Precious Metals Surge Past $16 Trillion in Value as Dollar Weakens and Policy Shifts Drive 2025 Rally

The combined market cap of gold and silver expanded by a staggering $16 trillion in 2025, making it an exceptional year for precious metals investors. According to Bloomberg data, both assets significantly outperformed broader market benchmarks—gold delivered returns four times greater than the S&P 500, while silver surged eight times higher than the equity index.

Currency Collapse Fuels Precious Metals Strength

The foundation for this rally was laid by the US Dollar’s historic deterioration. The currency weakened 9% year-to-date, marking its worst performance since 2017. This depreciation accelerated following the Federal Reserve’s rate-cutting cycle, which commenced in September and continued to erode dollar strength. The situation intensified when President Donald Trump signaled in December his preference for rates at “1% and maybe lower,” creating additional headwinds for the currency.

Silver’s Breakout Performance and China’s Policy Response

Silver’s trajectory proved even more dramatic, climbing 175% throughout the year while maintaining an eight-month winning streak—a phenomenon unseen since 1980. December alone delivered a 41% monthly gain, positioning it for the strongest month since December 1979. The metal’s momentum gained additional fuel from geopolitical factors, particularly China’s tightening grip on exports.

Shanghai silver prices now trade at $85 per ounce, a $5 premium to US spot levels. This premium reflects urgency among buyers racing ahead of Xi Jinping’s new export regulations set to take effect in 2026. Under these controls, companies must obtain special government licenses to export silver, fundamentally reshaping supply dynamics.

China’s Hidden Accumulation Strategy

Behind the scenes, the People’s Bank of China has been aggressively accumulating precious metals. Q3 2025 saw purchases of 118 tonnes—up 39% sequentially and 55% year-over-year. However, Goldman Sachs research suggests official figures drastically understate actual acquisition. While China reported 15 tonnes purchased in September, the actual figure approximated 150 tonnes. For the full year, claims of 24 tonnes contrast sharply with Goldman’s estimate closer to 240 tonnes, indicating systematic underreporting of precious metals accumulation.

Crypto’s Divergent Path

Bitcoin’s 2025 performance starkly contrasted with precious metals’ triumph. After rising 40% early in the year, the cryptocurrency surrendered those gains and closed down 6% annually. Excessive leverage in derivatives markets triggered cascading liquidations that rippled through the digital asset ecosystem.