Why do central banks buy gold, and why does the market talk about silver? | Hong Ik-hee, former professor at Sejong University

Summary

Hong Ik-hee, a former Sejong University professor, explains that gold and silver are normalizing after decades of price suppression. He argues that central banks and BRICS countries are buying gold as a reserve asset, while silver faces a physical supply deficit and rising industrial demand. He recommends long-term exposure to both metals, a 7:3 gold-silver allocation in an uptrend, and a monthly dollar-cost-averaged crypto index portfolio.

• Central banks and BRICS nations have increased gold purchases since the 2008 crisis, accelerating after 2022.
• Gold reserves have overtaken Treasury reserves in global central bank holdings.
• US futures-market interventions and JP Morgan silver accumulation previously suppressed precious-metal prices.
• Silver has run multi-year supply deficits, with industrial demand from solar, EVs, batteries, semiconductors, and AI data centers.
• COMEX physical-delivery requests and high lease rates signal tight physical silver availability.
• The gold/silver ratio is around 58; he expects normalization toward below 40.
• He suggests a 7:3 gold-silver allocation in an uptrend and a monthly DCA crypto index portfolio of BTC, ETH, and XRP.