FEBRUARY 2026
Historically, the gold price (red line) has moved inversely with US inflation-adjusted (real) yields (blue line) as lower rates reduce the opportunity cost of holding non-yielding bullion (and vice-versa).
But that relationship has weakened markedly since 2022 with the gold price surging to record-breaking levels despite real yields also climbing to multi-year highs.
Structural drivers help to explain this divergence. Central Banks are buying aggressively, geopolitical risks are intensifying and investors increasingly see gold as a hedge against wider policy and systemic risks.
This suggests gold has become much more than a rate-sensitive asset.
And means investors would be better served monitoring technical and sentiment indicators to help judge when its impressive bull market may run out of steam.
The gold–silver ratio is falling sharply, adding weight to the argument that the record-breaking ascent in precious metals prices may be nearing an end.
The ratio measures how many ounces of silver are needed to buy one ounce of gold, and is often used to gauge whether silver is relatively cheap or expensive versus gold.
Silver tends to be the less efficient, more speculative market and typically outperforms gold as a bull market develops.
This is consistent with the ratio trending downwards, like it is now.
Major historic peaks in precious metals prices have emerged when the ratio has fallen below 50, which suggests the current uptrend could extend much further before topping out.
But with a parabolic price move now underway, we are likely entering into a much more volatile phase for both gold and silver. So caution is warranted.
Base metals have rallied strongly, in line with the broader ascent in commodity prices.
This is noteworthy given China’s position as the world’s dominant base metals importer and the fact that its headline growth rate continues to ease; real GDP growth softened to 4.5%y/y in Q4 ’25 with property sales and fixed asset investment the notable laggards.
Traditional demand drivers appear weak, but are likely being offset by China’s “green energy” push and constrained supply with years of underinvestment, mine disruptions, and stricter environmental policies hindering the production of industrial commodities.
More strategically, China is building inventories of key commodities as a buffer against geopolitical threats and supply-chain fragilities, so base metals could continue to rally even if growth headwinds persist.
Energy prices continue to lag the wider commodity boom, despite a notable increase in geopolitical tensions.
One reason is rising inventories. US crude stockpiles are rising from multi-year lows (red line), alleviating near-term tightness and weighing on oil prices (blue line). Soft economic growth rates have also capped the upside.
However, the fundamental backdrop appears to be tightening.
OPEC+ spare capacity is limited and the geopolitical price premium is more likely to rise than fall.
The demand side could also be on the verge of improving with some commentators forecasting a potential 5-6%y/y US GDP growth rate this year, as fiscal support and monetary easing filter through ahead of the November mid-term elections.
With oil inventories still at historically low levels, any disruption or demand surprise could quickly tighten the market, setting the stage for energy prices to catch up with the wider commodity cycle.
That could spark a rebound in inflation expectations and higher bond yields which, in turn, could hamper the “risk on” move in markets.
Which suggests energy-related investments could be an effective hedge against any future equity and credit market sell-offs.
Bentley Reid & Co (UK) Limited (FRN 572096) is authorised and regulated by the Financial Conduct Authority.
This communication is provided for information purposes only. Bentley Reid believes that, at the time of publication, the views expressed herein represent fair opinion; however, no assurance can be given that any illustrated or referenced performance will be achieved or repeated. All data and graphical information are believed to be accurate at the time of capture but may be subject to change and may not reflect current conditions. Fluctuations in exchange rates may cause the value of investments to rise or fall.
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