Gold and silver prices continue to hit record highs, but the market itself may have already 'malfunctioned'.

Recently, gold broke through $5500 per ounce, and silver once rose to $117–119 per ounce, with a cumulative increase of over 145% by 2025, and still up about 65% this year. Multiple analysts bluntly stated that such an increase cannot be explained by traditional supply and demand or fundamentals.

The core issues are threefold:

First, the market depth is too shallow. Precious metals (especially silver and platinum) are far smaller in scale than the stock and bond markets, where a small amount of new funding can trigger extreme increases, causing prices to quickly detach from physical demand.

Second, the driving logic has shifted from 'commodities' to 'currency'. The US dollar index has fallen by about 11% in the past 12 months, and gold resembles a 'quasi-currency priced in weak dollars', where price increases reflect more the depreciation of the denominator rather than a surge in real demand.

Third, the effects of liquidity and leverage amplification. After stock market valuations rose, some leveraged funds and marginal liquidity flowed into precious metals as a 'harbor' for capital, further amplifying volatility.

Multiple institutional figures believe that current precious metal prices are mainly driven by speculative liquidity rather than fundamental improvements, representing a typical 'melt-up'. Once funds begin to take profits, the speed of retraction may also be severe.

There are also relatively moderate views that suggest the price discovery function has not completely failed, but the weight of speculative capital in pricing has clearly increased, and volatility risks are systematically underestimated.

In summary:

This is more like a liquidity-driven structural distortion market, rather than a sustainable fundamental bull market. #PAXG