For Nicky Shiels, the current gold rally, which saw prices virtually "explode in recent months," is an indication of "very little trust in the system."
"There is less trust in government, less trust in the functioning of society," the head of Precious Metals Investment Strategy at MKS PAMP Group told DW.
Now, the emerging question, she added, was whether the relatively small gold fund market could absorb the current flood of capital.
Based in Geneva, MKS PAMP Group is one of the most influential players in the global precious metals industry. It processes gold, silver, and platinum into bars, coins, and products for jewelry and industrial companies, and offers investment products for both institutional and private investors.
'Paper gold' the darling of investors
According to the World Gold Council, global assets under management in so-called gold exchange-traded funds (ETFs) rose from $472 billion (€407 billion) in September to $503 billion in October — a 6% increase.
Inflows for October alone amounted to $8.2 billion, well above the previous annual average of $7.1 billion.
In the third quarter of 2025 — from July to September — physically backed gold ETFs recorded a record inflow of $26 billion.
North American investors led with $16.1 billion in gold ETF investments, while European funds also saw strong buying, reaching the region's second-highest quarterly figure with $8.2 billion.
Gold ETFs track the price of gold without requiring investors to buy and store physical gold bars themselves. Many of these ETFs are actually backed by physical gold held in vaults and assigned to fund assets, which is why they are often called "paper gold."
Unlike stock funds, however, gold ETFs consist of only one component — gold. This means they do not diversify investment risk across multiple assets. For this reason, gold ETFs are not approved in Germany, though they are allowed in many other European countries.
What is approved instead are gold ETCs (exchange-traded commodities), which are securities for exchange-traded raw materials.
'Gold rally set to continue'
Market analyst Martin Siegert of German regional lender Landesbank Baden-Württemberg (LBBW) expects the gold rally to continue.
"Many of the key pro-gold arguments remain valid," he wrote on the bank's platform in late November. "Inflows into gold ETCs are likely to remain intact."
He expects interest rates in the US to continue falling, raising more questions about the future independence of the US Federal Reserve and the stability of the US dollar, and a US trade policy that will probably continue to surprise markets well into 2026.
And against this backdrop, the LBBW analyst raised his forecast for gold, saying the commodity's price could "rise to $4,600."
'Anti-fragile asset'
The previous all-time high for gold was reached in October this year at over $4,350 per ounce. The price has since stabilized at around $4,115 per ounce as of November this year.
In September, US investment bank Morgan Stanley even advised investors to change their portfolio structure and make gold a "core component." Instead of allocating the traditional 60% to stocks and 40% to bonds — some 20% of investments should go into gold products, the bank said.
Morgan Stanley Chief Investment Officer Mike Wilson told news agency Reuters in September that gold is now the "anti-fragile asset to own," rather than US Treasuries.
"High-quality equities and gold are the best hedges," Wilson told the Reuters Global Markets Forum, because they would offer stability and protection in uncertain times.
The British business daily Financial Times recently described the hype as being stoked by "gold-plated fomo," noting that investors fearful of missing out on returns and worried about inflation add the precious metal to their portfolios, fueling what's become "the biggest gold price rally since the 1970s."
Crypto enters the gold business
But it's not just the capital inflows into gold ETFs that are driving the gold rally. According to Reuters, US company Tether is also playing a major role.
Now the world's largest digital asset company, Tether is based in El Salvador and issues the Tether stablecoin (USDT) — a type of cryptocurrency designed to maintain a stable value, often by being pegged to an external asset like a fiat currency such as the US dollar.
On its website, Tether is now promoting investment in its Tether Gold coin, which is a stablecoin that is pegged to the value of physical gold.
The crypto firm is the largest individual holder of gold bars outside major central banks and holds reserves comparable to those of some national central banks, such as those of South Korea, Hungary, or Greece.
MKS expert Nicky Shiels thinks that amid the "overheated" gold market, the commodity — long seen as a safe haven — has itself become a target for speculation.
"Through the last two months, it has been in a very bubble territory, but not just gold and silver, also US stocks, AI [artificial intelligence stocks]. The market is sort of overheated," she told DW.
For Shiels, the "overheating" has several causes, including the fact that the US Fed has been cutting interest rates even though the US economy is "not in recession."
"There are cracks in the US economy, cracks in the labor market, housing isn't so great, but we are cutting interest rates, creating more availability, more liquidity in a system that doesn't perhaps need it," she said.
Describing the last ten years as a "decade of very loose financial conditions," Shiels said this has created "a lot of bubble assets," such as AI stocks, US stocks in general, as well as in gold and silver.
