#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, does the bull market still exist?
This round of decline experienced two waves, with completely different reasons.
The first wave at the end of January: not due to deteriorating fundamentals, but a technical wipeout.
Profit-taking at high levels, combined with market suddenly fearing that new Federal Reserve Chair Warsh is hawkish, leveraged funds getting wiped out, the snowball rolling bigger, gold prices plummeted 8% in a single day.
This has nothing to do with bull market logic.
The second wave starting at the end of February: this was the real 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 increased, ETF funds fled massively, and the decline accelerated sharply.
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 it from five dimensions.
Each sentence has data, every number can be verified.
First dimension: Long-term erosion of 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 round of 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 debt holdings and increase gold reserves.
Data speaks:
From 2010 to 2021, global central banks bought an average of about 473 tons of gold annually.
After 2022, three consecutive years exceeded 1,000 tons, 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 the first quarter of 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 attribute—they are price-insensitive buyers.
They buy at $3,000, $4,000, or even $5,000 per ounce.
This is not speculation; it’s sovereign-level asset restructuring, a strategic national allocation.
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 purchase rate, 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, so there’s no 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—gold’s most important pricing framework.
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.
The lower or negative the real interest rate, the more attractive gold becomes, 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: it’s unlikely the Fed will cut rates 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 hasn’t fallen, so the Fed dares not cut rates.
No rate cuts mean real interest rates stay high.
High real interest rates mean high opportunity costs for holding gold.
ETF funds are fleeing.
That’s 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 cognition 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 inflows within six months.
This is a crucial number.
It means once rate cut expectations become clear, institutional funds will quickly replenish previously sold 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, it will be time for gold prices to reach 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 too 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.
The deficit continues into 2026.
Silver inventories at major exchanges in London, New York, and Shanghai have been decreasing since 2021.
This isn’t just accounting figures; 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 copper and lead mining, 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 applications 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 YoY by about 7% to 19% (various estimates).
Meanwhile, global solar capacity continues to expand at 15% annually.
This means 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; assembly costs increase; reliability is debated.
It’s not a switch; it’s an engineering problem that needs time to validate.
Meanwhile, new demand lines like AI data centers, EVs, and 5G are following the solar sector.
Silver use in data centers began to rise significantly in 2025, driven by high power density requirements for conductivity and heat dissipation.
Overall:
The photovoltaic substitution is a real risk but requires ongoing monitoring;
the overall supply deficit structure is unlikely to reverse in the short term;
industrial demand provides a solid support floor for silver prices.
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, in this bull market, silver’s gains far outpace gold.
Fourth dimension: Gold-Silver ratio—an internal signal in the bull market.
Many ignore this indicator, but it’s the most valuable internal thermometer 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 exchange for 60 ounces of silver.
Historical reference:
The long-term average in the 20th century was about 47:1;
the top of the 2011 bull market 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 early 2025, during the Iran war, it was about 107:1, with silver again collapsing amid war fears;
by October 2025, it fell back to 78:1, with institutions increasing allocations to silver;
as of May 2026, it’s about 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.
A mathematical projection:
If gold remains at $4,700, and the ratio compresses to the historical average of 47,
then silver would be around $100.
This isn’t a prediction, just a ratio-based mathematical reasoning.
In a precious metals bull market, a continued compression of the gold-silver ratio from high levels is an internal validation signal of the bull market’s continuation.
Once the ratio rebounds—say, breaks above 75 or 80—it signals deteriorating market risk appetite, weakening industrial demand for silver, and a shift toward a defensive posture for precious metals.
This is a reverse warning signal.
Currently, at about 60:1, the ratio is somewhat bullish but not aggressive.
There’s room for further compression, but it’s not an extreme over- or undervaluation.
For silver investors, remember this coordinate:
Above 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 a top should be approached with caution.
Fifth dimension: A-shares precious metals sector—logic is correct, leverage is greater.
The first four dimensions discuss the global gold and silver markets.
A-share investors are most concerned about: how does this logic translate into profit in A-shares?
First, why invest in gold stocks rather than holding physical gold:
The core logic of A-share 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 $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 leverage effect explains why gold miners often outperform gold prices during bull markets.
Currently, the bull market logic fully transmits to the A-share precious metals sector:
central banks buying gold underpin the market, lifting the gold price center, and miner profits’ elasticity amplifies.
Historically, each gold bull market has seen A-share gold stocks’ cumulative gains several times the gold price increase itself.
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-share gold stocks are no longer cheap, and individual stocks vary greatly.
Stock selection requires examining each company’s non-net profit attributable to shareholders—when gold prices are high, most miners have 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 Iran negotiations fail, conflicts escalate—oil prices return to $120–$130; inflation re-accelerates; the Fed not only refrains from cutting but considers hikes; real interest rates continue rising; ETF funds keep fleeing; gold could fall below $4,300, testing $4,000.
This is not a low-probability event.
The probability of oil prices staying at $120–$150, with CPI accelerating again, is estimated at 20%—one in five, and cannot be ignored.
Risks are real. But the existence of risk doesn’t overturn the bull market logic.
It just makes the path more winding.
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 positions 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 here.
This article is for reference only and does not constitute investment advice.