Gold, Silver Likely To See Huge Gains As ‘Debasement Trade’ Opens: Report

August 22, 2026

New Delhi: Gold and silver are likely to witness a substantial rally as fiscal dominance and shifting real yields reshape the macroeconomic outlook, a report said on Saturday.

The report by Vallum Capital said the recent correction in precious metals merely re-priced ownership rather than weakening the investment case for accumulating gold and silver. It identified a 2 per cent real-yield threshold and a reversing Dollar Index as key structural indicators pointing towards a durable shift in the precious metals market.

Fed Policy May Support Precious Metals

“The US Fed is structurally boxed in: hiking raises the cost of servicing $9.2 trillion in rollovers, and holding leaves real rates negative at the front end with CPI above target,” the firm said.

According to the report, either policy path could contribute to currency debasement, a scenario that has historically supported gold.

The report also highlighted strong central-bank demand. Central banks purchased 288.9 tonnes of gold in the second quarter of 2026, a 411 per cent quarter-on-quarter increase. At the same time, Western ETF outflows stood at 44.8 tonnes, while jewellery demand declined 17 per cent.

Silver Outpaces Gold

The report said silver has historically outperformed gold by a significant margin during sustained gold rallies.

In the current 2021-2026 cycle, silver has gained 263 per cent, compared with a 164 per cent rise in gold, representing a 99-percentage-point outperformance.

Despite this, the gold-silver ratio remains around 69, above its long-term median range of 45-50, suggesting further potential for silver, according to the report.

Gold Recovers After Correction

Following Kevin Warsh’s nomination as Federal Reserve Chairman, gold fell by around 25-30 per cent, wiping out nearly Rs 23,000-28,000 crore from that year’s new inflows in mark-to-market terms, the report said.

Gold later recovered from around $4,196 to nearly $4,359, reinforcing the role of ETFs and gold funds as rapidly growing retail avenues for investing in the precious metal despite periods of volatility.