The Volatility of Gold and Silver
The past three months have delivered a masterclass in market volatility. From mid-November 2025 to mid-February 2026, gold rose more than 20% overall but swung wildly, surging above $5,500/oz in late January before correcting sharply to around $4,870/oz. Silver was even more dramatic: it briefly breached $120/oz before plunging over 30% in a single session and now trades near $72–74/oz. Bitcoin, meanwhile, has traded in a $60,000–$78,000 range, down from its October 2025 peak above $126,000, reflecting broader risk-off sentiment amid shifting Fed expectations and geopolitical headlines.
These moves were amplified by positioning in the futures markets. Commitments of Traders (COT) data show commercial interests, often banks and producers maintaining or increasing short positions on COMEX gold and silver, while large speculators trimmed net-long exposure to 11-month lows. Margin hikes by the CME Group further intensified the swings, forcing liquidations and creating the sharp “liquidity vacuum” seen during the Lunar New Year lull in Asian trading. Yet beneath the noise lie powerful structural forces that favour precious metals over the longer term, and a maturing Bitcoin that has lost some of its original rebel appeal.
Silver stands out as the most compelling supply-constrained story. The market is heading into its sixth consecutive annual deficit in 2026, with cumulative shortfalls since 2021 approaching 800–820 million ounces. Industrial demand i.e. solar panels, EVs, 5G electronics and AI infrastructure, continues to surge, while above-ground inventories have been drawn down relentlessly. Critically, only about 20–30% of global silver comes from primary silver mines; the remaining 70–80% is a byproduct of copper, lead and zinc operations. Miners will not ramp silver output simply because the price is high, their economies are dictated by the primary metals. This inelastic supply, coupled with tightening physical availability in London and Shanghai vaults, means any sustained demand rebound will keep upward pressure on prices even after the current correction.
Gold’s role is equally strategic but more macro-driven. In a world of de-globalisation, tariffs, sanctions and national-security concerns, from Venezuela and Iran to Greenland disputes and US–Europe trade friction, central banks have hoarded the metal at record pace. Gold has long since overtaken the euro as the second-largest reserve asset after the US dollar; recent analysis shows its value in official holdings now surpasses foreign-held US Treasuries in some metrics, accounting for nearly 20% of global reserves (up from 15% in 2023). For nations wary of weaponised currencies, gold remains the ultimate neutral, liquid, non-yielding insurance policy.
Bitcoin, by contrast, has become institutionalised and, in the eyes of its original advocates, tamed. Spot ETFs from BlackRock, Fidelity and others now hold billions in assets, with institutional ownership (including corporates) exceeding 24% of ETF holdings and public companies controlling roughly 8% of total supply. It is easier to custody, easier to allocate to, and far easier for regulators and large funds to control. The decentralised, “nobody can stop it” narrative that drove the 2021 and 2024 rallies has faded; Bitcoin today trades more like a high-beta tech equity than digital gold. While it retains growth potential in a maturing crypto infrastructure, its appeal to retail contrarians has diminished.
For Yorkshire investors, the message is clear: volatility creates opportunity, but only for those who understand the fundamentals. Silver’s chronic shortage and industrial tailwinds point to higher prices once the current squeeze eases. Gold’s safe-haven status is structurally supported by central-bank diversification and geopolitical risk. Bitcoin offers asymmetric upside but requires a different risk appetite now that it sits comfortably alongside traditional portfolios.
At Lazenby’s Financial Services we continue to advocate balanced, diversified exposure, whether through physical bullion for wealth preservation, allocated accounts, or regulated ETFs, tailored to individual circumstances. In uncertain times, the assets that have protected and grown wealth for centuries still have a vital role to play. Get in touch with a member of our experienced team to discuss how we can help you plan your future.
