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gold and silver stocks issues market commentary from deVere Group.
Gold – which has jumped around 15% this year – is on an
impressive run, but there are legitimate concerns about whether the
momentum can last much longer, warns the CEO of one of the
world’s largest independent financial advisory organizations.
The warning from Nigel Green of deVere Group comes as the precious
metal hits $5,500 this week amid intensifying geopolitical tensions,
ballooning government debt, and a growing sense among investors that
government bonds and major currencies are becoming increasingly
politicized.
He says: “Gold’s surge reflects anxiety about fiscal
policy, geopolitics, and the future of fiat currencies, but rallies
driven by fear and momentum can reverse sharply.”
“But one of the most significant underappreciated risks to the
rally is the possibility that countries or central banks begin
selling gold to manage fiscal or currency pressures.”
“Gold remains one of the few unleveraged sovereign assets. For
governments under political or financial strain, the temptation to
liquidate reserves is real.”
The United States sits at the centre of this risk. Federal
debt continues to expand rapidly, with interest costs rising and
political divisions limiting fiscal reform. President Donald
Trump’s renewed tariff threats and assertive geopolitical
posture have increased uncertainty around the policy outlook.
“In Washington, deficits and political gridlock, including a
potential shutdown this weekend, make orthodox solutions
difficult,” notes the deVere CEO.
“In a crisis, selling gold could be framed as balance-sheet
management rather than issuing more debt.”
Europe faces parallel pressures. Highly indebted economies
remain constrained by fiscal frameworks and aging populations, while
Germany could face pressure to mobilize assets to stabilize the euro
area during a future sovereign stress episode.
“Gold could become a politically palatable source of liquidity
in Europe,” explains Nigel Green. “Systemic crises tend
to override monetary orthodoxy.”
Emerging markets present another layer of risk. Countries
managing volatile currencies and capital flows may sell gold to
obtain hard-currency liquidity for intervention or to cover fiscal
gaps.
“In periods of capital flight, gold becomes a tool of last
resort. Several emerging economies already adjust reserves
dynamically when markets turn against them.”
China and Russia represent a distinct category.
“Both have accumulated gold to reduce reliance on
Western financial infrastructure, but sanctions, trade disruptions,
or domestic financial stress could still force asset
mobilization.”
No country is immune to liquidity shocks. Strategic
accumulators can become sellers under extreme pressure.
He warns that official sector selling would likely trigger sharp
market reactions.
“Central bank flows carry outsized signalling power,”
comments Nigel Green.
“A sale by a major reserve holder would be interpreted as a
statement about confidence in the monetary system, and markets react
aggressively to statements.”
Beyond official selling, deVere Group highlights other reasons the
current rally could lose momentum. Gold has benefited from a
powerful momentum trade, with investors drawn to rising prices and
media headlines.
“Momentum drives flows, and flows drive prices,”
says the CEO and founder.
“When sentiment shifts, the same dynamic can work in
reverse.”
He adds that gold’s reputation as a guaranteed safe haven is
often overstated over short horizons.
“Gold is a strategic asset over long periods, but it is
volatile and sensitive to interest rates, liquidity conditions, and
risk sentiment,” says Nigel Green.
He points to history as a warning for policymakers and
investors alike.
“In 1999, the UK, under then-Chancellor Gordon Brown sold
roughly half its gold near cyclical lows.”
“Switzerland sold heavily after changing its monetary
framework. European central banks coordinated sales to signal
confidence in fiat currencies,” he explains. “Each
episode preceded major shifts in the gold market.”
He also notes that earlier attempts by Western governments to
suppress gold prices during the Bretton Woods era collapsed before
the system itself broke down.
“History shows governments often misjudge gold cycles, and
official selling can coincide with major market turning
points,” Nigel Green says.”
Political uncertainty continues to act as a tailwind for gold,
particularly as investors reassess exposure to US assets and major
currencies.
“Investors diversify when policy becomes less predictable.
Gold benefits when confidence in fiscal discipline and monetary
independence weakens.”
He concludes that investors should treat the current rally with
caution.
“If governments or central banks begin selling gold, the
rally could falter quickly as investors reassess the narrative.
Official selling would confirm fiscal or currency stress and could
trigger a rapid repricing.”
“Also, gold can climb fast when uncertainty rises, but
it can fall just as quickly when sentiment shifts or yields become
more attractive.”
“Gold’s run reflects deep uncertainty, but uncertainty
is not permanent. If policy stabilizes or reserves are mobilized,
the market could see a sharp adjustment.”
“Zooming out, there are legitimate and wide-ranging
reasons why the current gold rally may end sooner than many
expect.”
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