The bullish gold market is approaching a turning point. Recently, Daniel Oliver, founder of Myrmikan Capital, pointed out that the smooth upward trend that has persisted since 2022 is now about to change dramatically.

According to his analysis, the gold market has gone through two phases. The first phase was when geopolitical tensions prompted non-aligned countries to review their dollar reserves. Central banks quietly continued buying without concern for short-term price fluctuations. As a result, the chart depicted a beautiful parabola.

However, now that orderly rise is beginning to break down. This marks the second phase. Oliver is closely watching the pressure on the U.S. credit system. Over the past few decades, low interest rates have encouraged leverage. Funds have significantly raised capital, acquiring companies and refinancing at low costs. But now, interest rates are rising, and refinancing opportunities are shrinking. Companies that once easily deferred debt may now face higher costs and limited access.

This pressure has just started to surface. It may not lead to a mass default like in 2008 but could gradually spread across industries. Meanwhile, the Fed is in a situation where it cannot act. Reducing its balance sheet while lowering interest rates is mathematically contradictory. If the credit markets freeze, the Fed will ultimately have to expand its balance sheet to avoid systemic collapse. In other words, more money will be printed.

This movement is the fundamental reason supporting the gold market. Oliver regards gold as a balance asset against the expansion of central bank liabilities. Historically, central bank balance sheets have maintained a meaningful relationship with gold reserves. Applying this to today’s much larger Fed balance sheet suggests that higher gold prices are needed to restore equilibrium.

Silver offers a different perspective. Much of the world’s silver production is a byproduct of other metals, making supply relatively inelastic. Demand, especially from industrial uses and renewable energy, is also difficult to restrain. If both supply and demand are inelastic, even small fluctuations can significantly impact prices. In fact, this dynamic is already observable.

Structural stress in the physical gold market cannot be ignored either. Traders and refiners usually hedge inventories through futures markets, but rising volatility has led banks to tighten margin requirements. Small participants reduce processing and inventories in response, which can constrain supply flows and further amplify price swings.

Interestingly, while gold itself remains strong, mining stocks are lagging. Oliver attributes this to conservative accounting practices and institutional investors’ doubts about the sustainability of current gold prices. Large companies value resources based on multi-year average prices, which suppresses reported profits. During a full-blown bubble, retail investor inflows would surge into this sector, sharply increasing valuation multiples.

On a macro level, the U.S. fiscal situation is strained. When calculating federal debt per worker, it reaches an economically unsustainable level. Adding long-term benefit obligations increases this burden further. Oliver sees the increasing likelihood of some form of monetary restructuring over time.

He is also concerned about the direction of digital currencies and financial regulation. During unstable times, governments tend to tighten oversight of capital flows. Physical gold is one of the few assets that does not carry direct counterparty risk. The EU’s ongoing efforts to lower the acceptable cash transaction threshold and track all transactions via digital currencies are symbolic of this trend.

In conclusion, the next phase for gold is unlikely to be as smooth as before. The transition from quiet central bank buying to a more volatile era shaped by credit stress and policy constraints is underway. Whether this transition results in a gradual rise or a sharp revaluation depends on how the private credit cycle unfolds and how aggressively the Fed responds. Either way, gold is already signaling systemic pressures, and the second act of this bullish market has already begun.