Bank for International Settlements issues a market warning: gold has rallied roughly 60% this year while equity indices remain elevated, creating the first joint ‘‘explosive’’ co‑movement in over 50 years and prompting questions about fragility for reserve managers and retail investors alike.
- Price action: Gold ≈ +60% year‑to‑date; >+150% since 2022
- Market pair: S&P 500 and gold showing simultaneous ‘‘explosive behaviour’’
- Source: Bank for International Settlements final 2025 report (Dec 8, 2025)
- Investor signal: Gold ETFs trading at persistent NAV premiums
Context — Why 2025 looks different
The BIS, the central bank to central banks, emphasised that this cycle contrasts with past episodes because gold is behaving less like a classic safe‑haven and more like a speculative asset. The rally has been fuelled by a mix of strategic central‑bank buying, retail flows into ETFs and a broader risk‑on backdrop driven by outsized returns from AI and big‑tech firms. Hyun Song Shin noted the novelty: both metal and equities exhibiting synchronous, rapid appreciation — a configuration not seen in half a century.
Two structural 2025 trends sharpen the relevance for the jewellery and investment markets. First, persistent ETF premiums and central bank purchases have created a price floor of sorts, imparting substantial heft to gold’s valuation. Second, shifts within the broader luxury sector — where lab‑grown diamond price compression is freeing discretionary spend for alternative stores of value — may be redirecting some consumer capital toward bullion and high‑karat jewellery. In tactile terms, demand is migrating from optical rarity to assets with palpable heft and enduring vitreous luster.
The mechanics behind the warning
The BIS flagged signs typically associated with bubbles: simultaneous rapid price rises, retail herding, and impediments to arbitrage (illustrated by ETFs trading at a premium to NAV). It also highlighted macro drivers that could reverse the trend: a sharper economic slowdown, disappointment in AI profit trajectories, or abrupt shifts in dollar hedging behaviour by non‑U.S. investors. Any of these would test liquidity and valuations across both markets.
What this means for US retailers and investors
For jewellers and retail buyers the near‑term picture is practical. Inventory purchased earlier in 2025 now carries a marked‑to‑market uplift; pieces with heavy gold content possess a clear revaluation advantage because of the metal’s substantial heft and visible lustre. Yet the BIS warning argues for disciplined risk management:
- Pricing strategy: Reassess retail and trade‑in pricing bands to reflect volatile spot moves; position high‑karat pieces as both luxury and store‑of‑value.
- Inventory risk: Stagger restocking and consider hedged procurement or shorter vendor payment terms to limit downside exposure.
- Client advisory: Educate affluent clients on the dual nature of gold today — both decorative and speculative — and offer buyback or consignment options to retain value.
- Capital allocation: Investors should monitor ETF premiums, central bank demand data and S&P 500 breadth; diversification beyond metals and mega‑cap tech reduces correlation risk if the co‑movement reverses.
Takeaway
The BIS alert is not a prediction of imminent collapse but a diagnostic: two major stores of value are moving together in an uncommon, explosive pattern. For market professionals and jewellers in the US, the prudent response is measured — maintain margin discipline, tighten inventory cadence, and watch ETF price behaviour and reserve‑manager flows. In markets where perception and heft both matter, the difference between confidence and fragility can be tactile.
Reporting: Marc Jones; analysis for Jewellers News.