precious metals boom in 2011, the heat “came out of it just as quickly as it went in”.
“Investors rushing to the party now need to be very, very careful and tread carefully,” he said.
“It’s very rare that you get a situation where the most dominant sector of the previous year continues to be the dominant sector for the year going forward.”
While Hansen believes gold won’t experience a major price correction, he does have concerns for silver and believes it is in “bubble territory”.
“While gold’s ascent has so far been relatively orderly, with little evidence of classic bubble behaviour, the same cannot be said for silver,” he said.
“Silver increasingly show signs of having moved into bubble territory, with retail participation, speculative positioning and fear of missing out acting as the primary drivers of a rally that has pushed prices to historically expensive levels, both relative to gold and to platinum.
In a December forecast of the price of gold for 2026, Natasha Kaneva, head of global commodities strategy at US investment bank JP Morgan, predicted further increases but said the rally “has not, and will not, be linear”.
How can you invest?
Peter Swan, a professor of finance at the University of NSW Business School, told SBS News that the cost of investing in gold and silver, like any commodity, is based on supply and demand.
“They all exist on a spectrum and have different proportions of cash or earnings in returns. Shares have a dividend yield of around 4 or 5 per cent, while investing in housing gives a lower yield of around 2 per cent,” he said.
People can invest in precious metals in a range of ways. This includes buying the physical commodity in the form of bullion, coins or jewellery.
Other methods include buying shares in exchange-traded funds, where gold and silver are bought on behalf of shareholders, as well as directly buying shares in gold and silver mining companies.
Disclaimer: The information in this article is general in nature and is not intended as financial advice. You should consult with a licensed professional to make the decisions that are right for you.
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