Revathi Asset Management

Resurgent Safe Havens

In a world marked by escalating geopolitical tensions, wavering trust in the U.S. dollar, and unprecedented monetary experimentation, precious metals are poised to reclaim their historical role as premier stores of value. Gold has already broken through the $3,000 per ounce barrier in 2025, with many analysts projecting further gains ahead. Silver, often overlooked but historically following gold’s trajectory with greater volatility, presents an even more compelling case for substantial appreciation.

Geopolitical Fragmentation Driving Flight to Safety

The global landscape has fractured into competing power blocs, creating an environment where gold thrives. BRICS nations continue their strategic pivot away from Western-dominated financial systems while conflicts from Eastern Europe to the Middle East remain unresolved. This persistent uncertainty fuels demand for assets uncorrelated to political risk.

As investment strategist Ruth Simon noted recently, “Iran-Israel brinkmanship has injected volatility into global markets, and gold is the first beneficiary. A single missile strike in the Strait of Hormuz could send gold soaring past $4,000/oz overnight.” This isn’t mere speculation – over the past year, each escalation in regional tensions has triggered measurable inflows to gold ETFs and physical bullion.

The Dollar’s Diminishing Reserve Status

Perhaps the most significant tailwind for precious metals comes from the accelerating de-dollarization trend. Central banks worldwide have dramatically shifted their reserve allocation strategies, purchasing gold at rates not seen in over half a century.

According to the World Gold Council, central banks collectively bought over 1,000 tons of gold in 2024 alone, continuing a pattern that began in 2022. This isn’t limited to America’s geopolitical competitors—Poland, Turkey, and India were among the largest buyers. A 2024 survey revealed that nearly 70% of central banks plan to increase their gold allocations over the next five years.

The numbers tell a compelling story: the dollar’s share in BRICS nations’ trade has plummeted from 85% in 2015 to just 59% in 2023. Russia has increased its gold reserves from 5% to 15% of national reserves since 2014. These aren’t temporary adjustments but strategic moves toward a more multipolar monetary system.

The True Cost of Monetary Experimentation

The unprecedented monetary expansion that began in 2008 has fundamentally altered global financial markets. Quantitative easing (QE) programs, meant as temporary emergency measures, have become standard policy tools. The consequence has been the largest expansion of global debt in history, with central bank balance sheets bloated beyond recognition.

VanEck analysts note that “gold typically outperforms during the second half of the inflation regime as investors seek protection from social, geopolitical and financial instability.” We are now firmly in this second phase. The monetary reckoning has begun, with most major economies facing a painful choice between continued high inflation or interest rates that threaten to collapse debt-dependent growth models.

As former Morgan Stanley economist Peter Smithson recently observed, “Central banks find themselves in a trap of their own making. They cannot normalize policy without triggering debt crises, yet continued monetary accommodation guarantees further currency debasement.” In such an environment, hard assets with limited supply like gold and silver serve as monetary insurance.

Silver: The Undervalued Opportunity

While gold has reached record highs, silver remains significantly undervalued by historical standards. The gold-to-silver ratio has hovered around 80:1 in early 2025, well above the long-term historical average of 55:1. This suggests substantial upside potential for silver if/when the ratio eventually normalises.

Silver’s dual role as both monetary metal and industrial commodity makes it uniquely positioned in the current environment. The green energy transition continues to drive industrial demand for silver in photovoltaic cells, while its monetary properties attract investors seeking inflation protection.

Investment Implications

The case for precious metals allocation has rarely been stronger. While gold provides stability and sovereign-level security, silver offers additional upside potential with its industrial applications and historically tight supply-demand dynamics.

Investors have multiple avenues for exposure—physical bullion, ETFs like GLD and SLV, mining equities, or even royalty companies that provide leverage to metal prices without direct operational risks. However, at the end of the day, physical bullion or ETFs are the best direct exposure vehicles.

The optimal allocation depends on individual circumstances, but many analysts now recommend 5-10% of portfolios in precious metals as a core holding rather than a tactical trade, which to us seems on the lower side. As one Swiss wealth manager put it, “Gold isn’t just for crisis moments anymore—it’s become essential portfolio infrastructure in a world where traditional safe havens no longer provide the security they once did.”

Given the confluence of geopolitical instability, monetary uncertainty, and the accelerating de-dollarization trend, gold and silver are positioned not just as temporary safe havens but as fundamental assets in a changing global financial order. Their resurgence reflects not merely cyclical factors but a structural shift in how wealth is preserved in an increasingly uncertain world.