Boom, Bust, and Bullion: The Rollercoaster Ride of Gold

1. Introduction

Money is the vital blood that circulates life through the economy, while gold is the immutable skeleton providing its underlying structure and stability.

When everything in the financial market was deteriorating, the corroding, shining yellow metal formed its own trail. For example, in 2008 global financial crisis and covid 2019, where the financial market was dripping like ice cream on a hot summer day, gold was like the cone on which investor wealth was being protected.

“Gold serves more as a hedge against risk than as a ticket to sudden fortune.”

Gold provides support during the time of crisis rather than a sudden capital gain. Gold investment provides stability and diversification to your portfolio rather than dividend. It is nonproductive investment.

Gold has shown an unanticipated bull run as of October 2025, hitting all-time highs in the Indian and international markets. Gold is currently trading at ₹122,753 per 10 grams in India, breaking previous price records. Gold has reached an all-time high of $4,016.40 per ounce on the global market, reflecting the strong desire for safety in the face of geopolitical and financial unpredictability. ​

In addition to reflecting high demand and limited supply, this spike in gold prices also shows how governments, big institutions, and individual investors are thinking. The rally shows that everyone is looking for safety: governments are raising reserves to strengthen national financial security, institutional players are reallocating portfolios toward stable assets, and retail investors are looking for protection from inflation and uncertainty. In summary, the historic gold movement reflects anxiety around the world and the growing desire for stability at all economic levels.

2. Reasons for hike in gold price

The BRICS countries' significant gold holdings, which have increased demand worldwide and sped up the ongoing shift away from the US dollar, are a major driver of this change.

Why are BRICS nations hoarding gold in their gold reserve?

As part of a multi-pronged strategy to lessen reliance on the US dollar, improve financial stability, and acquire geopolitical clout in a world financial environment that is changing quickly, the BRICS countries are rapidly expanding their gold reserves.

• De-Dollarization Efforts: One the biggest reason for the creation of the BRICS nation was to Economic sovereignty. Countries are trying to reduce dependency on the USA by adopting various methods. One of the major methods is buying gold in enormous amount (gold price and rate of dollar have negative correlation). This whole act is to reduce the US dominance in global markets and financial markets. India’s foreign exchange market has experienced a noticeable decline in US Treasury bond holdings over the past year, while gold reserves have increased during the same period. India's gold reserves in its official foreign exchange holdings over the past ten years have historically been far smaller than US Treasury Bonds (held as part of the Foreign Currency Assets, or FCA).

But according to recent patterns, the Reserve Bank of India (RBI) has been diversifying by drastically raising its gold reserves and decreasing its holdings of US Treasury securities.

This pattern has shown and provided that RBI is aiming for Strategic autonomy.

However, this accumulation may backfire cause USA hold around 8000 ton of gold and if they decided to dump gold (fire sale) at once that will mess up the price of gold in the global market (USA higher ups have mentioned in the interview that they have not been planning to do anything like this but during geopolitical pressure a nation might act otherwise).They are promoting investment in digital currency over gold, USA have created a reserve section of digital currency, which is referred as the Strategic Bitcoin Reserve and the United States Digital Asset Stockpile. In the United States, there is increasing conjecture and policy discussion about converting a portion of its gold reserves into digital assets, particularly Bitcoin and possibly other digital currencies. As part of new digital asset initiatives backed by President Trump, the White House discussed a plan in early 2025 that would entail selling Federal Reserve gold certificates to finance massive Bitcoin purchases for a "Strategic Bitcoin Reserve."

• Geopolitical pressure: Nations are collecting gold to protect themself against any kind of upcoming war or maybe financial crisis. Gold not only provides diversification but also increases the trust of the general public in the domestic currency, helping in increasing the value of the currency. Trust is very important during times of crisis. A higher level of gold reserves is a significant factor contributing to the growth of the U.S. economy, as it enhances investor and lender confidence in the country’s financial stability.

Rumblings of a fresh global crisis

Many economies' index is screaming crisis, that is one of the reasons why investors are panic selling and investing in safest assets aka gold or hoarding cash. Due to rising demand for gold brought on by central banks, investors looking for safety, and worldwide unpredictability, gold prices have skyrocketed in 2025, hitting all-time highs.

Some indicator and index that is hinting nothing but crisis these are

• Shiller PE ratio: This ratio examines the market condition if the market is overvalued or undervalued by adjusting inflation and business cycle fluctuations. This ratio foretells the 1929 crisis and dot com crisis of 2000. If the Shiller pe ratio is higher than 33 then a major hit is expected and currently it is at 39, which is higher than 21% of the expected margin.

• Yield curve inversion: When short-term bond interest rates (yields) surpass those of long-term bonds, a yield curve inversion takes place, resulting in a downward-sloping curve. This is unusual because long-term bonds typically have higher yields to offset their longer time horizon and increased risk. Investor expectations that economic growth will slow down or that a recession may be imminent are reflected in an inverted yield curve. From October 2022 to December 2024, the US Treasury yield curve remained inverted for an unprecedented duration and depth—historically a strong signal of future recession. This led economists worldwide to warn that a major downturn could likely hit within 12 to 18 months of the inversion. However, the USA 2025 growth might be lower than the 2024 but it didn't downturn overall. Growth is very slow but still positive but worries of recession are still hovering over the economy.

some unconventional indices such as the "Stripper Index" and the "Men's Underwear Index" screeching crisis. The decline in the S&P 500 does not fully reflect the underlying market weakness, as a small group of companies primarily in the AI sector (magnificent seven AI stock) holds around 47% of the index, that are performing against the current business cycle and in economy world this is known as Concentration of value in a stock market index. However, this outperformance is largely driven by a bubble in the AI industry. So, the probability of another crisis is more like an inevitability rather than a high chance, that is why people are rushing to buy gold and that is rising the price day by day.

3. Conclusion

The whole world is running after gold currently because they think it's safe, but the hike is not normal. Economists believe that gold is currently in a bubble and a bust will cause 30% to 50% fall. Even the owner of JP Morgan James Dimon has mentioned the fact that gold is in a bubble and will cause a downfall after it goes bust. Many investors today prefer gold ETFs and sovereign gold bonds over holding physical gold, resulting in a trend where much of the investment in gold exists in electronic form rather than as actual bullion. This shift has led to significant volumes of ‘paper gold’ that can become overbought and potentially undrowned, meaning there’s more traded exposure than physical backing in some cases. The merit or worth of these investment products is mostly build on trust in the issuer, be it a government, bank, or fund management company. If the entity or custodian holding the gold behind these instruments fails or defaults, the investment could become compromised, even if this scenario is unlikely for government-issued bonds or regulated ETFs.​History shows that even widely trusted entities can fail unexpectedly, as seen in the Bernie Madoff case, where many investors believed their funds were secure in legitimate financial products but were instead victims of a massive Ponzi scheme. While physical gold provides direct ownership and is immune to counterparty risk, digital gold, ETFs, and bonds involve a degree of reliance on third parties and the financial system. Investors should be aware of these risks and diversify accordingly

Currently if one is looking for a safe asset investment they might also go for silver. Purchasing gold is no joke these days, so small investor might look for an alternative which is silver.

Nevertheless, gold is a nonproductive asset. According to Warren Buffett, the price of gold is more a reflection of market sentiment and investor anxiety than of its intrinsic value or potential for production. According to Buffett, gold is primarily purchased out of fear of economic unrest or currency collapse, and its value rises as the "ranks of the fearful increase."

Invest in gold just for the purpose of protecting your wealth, gold doesn’t help in wealth creation. Be savvy