#Gate广场五月交易分享 In May 2026, is the gold and silver bull market still ongoing?

Gold has fallen from its historical high of $5,595 to today's $4,700, a decline of nearly 20%.
Many say the bull market has ended.
So, is the bull market really over?
This recent decline experienced two waves, with completely different causes.
The first wave was at the end of January: not due to deteriorating fundamentals, but a technical sell-off.
Profit-taking at high levels, combined with market suddenly worrying that new Federal Reserve Chair Warsh is hawkish, leveraged positions being liquidated, the snowball rolling bigger and bigger, causing gold prices to plummet by 8% in a single day.
This had nothing to do with bull market logic.
The second wave started at the end of February: this was true suppression.
On February 28, the US and Israel launched airstrikes against Iran, the Strait of Hormuz was immediately blocked, oil prices broke above $100, inflation expectations rose, the Fed’s March policy meeting reduced the number of rate cuts for the year from two to one, real interest rates rose, ETF funds fled massively, and the decline was swift and severe.
Two waves of decline, two different reasons. But one thing has never changed:
The underlying logic of the bull market remains intact—none of its core principles have been broken.
Now I will analyze this from five dimensions.
Every sentence has data, every number can be verified.
First Dimension: Long-term erosion of US dollar credit—Central banks buying gold, the foundation of the entire bull market.
Many people trade gold and silver based on inflation, war, or the dollar index.
All are correct, but superficial.
What truly supports this bull market reaching $4,700 an ounce is a force you may not have paid much attention to—global central banks systematically abandoning US Treasuries and buying gold.
2022 was a turning point. That year, about $300 billion of Russia’s foreign exchange reserves were frozen overnight by the West.
The shock of this event was equivalent to an 8-magnitude earthquake for global central banks.
You think your money in the US is yours? No, it’s America’s.
This realization prompted over 40 central banks worldwide to take action simultaneously: reduce US Treasuries and increase gold holdings.
Data speaks:
From 2010 to 2021, global central banks bought about 473 tons of gold annually on average.
After 2022, they exceeded 1,000 tons for three consecutive years, with 2022 surpassing 1,000 tons—the highest since 1950;
2023: 1,051 tons;
2024: 1,045 tons.
In 2025, total gold purchases were 863 tons, still nearly double the average from 2010 to 2021, despite being lower than the previous three peak years.
In Q1 2026, central banks net purchased 244 tons of gold, a 17% increase quarter-over-quarter, above the five-year quarterly average.
Moreover, these buyers have a very special trait— they are price-insensitive.
They buy at $3,000, $4,000, or even $5,000 per ounce.
This is not speculation; it’s sovereign-level asset reallocation, a strategic national deployment.
The People’s Bank of China currently holds 2,313 tons of gold, about 10% of its total reserves.
The Federal Reserve holds 8,133 tons, accounting for 75%.
What does this gap mean?
If China wants to increase its gold proportion to 20%, it needs to buy about 3,000 more tons.
At the current annual pace of gold purchases, this process would take many years.
That’s why some say the bottom of this gold bull market is structural— not driven by panic buying, and therefore not subject to panic selling.
Another number to remember:
$4,500 to $4,600 is the current dense zone for sovereign gold purchases.
Below this price, multiple central banks worldwide will actively step in to support the market.
This isn’t technical support; it’s a price floor hammered out by real gold and silver.
With this floor in place, do you still need to worry about the bull market collapsing?
Second Dimension: Real interest rates—The most important pricing framework for gold.
Anyone familiar with basic investment theory knows: gold is an inverse function of real interest rates.
Real interest rate = Nominal interest rate – Inflation expectations.
The higher the real interest rate, the greater the opportunity cost of holding gold, putting downward pressure on gold prices.
Conversely, when real interest rates are low or negative, gold becomes more attractive, and prices soar.
This formula isn’t complicated. But in 2026, it was disrupted by Middle East war.
First, the current situation: the Fed’s interest rates remain at 3.5% to 3.75%.
On April 29, the FOMC meeting saw a rare 8-4 split vote—some wanted to cut, others wanted to hike, with completely opposing directions.
The market is pricing in: no rate cuts are likely for the rest of this year.
Why?
Because the blockade of the Strait of Hormuz pushed oil prices above $100 per barrel, inflation re-emerged from the 2% control zone, with March CPI YoY rising to 3.3%.
Inflation isn’t falling; the Fed dares not cut rates.
Without rate cuts, real interest rates stay high.
High real interest rates mean high opportunity costs for gold. ETF funds are fleeing.
This explains why gold, from its historical high of $5,595, has fallen to around $4,700.
The war itself didn’t save gold. Instead, the surge in oil prices triggered inflation expectations, indirectly suppressing gold.
This understanding is counterintuitive but logically consistent and fully validated by actual price movements.
But now, things are changing.
In early May, the US issued a ceasefire memorandum to Iran via Pakistan.
Oil prices fell back from $110 to around $100.
Gold jumped from $4,569 to $4,711 in a single day.
Silver rose from $73 to $77.
This is a prelude to the ceasefire logic:
Ceasefire implemented, Hormuz reopens, oil prices fall, inflation cools, Fed rate cut expectations reignite, real interest rates decline, gold rises.
Goldman Sachs’ model provides a specific transmission coefficient:
For every 25 basis point rate cut by the Fed, there will be about 60 tons of additional net ETF inflow within six months.
This is a crucial number.
It means that once rate cut expectations become clear, institutional funds will quickly replenish previously liquidated positions.
Currently, gold ETF holdings are still below the peak of 3,929 tons in November 2020.
This indicates that Western institutional funds suppressed by war and inflation have not yet returned.
Once they do, gold prices will be rewritten to new highs.
Third Dimension: Silver industrial demand—Six consecutive years of deficit, the real reason behind the 141% surge in silver.
Many buy silver because it’s cheap.
This logic isn’t wrong, but it’s superficial.
Silver’s rise from $32 last year to $78 today, an increase of over 140%, can’t be sustained solely by being cheaper than gold.
Behind it is a structural supply deficit that has persisted for six years.
First, the scale: from 2021 to 2025, the cumulative supply gap in the silver market is about 800 million ounces.
What does that mean?
It’s equivalent to the total annual output of global mines.
2025 marks the fifth consecutive year of deficit, with a shortfall of about 40.3 million ounces.
In 2026, deficits continue.
Silver inventories at major exchanges in London, New York, and Shanghai have been decreasing since 2021.
This isn’t just accounting; it’s real physical silver disappearing from the market.
Why does the deficit persist?
The key is supply rigidity.
About 70% of global silver is produced as a byproduct of copper, lead, zinc, and other base metals.
In other words, even if silver prices rise from $30 to $80, miners can’t simply increase production significantly—because their main business is mining copper and lead, with silver as a byproduct.
New silver mines take 5 to 8 years from discovery to production.
On the demand side, industrial use of silver continues to grow:
Solar photovoltaic, EV battery management systems, 5G infrastructure, AI data center cooling and conductive components—these are all downstream uses of silver.
However, a new important variable must be understood: the photovoltaic substitution effect is happening.
By 2026, silver accounts for 17% to 29% of the cost per watt of solar modules.
Silver prices are too high for manufacturers to sustain.
Longi Green Energy announced plans to replace silver with copper, with mass production starting in Q2 2026.
Jinko and Aiko have already launched silver-free solar cells.
It’s estimated that in 2026, demand for silver in photovoltaics will decrease by about 7% to 19% YoY (estimates vary by institution), while global solar capacity continues to expand at 15% annually.
In other words, the solar sector is experiencing a structural decoupling: increasing installed capacity but decreasing silver usage.
But can this substitution succeed on a large scale?
Replacing silver with copper involves significant technical challenges.
High-temperature TOPCon cells are incompatible with copper, increasing assembly costs and raising reliability concerns.
This isn’t a switch that can be flipped; it’s an engineering problem that requires time to validate.
Meanwhile, new demand lines like AI data centers, EVs, and 5G are taking over from photovoltaics.
Silver use in data centers began rising significantly in 2025, driven by high power density needs for conductivity and heat dissipation.
Overall, the risks of photovoltaic substitution are real but require ongoing monitoring;
the supply deficit structure is unlikely to reverse in the short term;
and industrial demand provides a solid price support floor for silver.
Silver is both a precious metal and an industrial metal.
This dual attribute allows it to benefit from both monetary easing cycles and industrial recovery cycles, capturing two waves of market gains.
That’s why silver’s rally in this bull market has outperformed gold by a wide margin.
Fourth Dimension: Gold-Silver Ratio—A hidden signal within the bull market.
Many ignore this indicator, but it’s one of the most valuable internal thermometers of the precious metals market.
The gold-silver ratio equals the price of gold divided by the price of silver.
Currently, about 4,697 divided by 78, roughly 60:1.
Meaning: buying 1 ounce of gold can be exchanged for 60 ounces of silver.
Historical reference:
The long-term average in the 20th century was about 47:1;
the 2011 bull market peak was about 32:1, with silver leading the rally and the ratio at its most compressed;
during the March 2020 pandemic panic, it soared to about 125:1, with silver collapsing;
in April 2025, during the Iran war onset, it was about 107:1, with silver again collapsing amid war fears;
by October 2025, it fell back to 78:1, with institutional investors increasing silver holdings;
and as of May 2026, it’s around 60:1.
What does this trajectory indicate?
From 107 down to 60, silver has begun to catch up, and institutions are acting.
But 60:1 is still above the historical average of 47:1, leaving about 21% room for compression.
Let’s do a mathematical projection:
If gold remains at $4,700, and the ratio compresses to the historical average of 47,
then silver’s price would be about $100.
This isn’t a prediction, but a logical mathematical derivation based on the ratio.
In a precious metals bull market, a continuous compression of the gold-silver ratio from high levels is an internal validation signal of the bull’s continuation.
If the ratio rebounds, say to 75 or 80, it signals deteriorating market risk appetite, weakening industrial demand for silver, and the overall market shifting into a defensive mode.
This is a reverse warning sign.
Currently, at around 60:1, the ratio is somewhat bullish but not extreme.
There’s room for further compression, but it’s not an ideal time for extreme positioning.
For silver investors, remember this coordinate:
When the ratio exceeds 80, the odds favor silver;
around 60, there’s still room but it’s no longer deeply undervalued;
below 40, historically, it’s the final frenzy stage of silver bull markets, and it’s time to start cautious top-guarding.
Fifth Dimension: The A-shares precious metals sector—Logic is correct, leverage can be greater.
The first four dimensions discuss the global gold and silver markets.
A-shares investors are most concerned with: how does this logic translate into profit in A-shares?
First, why invest in gold stocks instead of holding physical gold:
The core logic of A-shares gold miners is that their costs are relatively rigid, and their profit elasticity is very high.
For example, a miner with a production cost of $2,500 per ounce, when gold is at $4,000, profits are $1,500;
when gold hits $5,000, profits are $2,500.
A 25% increase in gold price results in a 67% increase in profit.
This is leverage, and it explains why gold miners often outperform gold prices during bull markets.
The current bull market logic fully transmits to the A-shares precious metals sector:
Central banks buying gold lay the foundation, lifting the gold price center, and miner profits’ elasticity amplifies.
Historically, each gold bull market has seen A-shares gold stocks’ cumulative gains multiply the gold price increase many times over.
There’s no reason for this cycle to be an exception.
Note that after the big run from 2024 to 2025, valuations of major A-shares gold stocks are no longer cheap, and individual stocks vary greatly.
Stock picking requires examining each company’s non-net profit attributable to shareholders—when gold prices are high, most miners show positive non-net profits, but some have exchange losses or impairments, leading to uneven profit quality.
The bull market logic is sound; stock quality determines returns.
The biggest risk: if Iran negotiations break down.
The five dimensions above are mostly bullish, but a bull market doesn’t mean no risk.
All bullish logic is based on one assumption: that Middle East tensions do not worsen further.
If negotiations fail and conflict escalates—oil prices return to $120–$130; inflation accelerates again; the Fed not only refuses to cut but considers rate hikes; real interest rates continue rising; ETF funds keep fleeing; gold could fall below $4,300, testing $4,000.
This isn’t a low-probability event.
The probability of oil prices staying at $120–$150, with CPI accelerating again, is estimated at 20%—a one-in-five chance, which cannot be ignored.
Risks are real. But their existence doesn’t overturn the bull market logic.
It just makes the path more complicated.
Conclusion:
The underlying logic of the bull market is central bank gold purchases, continued de-dollarization, and the persistent annual industrial deficit of silver.
These three factors won’t change because of a war starting or ending.
What changes is the rhythm—war prolongs the high-interest-rate cycle, temporarily suppresses gold prices, and causes a correction.
But the structure remains intact.
Central banks are still buying.
The deficit persists.
ETF holdings haven’t fully recovered.
The gold-silver ratio hasn’t compressed back to the long-term average.
Every number points to the same conclusion:
The bull market is still ongoing.
This article is for reference only and does not constitute investment advice.