For Nicky Shields, gold’s current rally, which has seen prices “almost explode in recent months”, is a sign of “very low confidence in the system”.
“There is less trust in the government, less trust in the functioning of society,” the head of precious metals investment strategy at MKS PAMP Group told DW.
He further said, the emerging question now is whether the relatively small gold fund market can absorb the current influx of capital.
Located in Geneva, MKS PAMP GROUP One of the most influential players in the global precious metals industry. It processes gold, silver and platinum into bars, coins and jewelery and products for industrial companies, and offers investment products to both institutional and private investors.
Investors’ favorite ‘paper gold’
According to the World Gold CouncilGlobal assets under management in so-called gold exchange-traded funds (ETFs) rose to $503 billion in October from $472 billion (€407 billion) in September – an increase of 6%.
Inflows in October alone were $8.2 billion, far above the previous annual average of $7.1 billion.
In the third quarter of 2025 – July to September – physically backed gold ETFs recorded record inflows of $26 billion.
North American investors led the way in gold ETF investments with $16.1 billion, 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 purchase and store physical gold bars. Many of these ETFs are actually backed by physical gold held in vaults and assigned to fund assets, which is why they are often referred to as “paper gold.”
However, unlike stock funds, gold ETFs have only one component – gold. This means that they do not diversify investment risk across multiple assets. For this reason, gold ETFs are not approved in Germany, although they are allowed in many other European countries.
What has been approved instead are gold ETCs (exchange-traded commodities), which are securities for exchange-traded raw materials.
‘Gold will continue to rise’
Martin Siegert, market analyst at German regional lender Landesbank Baden-Wurttemberg (LBBW), expects gold’s rise to continue.
“Several of the key arguments in favor of gold remain valid,” he wrote at the bank’s forum in late November. “Investment in gold ETCs is likely to remain intact.”
He expects interest rates in the US to continue to fall, raising more questions about the future independence of the US Federal Reserve and the stability of the US dollar and US trade policy, which will likely continue to surprise markets through 2026.
And against this backdrop, the LBBW analyst raised his forecast for gold, saying the commodity price “could rise to $4,600.”
‘Anti-fragile assets’
Gold’s previous all-time high was reached in October this year at more than $4,350 an ounce. By November this year, the price has stabilized at around $4,115 an ounce.
In September, US investment bank Morgan Stanley advised investors to change their portfolio structure and make gold a “core component”. The bank said that instead of allocating the traditional 60% to stocks and 40% to bonds – about 20% of investments should go into gold products.
Morgan Stanley chief investment officer Mike Wilson told news agency Reuters in September that gold is now a “fragile asset to own” rather than a US Treasuries.
“High quality equities and gold are the best hedges, as they will provide stability and security in uncertain times,” Wilson told the Reuters Global Markets Forum.
British Business Daily financial Times Recently this hype has been described as being fueled by “gold-plated fomo”, with investors so afraid of missing out on returns and so worried about inflation that they are adding the precious metal to their portfolios, leading to “the biggest gold price rally since the 1970s”.
Crypto enters gold business
But it is not just capital inflows into gold ETFs that are driving gold’s rally. According to Reuters, American company Tether is also playing an important role in this.
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 stable value, often pegged to external assets such as fiat currencies such as the US dollar.
On its website, Tether is now promoting investing in its Tether Gold coin, 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 equivalent to some national central banks like South Korea, Hungary or Greece.
MKS expert Nicky Shields believes that amid an “overheated” gold market, the commodity – long seen as a safe haven – has itself become the target of speculation.
“During the last two months, it has been very much in bubble territory, but not only gold and silver, but also US stocks, AI [artificial intelligence stocks]”The market is very hot,” he told DW,
For Shields, there are several reasons for “overheating,” including the fact that the US Fed is cutting interest rates even though the US economy is “not in recession.”
“There are cracks in the American economy, there are cracks in the labor market, housing is not that good, but we are cutting interest rates, creating more availability, more liquidity in a system that probably doesn’t need it,” he said.
Describing the past ten years as “a decade of very loose financial conditions”, Shields said it had created “a lot of bubble assets”, such as AI stocks, US stocks in general, as well as gold and silver.
This article was originally written in German.