Over the second weekend in May, the US contributed to progress on peace deals in the Russia-Ukraine war, the Israeli-Palestinian conflict, the India-Pakistan conflict, and a possible resolution to the Houthi rebels-Red Sea shipping conflict.

In addition, the US and UK agreed on a trade deal framework, and the US and China decided to try a significant de-escalation of the trade disputes. The Trump administration also made progress on trade deals with Japan and South Korea. And finally, considerable progress was made at home toward a hard-fought tax deal in Congress.

A weekend quite possibly unrivaled since Phil, Stu, and Alan celebrated Doug's bachelor party in Las Vegas in the 2009 movie The Hangover.

So, where does the Trump administration’s laundry list of wins leave the investment landscape, specifically commodities?

What the gold-silver ratio suggests

The ratio between the prices of gold and silver does not reveal to investors which is the cheaper metal for a particular purchase need, as they are not substitutes for each other. 59% of silver demand originates from the industrial sector, significantly more than the 7% of gold demand from industry.¹

The price ratio between gold and silver, currently at 99, indicates a relative pessimism in the global economy.²

Previously, the ratio peaked on October 10, 2008, at 84, coinciding with the peak in economic pessimism. On the same day, the CME Group auctioned off the bankrupt Lehman Brothers' bonds for just 8% of their notional value.^2,3 The ratio also peaked at 124 on March 18, 2020, a day after then-President Trump requested a $1 trillion stimulus package to offset the economic fallout of the Coronavirus global economic shutdown, which began that week.² The recent peak at 104 occurred on April 21, 2025, when President Trump berated Federal Reserve Chairman Jerome Powell to lower rates, attempting to interfere in an otherwise independent policy-setting organization.

The ratio remains elevated at 99 – significantly above the average of 85 over the last four years, 80 during the first Trump term, and 70 during the 2012–2016 period. 

A peak in economic pessimism can be a good time for industrial commodities.

Commodities with significant industrial demand performed strongly in the two years following the peaks in the gold-silver ratio: industrial metals increased by 32% after 2008 and 123% after 2020, while silver surged by 318% after 2008 and 142% after 2020.⁴

Is gold’s glittering popularity overstated?

The May 2025 Bank of America fund manager survey asserted that gold is the most crowded trade currently.⁵

We, however, struggle to find hard data that supports the survey's sentiment. The data we have suggests the opposite. ETF investors bought 28 million ounces of gold from the end of 2019 to the peak of 2020 and then sold 29 million ounces of it over the following four years.⁶

Over the following year, investors purchased only eight million ounces, which represents just 28% of the amount acquired during the COVID period. It is also possible to invest in gold through futures contracts, and the total number of net long contracts is currently half of what it was during the pandemic.

Neither of these data sets indicates extreme positive sentiment among investors. We still see a potential for gold to end the year near $3,500 an ounce, supported by continued central bank purchases and by Chinese insurance companies, which have recently received approval to allocate to gold. It will take time to change the fiscal dynamics in the US, where interest on Federal Debt is now 18% of federal revenues and Federal spending is 24% of GDP.^7,8

If we have already reached the peak of economic pessimism that the gold-silver ratio shows, some industrial metals may fare better than gold. To truly derail the pessimism, trade deals will need to follow through with a formal trade agreement, progress in peace talks will need to turn to actual peace, and a tax bill will need to pass Congress that helps offset the baseline 10% tariffs on all US imports. Ultimately, we foresee a potential path for silver to reach $35 by the end of the year and possibly $40 within the next two years.

Oil's slippery slope

Organization of Petroleum Exporting Countries’ (OPEC) recent decision to increase production quotas more aggressively is aimed at eliminating the relative advantage that Kazakhstan, Iraq, and the UAE have gained by producing in excess of their allocated quotas.⁹ Kazakhstan's production exceeds its quota by 400,000 barrels per day, or 24%.¹⁰ If their overproduction and OPEC's quota increase result in a 20% price decline, Kazakhstan will experience a decrease in total oil revenue due to the price decline, despite the increased volume.¹¹

Saudi Arabia can afford to play this game of chicken, as its marginal cost of oil production is the lowest among all major producers. Saudi Arabia's bigger concern is its relationship with the US, which provides access to quality military arms, an important consideration in a dangerous neighborhood. That fact was only emphasized last week as the US president was greeted with great enthusiasm in Saudi Arabia.

US oil production is price-sensitive, as are many OPEC members, including Kazakhstan, Iraq, and the UAE, which have been producing more than the target. Several events could help boost oil prices from here, including seasonal demand increases and potentially lower supply from the US, Kazakhstan, Iraq, and the UAE.

Oil demand remains resilient, even in Europe, where demand rose 4% over the last year, surprising many given its relatively flat consumption growth in recent years as a flag bearer in the renewable energy revolution.

The energy transition is progressing at varying speeds across different countries, as policies and their effectiveness differ. The number one consumer motivator, saving money, is most acutely applicable in China, which also boasts some of the most impressive updated electric vehicles (EVs).

Given the disparity, it isn't surprising that there are different EV sales results between regions. That is not to make light of progress in the US. The Energy Information Administration notes that actual electricity consumption by EV owners in the US doubled between 2022 and 2024.¹² Still, it will take a considerable number of additional EVs to affect total US oil demand.

¹ Metals focus, gold focus 2024; World silver survey 2024; 5-year average demand 2019–2023.
² Bloomberg data: gold price/silver price 12/31/2004–5/16/2025.
³ CME Group is a financial services company that operates multiple derivative exchange marketplaces.
⁴ Bloomberg data: Bloomberg Industrial Metals Index return 10/10/2008–04/29/2011; 3/18/2020–03/08/2022; Silver price gain 10/10/2008–04/28/2011; 3/18/2020–02/01/2021.
⁵ "Has gold peaked?" Financial Times, May 2025. https://www.ft.com/content/95777607-4a1d-4ec9-8d8b-8b94ad6f977d.
⁶ Bloomberg data: ETF holdings of gold in ounces 12/31/2019–10/27/2020, 10/27/2020–6/19/2024.
⁷ "Moody's Ratings downgrades United States ratings to Aa1 from Aaa; changes outlook to stable." Rating Action. Moody's Ratings, May 2025. https://ratings.moodys.com/ratings-news/443154.
⁸ "Policy Basics: Where Do Our Federal Tax Dollars Go?" Center on Budget and Policy Priorities, January 2025. https://www.cbpp.org/research/federal-budget/where-do-our-federal-tax-dollars-go.
⁹ The Organization of Petroleum Exporting Countries (OPEC) is an organization of oil-producing nations designed to coordinate oil production policy and ensure stable prices. ¹⁰ "Why OPEC Plus Is Increasing Oil Supplies Despite Falling Prices." The New York Times, May 2025. https://www.nytimes.com/2025/05/03/business/opec-plus-oil-production-trump.html.
¹¹ Aberdeen Investments calculation.
¹² "U.S. electricity consumption by light-duty vehicles likely surpassed rail in 2023." Today in Energy. U.S. Energy Information Administration, May 2024. https://www.eia.gov/todayinenergy/detail.php?id=62083.

Important information

The abrdn Gold ETF Trust is not investment company registered under the Investment Company Act of 1940 or a commodity pool for purposes of the Commodity Exchange Act. Shares of the Trust are not subject to the same regulatory requirements as mutual funds. These investments are not suitable for all investors. Trusts focusing on a single commodity generally experience greater volatility. Commodities generally are volatile and are not suitable for all investors. This material must be accompanied or preceded by the prospectus. Carefully consider the Trust’s investment objectives, risk factors, and fees and expenses before investing. To view the prospectus, please click here – abrdn Gold ETF Trust.
Trading in commodities entails a substantial risk of loss and is not suitable for all investors.
Diversification does not eliminate the risk of experiencing investment losses.
Prospectuses for abrdn Physical Gold Shares ETF, abrdn Physical Palladium Shares ETF, abrdn Physical Platinum Shares ETF, abrdn Physical Precious Metals Basket Shares ETF and abrdn Physical Silver Shares ETF.
Projections are offered as opinion and are not reflective of potential performance.
Projections are not guaranteed, and actual events or results may differ materially.
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There are risks associated with investing including possible loss of principal.
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ETF002340 11/30/25
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