The Sovereign Reset: Gold, Silver, and the Re-Anchoring of Global Capital
“That which has been is what will be,
and that which has been done is what will be done”
— King Solomon, Kohelet (Ecclesiastes) 1:9
Executive Summary
Six months after our gold memorandum and several months after our broader silver & precious-metals outlook, the global financial landscape is currently traversing a period of profound structural transformation, defined by the exhaustion of the post-Bretton Woods monetary architecture and the emergence of a multipolar system where hard assets serve as the primary anchors of trust. Market behavior has validated the core of our work while moving policy and geopolitics from background risk to foreground driver. Over this interval, Goldman Sachs raised its end-2026 gold price target first to 4,900 dollars per ounce and then to 5,400 dollars per ounce, attributing the upgrade to persistent exchange-traded fund inflows in the West, resilient official-sector demand, and the broadening of private “macro-policy hedge” flows. As of the January 2026 revision, their framework assumes roughly 60 tonnes per month of central-bank purchases and a continuation of private hedging that does not reverse with routine rate moves. For the institutional endowment and foundation investment officer, the previous era of unquestioned reliance on United States Treasury securities as the ultimate risk-free asset has given way to a regime of systemic vulnerability. The foundational premise of modern portfolio construction, which assumes a negative correlation between equities and bonds to dampen volatility, has faced its most significant challenge in decades as long-term bonds have failed to protect against equity downside during periods of institutional credibility shocks.
We now update our prior work to incorporate a currency thesis facet that has become integral to the precious-metals narrative. China and a subset of BRICS states are behaving as if they intend to support a gold-linked settlement instrument with a digital architecture and a fractional linkage ratio. The facts are persistent official purchases through volatile periods, private accumulation through both listed and tokenized channels, and progress in cross-border digital settlement capabilities. On that scaffold sits a plausible U.S. counter, which would re-establish a loose linkage between gold and dollar obligations through a gold-referenced Treasury bill and a revaluation of official gold stocks to market. Neither initiative is policy; both frame scenarios in which equilibrium bullion prices would need to be substantially higher to clear collateral demand. In such a scenario, an initial repricing toward 6,000 to 8,000 dollars per ounce of gold could precede any formal linkage, with a further step-up possible if an instrument is announced.
Silver’s role in this reset is twofold. It is the high-beta monetary metal that amplifies gold’s moves, and it is also at the center of an industrial transformation that has pushed demand toward greater price inelasticity. The solar industry’s shift from PERC to TOPCon and HJT technologies has raised silver loadings, while attempts to switch to copper face reliability constraints. The commercialization of all-solid-state batteries that use a silver-carbon layer would, if widely adopted, multiply per-vehicle silver usage and reframe the market’s demand profile. These forces collided with thin London liquidity in late 2025, producing a squeeze that has extended into early 2026, a two-month surge of more than fifty percent, and a recent dramatic pullback that reinforces the need for disciplined implementation. We remain constructive on the multi-year path while acknowledging that near-term conditions are frothy and correction risk is significantly elevated.
Our house view remains clear. We recommend that investors define a strategic gold allocation as portfolio insurance against policy and credibility shocks and reach it through paced averaging. We remain constructive on silver’s medium-term trajectory, driven by structural deficits, industrial demand and gold-led monetary repricing, while urging respect for near-term volatility. We favor the quality tilt of large-capitalization silver miners for core equity exposure and size junior miners as an optional overlay to be trimmed into strength and rebuilt into weakness. Across implementation, we prefer structures that preserve liquidity and avoid forced selling, and we anchor governance in rules-based rebalancing that harvests volatility rather than attempts to time momentum.
The analysis that follows integrates the firm's long-standing research on strategic metals with a developing thesis regarding sovereign monetary maneuvering, industrial scarcity, and the ongoing repricing of the precious metals complex.
The Macro Paradigm Shift and the Fragility of Fiat
The modern institutional portfolio, typically exemplified by the 60/40 allocation, is currently navigating an environment where conventional assets frequently correlate toward one, thereby eliminating the diversification benefits essential for capital preservation. This breakdown is not a cyclical anomaly but a symptom of a new paradigm of portfolio risk, where the primary threat is no longer simple market volatility but an erosion of sovereign institutional and fiscal credibility. Historically, periods characterized by simultaneous negative real returns in both stocks and bonds have originated from inflation shocks, often categorized into negative commodity supply shocks and shocks to institutional credibility. Gold has a proven track record of delivering positive real returns during these rare but critical 12-month windows when the primary engines of a portfolio fail simultaneously, such as in the 1970s, the 2001 recession, and the 2008 Global Financial Crisis.
In this context, gold's value is not derived from industrial utility but from its unique role as neutral collateral and a non-sovereign store of value in a world of increasing geopolitical and fiscal uncertainty. As cited in our prior published work, unlike other commodities, gold is not consumed but accumulated; the 220,000 tonnes currently existing above ground are augmented by a mere 1 percent annually through mine production. This inelasticity makes gold a currency of conviction where price direction is determined not by traditional supply and demand equilibrium but by ownership flows among central banks, institutional investors, and opportunistic buyers.
The BRICS Monetary Offensive and the Unit Architecture
A central component of the new monetary thesis involves a deliberate and coordinated strategy by the BRICS nations (Brazil, Russia, India, China, and South Africa, along with expanded members) to outmaneuver the United States in the global currency reserve market. This coalition, which now represents a significant portion of global GDP (PPP) and controls approximately 50 percent of global gold production, is executing a plan to stockpile gold as the foundation for a superior, asset-linked trade currency. The People's Bank of China and the Central Bank of Russia have led this surge, with collective reserves among the bloc now exceeding 6,000 tonnes.
On October 31, 2025, the alliance launched a pilot program for a gold-backed settlement instrument known as the Unit. Designed as a neutral settlement tool, the Unit aims to reduce trade dependence on the US dollar and Western financial infrastructure like SWIFT. Unlike traditional fiat, the Unit is anchored in a 40/60 hybrid structure that combines tangible assets with regional currency diversification.
Technical Mechanics of the Unit
The reserve basket for the Unit is composed of:
Physical Gold (40 percent): Backed by actual gold weight, currently pegged to 1 gram of gold (approximately 0.9823g per Unit), stored in diversified, secure vaults across member nations.
Currency Basket (60 percent): An equal-weighted selection (12 percent each) of the Brazilian Real, Russian Ruble, Indian Rupee, Chinese Yuan, and South African Rand.
This architecture provides an "apolitical currency" that addresses concerns regarding the weaponization of the dollar. By utilizing blockchain technology, every Unit possesses documentary proof of backing, enabling direct peer-to-peer asset transfers without the need for traditional correspondent banking intermediaries. The weight-based valuation of the gold component ensures that as global gold prices rise, the Unit's intrinsic value increases proportionally, creating a structural incentive for emerging markets to adopt the Unit over the depreciating dollar.
The American Counter-Strategy and Senate Bill 954
The United States administration is reportedly aware of the threat posed by a gold-backed BRICS settlement rail and is crafting a response centered on the re-anchoring of the dollar to hard assets. This strategy involves the potential introduction of gold-backed US Treasuries or "gold-convertible" bonds to restore international credibility. A critical legislative catalyst in this movement is S. 954, also known as the BITCOIN Act of 2025, which, while focused on digital assets, has reignited the debate over the revaluation of federal gold reserves.
Currently, the US Treasury values its 261.5 million ounces of gold at a statutory rate of 42.22 dollars per ounce, a legacy of the 1973 pricing regime. This values the national reserve at only 11 billion dollars, whereas the market value as of early 2026 exceeds 1.2 trillion dollars. An official revaluation to market prices would realize an accounting profit of approximately 1 trillion dollars for the Treasury General Account (TGA), providing a massive non-debt-funded liquidity injection.
Our thesis holds that the US government may allow or encourage gold prices to rise naturally toward the 6,000 to 8,000 dollar per ounce range, at which point it will revalue its holdings to market (or a significant premium above market) and announce a gold-backed T-bill. Such an action, whether initiated by the BRICS bloc or the United States, we expect, would trigger a parabolic move in gold prices, potentially reaching 15,000 dollars per ounce or higher as the global financial system undergoes a total reset. Silver, for its part, would benefit from the re-valuation as well, even if we assume only a further compression of the Gold to Silver Ratio. If any or multiple of these catalysts come to fruition and Gold trades to $10k or 15k dollars per ounce, on a 20:1 GSR ratio that implies a 500 to 750 dollar per ounce price of silver. While this is a tail scenario perspective, it is also no longer entirely out of the real of possibilities.
Federal Reserve Transition and the Resumption of Liquidity
The political dimension of this monetary reset is inextricably linked to the leadership transition at the Federal Reserve. With Jerome Powell's term as Chair expiring in May 2026, the White House has signaled a preference for a successor who will prioritize domestic market stimulation and lower interest rates.13 President Trump has explicitly called for an appointee who shares his view that lower rates are essential to support the housing market and general economic prosperity, stating that anyone who disagrees will not be appointed.
Predictive markets as of January 2026 indicate that Rick Rieder, BlackRock's Chief Investment Officer of Global Fixed Income, has emerged as the frontrunner, followed by former Governor Kevin Warsh. Rieder is perceived as a practitioner who values dialogue with markets and has publicly suggested that the Fed could implement up to 100 basis points of rate cuts in 2026.
A nomination of Rieder or a similarly dovish candidate would likely signal a regime shift from "data-dependent tightening" to a "liquidity-focused approach". This transition would occur against a backdrop of a robust but overheating economy, where fiscal stimulus and strong personal consumption are already driving GDP growth forecasts to the 2.4 to 2.8 percent range. The resulting environment, defined by high growth, sticky inflation, and expanding liquidity, is expected to devalue the dollar further and cause gold and silver to increase in price while also serving as the primary "off-ramps" for investors seeking to protect against depreciating fiat.
Silver's Industrial Singularity: Technological Scarcity
While gold represents the monetary anchor of this thesis, silver is currently navigating an industrial paradigm shift that renders its demand increasingly price-inelastic. For a decade, the industrial narrative was dominated by "thrifting," the reduction of silver content in applications to minimize costs. However, in 2025 and 2026, the industry has reached the limits of this trend, particularly in the sectors of electrification and AI-driven infrastructure.1
The Solid-State Battery Breakthrough
The most disruptive driver of silver demand is the commercialization of All-Solid-State Batteries (ASSB), specifically the architecture pioneered by Samsung SDI. This "super-gap" technology utilizes a Silver-Carbon (Ag-C) nanocomposite layer to regulate lithium deposition and prevent the formation of dendrites, which are needle-like structures that cause short circuits in conventional lithium-ion batteries.
The loading of silver in this architecture represents a quantum leap in material intensity:
Traditional Li-Ion EV: 25 to 50 grams of silver per vehicle.
Samsung Solid-State EV: Approximately 1,000 grams (1 kilogram) of silver per vehicle.
This 20-fold to 40-fold increase transforms the automotive sector from a moderate consumer into potentially the largest single end-market for silver. Technical estimates suggest that if only 20 percent of global car production transitioned to this technology, incremental annual demand would reach 16,000 metric tons. Given that total global mine production hovers around 25,000 to 26,000 metric tons, the supply chain is fundamentally ill-equipped to handle this shock without a complete restructuring of the market and a permanent upward repricing.
The Photovoltaic Thrifting Wall
The solar sector, currently the dominant industrial consumer of silver, is undergoing a transition from PERC technology to higher-efficiency TOPCon and HJT cells. TOPCon technology, which now accounts for nearly 80 percent of global manufacturing, requires approximately 13 milligrams of silver per watt, a 30 to 40 percent increase over PERC loadings. HJT cells are even more intensive, requiring up to 22 milligrams per watt.
Efforts to substitute silver with copper plating have encountered a "reliability wall." Copper is chemically active and susceptible to corrosion from environmental moisture and contaminants. Laboratory tests have shown that unprotected copper contacts suffer an 80 percent relative reduction in efficiency after only six hours of damp-heat testing, whereas silver remains stable. Furthermore, copper does not bond to the silicon wafer as naturally as silver paste, leading to delamination risks over the 25 to 30 year life of a module. Consequently, bankable Tier-1 manufacturers remain structurally tethered to silver for the foreseeable future.
Physical Market Dislocation and the Silver Squeeze
The collision of these industrial drivers with a rigid supply chain has resulted in acute physical dislocations. In October 2025, the silver market experienced a "London Squeeze" where benchmark inventories in London vaults were drained as metal was pre-positioned in the United States to hedge against potential 50 percent tariffs on critical minerals. This resulted in an immediate shortage that required the airlifting of bars and sent silver lease rates to spikes of 20 to 30 percent, signaling that the mobile "free float" of the market had dried up.
While industrial demand continues to outpace supply, with the world entering its sixth consecutive year of silver deficits, the near-term price action has become increasingly "frothy". Silver prices surged over 50 percent in late 2025 and early 2026, reaching record highs of approximately 117 dollars per ounce. This rapid ascent represents a significant risk of a near-term correction as speculative positions are unwound and metal pre-positioned in the US potentially returns to London vaults.
However, the long-term outlook remains governed by the potential for a massive short squeeze. A sustained increase in demand from conviction buyers, who explain 70 percent of price movements in precious metals, could act as another independent catalyst that pushes silver toward targets of 300 to 500 dollars per ounce. This is further supported by the compression of the gold-to-silver ratio as mentioned previously. After peaking at 105.85 in 2025, the ratio has compressed to 45:1 in early 2026. Historical patterns and industrial scarcity suggest the ratio may reach all-time lows below 15:1 as silver's role as both a monetary asset and a critical technology metal converges.
Silver Equity and Mining Analysis:
For institutional investors, the operating and financial gearing of mining companies transforms incremental moves in metal prices into nonlinear equity value creation. The transition from "price discovery" to "availability discovery" is increasingly transmitted through the capital structures of refiners, royalty companies, and primary producers.
Silver Miners
For institutions that prefer equity expressions of the metals thesis, the choice between large-capitalization and junior miners is a trade-off between balance-sheet quality and torque. The Global X Silver Miners fund tilts toward established producers and streamers. A significant weight in a capital-light streamer provides cash-flow stability and reduces operating leverage to the metal, which can cause underperformance in blow-off phases but better relative resilience when margins compress and liquidity tightens. The junior-focused fund concentrates risk in developers and smaller producers. Its upside torque is significant when silver rises, but drawdowns are sharper when the metal pulls back or when capital-market windows narrow. The beta is not purely to the metal; it embeds equity market risk, access to financing, and asset-level geology, permitting, and cost control.
In this phase of the cycle, cost curves matter. Lowest-quartile all-in sustaining costs, strong balance sheets, and unencumbered assets create positive convexity in drawdowns because margins compress less and companies are not forced into defensive capital raises. Jurisdictional diversification is equally important. Export licensing, trade policy, and critical-minerals frameworks can change quickly and amplify squeezes when inventories are thin. A quality-biased large-cap basket is therefore suitable as the core equity expression, while a junior overlay can be sized to the risk budget and actively managed through trims into strength and rebuilds into weakness.
Strategic Implementation for Endowment & Foundation Portfolios
The current macro-geopolitical environment suggests that the time for incremental adjustments to gold and silver allocations has passed. The post-Bretton Woods III era has begun, and portfolio construction principles must evolve to account for the reality of non-sovereign collateral.
The stock-bond hedge is less reliable at the moment when policy credibility is under the most scrutiny. Official-sector gold buying has migrated from episodic to structural. Private hedging is broader and less price-sensitive than in prior cycles. At the same time, a plausible set of geopolitical scenarios would increase the share of bullion that must sit as immobile collateral, which is functionally equivalent to a reduction in circulating supply. For perpetual pools that prize resilience, the correct response is to define a strategic gold allocation as part of the real-asset or monetary-hedge sleeve and to treat it as insurance, not as a tactical trade. We recommend setting target weights and reaching them through paced averaging rather than lump-sum execution, then codifying rebalancing bands that harvest volatility by trimming into strength and adding into weakness.
Silver belongs in the same sleeve but plays a different role. Despite the risk of a near-term corrective pullback from its 117 dollar peak, it remains the most technically scarce industrial metal of the energy transition. The Samsung SDI battery catalyst alone creates a demand floor that the mining industry cannot currently meet, while the compression of the gold-to-silver ratio toward historical norms provides an additional layer of capital appreciation. It is a levered expression of the monetary repricing thesis with the added tailwind of industrial scarcity. The recent two-month vertical move argues for tactical caution, not strategic retreat. We would refresh or build positions on drawdowns that retrace a meaningful portion of the latest leg, while avoiding the temptation to treat silver as a substitute for gold in the policy-hedge function. For the equity expression, we favor a quality-biased large-cap basket as the core, recognizing that the presence of streamers moderates operating leverage, and we size a junior overlay within a risk-budgeted sleeve to express torque. Jurisdictional diversification and balance-sheet strength are the screening anchors, and trims and rebuilds should be rules-based rather than discretionary.
Governance is the multiplier. The best outcomes accrue to committees that align education, implementation capacity, and discipline. It is not sufficient to adopt a view; the policy must name instruments, custody arrangements, and reporting conventions, and it must specify the rebalancing rules that distinguish a strategic sleeve from a series of tactical trades. Success for the precious-metals allocation should be evaluated during episodes when equity-bond correlations turn positive and traditional engines fail, not by whether gold lagged equities during risk-on quarters. That evaluation standard maintains the integrity of the insurance concept and reduces the temptation to time momentum.
The Conviction View
The firm reiterates its conviction view that gold and silver should be treated as core strategic allocations rather than tactical tilts. Gold, in particular, should be viewed as institutional credibility insurance for long-term portfolios. The potential for a 15,000 dollar gold price, driven by either a BRICS-led alternative currency adoption or a US Treasury revaluation, represents a tail risk of such magnitude that being under-allocated is a breach of fiduciary prudence.
Silver, despite the risk of a near-term corrective pullback from its 117-dollar peak, remains the most technically scarce industrial metal of the energy transition. The Samsung SDI battery catalyst alone creates a demand floor that the mining industry cannot currently meet, while the compression of the gold-to-silver ratio provides an additional layer of capital appreciation potential.