Second Headline: The Bank for International Settlements (BIS) says gold’s 60% year-to-date surge and a concurrent equity rally have produced co‑movement not seen in half a century, posing systemic reserve and liquidity risks for investors and central banks.
- Gold YTD: +60% (2025)
- Since 2022: Gold +150%
- Co‑movement: Gold and S&P 500 show “explosive behaviour” — BIS final report, Dec 8, 2025
- Market signals: Gold ETF prices trading at a persistent premium to NAV
What the BIS found
In its year‑end analysis the BIS — the central bank to central banks — called attention to an uncommon alignment: bullion and risk assets rising in tandem. Hyun Song Shin, the BIS’s Economic Adviser and head of its Monetary and Economic Department, noted gold has behaved more like a speculative instrument this year rather than its usual role as a flight‑to‑safety store. That behavioural shift, the report says, along with sustained central‑bank purchases and retail flows, has produced price dynamics that look more “explosive” than in recent decades.
Market signals and mechanics
Three tactile market signals underpin the BIS concern. First, gold’s vitreous luster on price charts — up 60% YTD and roughly 150% since 2022 — reflects both reserve‑manager accumulation and speculative demand. Second, gold ETFs trading at a consistent premium to NAV imply strong buying pressure and impediments to arbitrage. Third, equity markets, led by AI and tech gains, display stretched valuations that have drawn comparisons to earlier bubble episodes.
Context: 2025 markets and structural trends
Two 2025 trends frame the BIS warning. The first is the reallocation of official reserves: central banks have been substantial buyers of physical gold as they diversify away from dollar‑centric holdings. The second is the concentration of market gains in AI‑enabled firms whose rapid capital expenditure on data centres has produced real profits but also heightened valuation sensitivity to growth expectations. Both trends amplify cross‑market fragility when they move together.
Why US retailers and investors should take note
For US jewellery retailers and investors the BIS alert is not an abstract paper exercise — it is a reminder that price formation for gold is now influenced by both industrial and macro reserve flows, not just jewellery demand. That means: inventory carrying costs may swing with broader risk appetite; sourcing decisions will need to account for potential quick reversals in bullion prices; and marketing claims about gold as an inflation hedge face a more complex reality when bullion rallies alongside equities.
Operationally, retailers should reassess hedging and working‑capital approaches: spot exposure has substantial heft in balance sheets when ETF and retail premiums push prices, yet liquidity could evaporate rapidly if both gold and equities retrace. For investors and fund managers, the BIS’s analysis elevates the question of where capital shelters if both traditional safe‑havens and equities falter simultaneously.
Implications for reserve managers and policy
Central banks and reserve managers now confront a coordination problem: heavy official demand has set a firm tone for prices, but it also concentrates downside risk within the same asset classes. The BIS warning underscores the importance of liquidity management, transparent reporting of reserve allocations, and contingency planning for scenarios in which both bullion and risk assets fall together — a stress test many institutions have rarely had to run.
In short, the BIS sees a rare co‑movement that elevates tail‑risk. For market participants who trade or hold gold — from bullion dealers and ETF managers to high‑street jewellers and sovereign treasuries — the practical takeaway is to treat current gains as conditional on sustained flows and to plan for abrupt shifts in liquidity and sentiment.
Image Referance: https://wmbdradio.com/2025/12/08/central-bank-body-bis-raises-concerns-of-gold-and-stocks-double-bubble/