Daijiworld Media Network - New Delhi
New Delhi, Aug 22: Gold and silver are likely to witness a substantial rally as fiscal dominance and changing real yields reshape the macroeconomic outlook, according to a report by Vallum Capital released on Saturday.
The report said the recent correction in precious metals had merely repriced ownership rather than invalidating the investment case for accumulating gold and silver.
It identified a 2 per cent real-yield threshold and a reversing Dollar Index as structural markers, suggesting a durable reversal rather than a temporary chart pattern.
"The US Fed is structurally boxed in: hiking raises the cost of servicing $9.2 trillion in rollovers, and holding leaves real rates negative at the front end with CPI above target," the firm said.
According to the report, either policy path could result in currency debasement, which it described as the "setup gold has priced correctly through every prior cycle."
The report also highlighted strong central-bank demand for gold. Central banks bought 288.9 tonnes of gold in the second quarter of 2026, representing a 411 per cent quarter-on-quarter surge.
This came even as Western exchange-traded fund (ETF) outflows reached 44.8 tonnes and jewellery demand declined 17 per cent, it said.
The report noted that silver has historically outperformed gold by a significant margin during cycles in which gold records a sustained advance.
In the current 2021-2026 cycle, silver has gained 263 per cent compared with gold's 164 per cent, representing a 99 percentage-point outperformance. However, the gold-silver ratio remains at around 69, compared with its long-term median range of 45 to 50, suggesting further scope for silver to outperform, according to the report.
The report also discussed the impact of Kevin Warch's nomination as Federal Reserve chairman, saying gold subsequently fell by 25-30 per cent. This wiped out nearly Rs 23,000-28,000 crore from that year's new inflows on a mark-to-market basis.
Gold later recovered from around $4,196 to approximately $4,359, the report said, reaffirming exchange-traded funds and gold funds as the fastest-growing retail access routes into the precious metal despite periods of volatility.