What’s Really Driving the Precious Metals Boom?

Gold, Silver, and the Big Breakout

Gold and silver prices are heating up, and a key stock index for gold mining companies is making headlines. Investors and governments around the world are paying close attention—and for good reason.

Big shifts are happening in the metals market, and the effects could be felt for a long time.

The HUI Breakout: Why It Matters

The HUI Gold Mining Index, which tracks major gold mining companies, recently shot past a key level of 375. This breakout had been building for a while, and once it happened, the index jumped to 414—its highest level in more than a decade. That’s a major move.

Why is this important? Many investment managers have been underweight in metals like gold and silver. That means they haven’t been putting much money into them. But with gold performing well while other markets are falling, they’re now racing to catch up.

Gold’s Big Moves

Gold has had an incredible year. It’s already up about 20% in 2025 and recently reached prices over $3,000 an ounce. In just the past two weeks, there have been three separate days where the price jumped by nearly $100, a rare event.

What’s driving this? Demand from Asia, especially China, has played a big role. Many mornings, the strongest price action in gold is coming out of Asian markets before U.S. markets even open.

There’s also stress building in the gold futures markets, like COMEX. Normally, when prices go up, so does “open interest,” or the number of active contracts. But lately, prices have been rising while open interest is falling. That suggests a “bear squeeze,” where traders who bet against gold are being forced to buy in as prices rise.

China’s Gold Rush

One of the most interesting stories behind gold’s rise is what’s happening in China. Chinese investors are trying to buy so much gold that some exchange-traded funds (ETFs) can’t get enough bullion to meet demand. Some are even warning new customers that buying gold might be risky—not because prices will fall, but because there just isn’t enough physical gold available, creating a supply squeeze.

Why are Chinese people buying so much gold? Their options for saving and investing are limited. Real estate in China has lost its appeal, and the stock market isn’t seen as trustworthy by many everyday investors. At the same time, interest rates are falling, so bank deposits don’t earn much.

Interestingly, unlike the U.S. most banks in China offer gold accounts, and with fewer attractive alternatives, people are pouring their savings into gold. This strong demand is adding even more pressure to global gold supplies.

Central Banks and the Leasing Crunch

Gold leasing—where central banks lend out their gold to create liquidity—is also slowing down. This has been one of the main sources of gold for traders, especially in London. But now, those banks are not renewing their leases.

That’s a big deal. With less gold available to lease, and more people trying to buy it, prices may rise even more. Large banks seem to understand this. Many are now predicting gold could climb to $3,500 or even $4,000 an ounce or more. And it’s possible they’re already buying gold to prepare for that.

What About Silver?

While gold has been grabbing most of the headlines, silver has lagged behind. It’s still about $3 off its high, even in the futures market. One reason is that silver is often seen more as an industrial metal than a monetary one. When markets worry about a slowdown in the economy, like after President Trump’s “Liberation Day” speech on April 2, prices of industrial metals can take a hit.

But silver may be about to bounce back. There’s been a sharp drop in open interest, even as prices are starting to rise again. That’s often a sign of another possible supply squeeze, where those betting against silver could be forced to buy in. It’s similar to what’s been happening in the gold market.

What’s Next?

It’s looking like precious metals may keep climbing. There’s little physical supply available, and demand—especially from Asia—keeps growing. Smaller bullion banks that don’t have enough gold on hand could face big problems. Meanwhile, larger banks may already be positioned for gold to keep rising.

Silver could offer even more potential upside, especially if the market sees another short squeeze. And the HUI, which includes some of the world’s biggest mining companies, may offer the best gains of all—at least in the short term. May could be a very exciting month for metals investors if current trends hold.

Always ask a licensed investment advisor if precious metals are right for you.

Source: https://www.offthegridnews.com/financial/whats-really-driving-the-precious-metals-boom/