As 2026 trading commenced on Thursday, gold and silver wasted no time extending a rally that has captivated investors and rewritten record books. Gold climbed 1.5% to trade near $4,380 per ounce, while silver demonstrated even stronger momentum, surging over 4% to breach $74 per ounce.

These gains build on what was an extraordinary 2025 for precious metals. Gold posted annual gains of 64%, while silver exploded higher by nearly 150%—putting both metals on pace for their strongest annual showing since 1979, the year the Hunt Brothers' legendary silver speculation drove prices to levels that wouldn't be seen again for decades.

What's Driving the Historic Rally

Unlike the Hunt Brothers' artificial squeeze, today's precious metals rally rests on multiple fundamental pillars:

Central Bank Buying

Global central banks have been accumulating gold at a pace not seen in decades. Emerging market central banks, particularly in China, India, and the Middle East, have been diversifying reserves away from the dollar—a trend that accelerated following the freezing of Russian central bank assets after the Ukraine invasion.

Federal Reserve Rate Cuts

The Fed's three successive interest rate cuts in 2025 reduced the opportunity cost of holding non-yielding assets like gold. With rates expected to decline further in 2026, the bullish case for precious metals remains intact from a yield perspective.

Geopolitical Uncertainty

From ongoing conflicts in Eastern Europe and the Middle East to trade tensions between major economies, the global backdrop has pushed investors toward traditional safe-haven assets. Gold's historical role as a store of value during uncertain times has never looked more relevant.

ETF Inflows

After years of outflows, gold exchange-traded funds saw significant inflows in 2025 as institutional investors rotated back into the asset class. This represented a meaningful shift in sentiment from professional money managers.

Wall Street's 2026 Forecasts

Major investment banks remain structurally bullish on precious metals, though forecasts vary in their optimism:

  • Goldman Sachs: Reaffirmed its "structurally bullish" stance with a gold price target of $4,900 by year-end 2026
  • UBS: Expects gold to reach $4,500 by June 2026, driven by lower real yields and continued dollar weakness
  • JPMorgan: Sees gold potentially reaching $5,000, citing unprecedented central bank demand and fiscal concerns

For silver, analysts see potential for prices to reach $85 per ounce, though the metal's industrial demand component adds complexity to the outlook.

The 1979 Parallel—and Its Warning

The comparison to 1979 cuts both ways. That year, gold surged 126% and silver an astonishing 435% as the Hunt Brothers accumulated silver futures and inflation ran rampant. But what followed was sobering: gold plummeted more than 50% by 1982 as the Fed crushed inflation with aggressive rate hikes.

Today's environment differs in important ways:

  • Inflation, while elevated, is nowhere near the double-digit levels of the late 1970s
  • Central bank buying provides structural demand that didn't exist in the Hunt era
  • The rally has been more gradual and broadly based, not driven by a single speculative actor

Still, analysts have flagged concerns about portfolio rebalancing. Given the substantial rallies in gold and silver, their presence within various market indices may have exceeded predetermined allocation targets. This could compel passive tracking funds to sell contracts, creating near-term headwinds.

How to Position Your Portfolio

For investors considering precious metals exposure in 2026, several strategies merit consideration:

Physical Gold and Silver

Coins and bars from government mints offer direct ownership without counterparty risk. However, storage costs and dealer premiums can eat into returns, making this approach better suited for long-term holders.

Exchange-Traded Funds

Gold ETFs like GLD and IAU, along with silver ETFs like SLV, provide liquid exposure without storage concerns. Expense ratios are low, making these vehicles efficient for most investors.

Mining Stocks

Gold and silver miners offer leveraged exposure to metal prices. When gold rises, mining company profits typically rise faster due to fixed production costs. However, miners also carry operational and geopolitical risks that pure metal exposure avoids.

Position Sizing

Most financial advisors suggest limiting precious metals to 5-10% of a diversified portfolio. After the massive 2025 rally, investors who let their winners ride may find their gold allocation has swelled beyond target levels—a good problem, but one that may warrant rebalancing.

The Bottom Line

Gold and silver's historic rally reflects genuine concerns about currency debasement, geopolitical instability, and the long-term value of fiat money. While the comparison to 1979 warrants caution, the fundamental backdrop today appears more sustainable than the speculation-driven mania of that era.

For investors without precious metals exposure, current prices are undeniably higher than they were a year ago—but the factors driving the rally show no signs of abating. A modest allocation to gold and silver can provide portfolio insurance that has proven its worth during uncertain times.

The question isn't whether gold will hit Goldman's $4,900 target—it's whether you can afford not to own any when the next crisis strikes.