Econified

The price of gold skyrocketed in 2025. The performance of gold has outpaced the stock market.  Here are some numbers showing the extremity of the movement in the gold market:

• As of Nov. 11, the price of gold is $4,123.30
• One year increase of 57.09% from price of $2,624.75
• YTD increase of 55.91% from price of $2644.60
• 6-month increase of 27.95% from price of $3222.60

In fact, the silver market has skyrocketed more than gold has in the last year. The price of an ounce of silver was $31.135 a year ago and now it is valued at $51.240 which shows a staggering increase of 63.63%!

This is the biggest one-year increase in the price of gold and silver since 1979.

Let’s talk about how gold is priced

If you do not want to get into the nitty gritty of how gold is priced, I certainly do not blame you. Skip this section if you just want to read about why the prices have moved so much and what this will mean for future gold prices.

Gold prices depend on the market. Gold is typically priced in troy ounces which is slightly heavier than a traditional ounce. It is impossible to get a coin or bar to be 100% gold, so 999.9 or 24K is considered to be “pure gold”. This gold is at least 99.9% gold. Nobody controls all the gold in an economy, and there is not much difference between one person’s 24K gold or another person’s 24K gold. This means that in gold transactions, sellers are taking market price for the gold when they sell it. Some shapes/sizes of gold do hold a slight premium such as gold from the US Mint or lower weight denominations. However, for practical purposes 24K gold is simply worth the price of its weight.

That brings us to determining the price of the weight for gold. Just like with stocks, there are asks and there are bids for gold. A bid price is the price that a person would be willing to pay to purchase gold. The ask price is the price that sellers want for the gold they are selling. The market spread for gold is the difference between the market buyers’ price (the bid) and the market sellers’ price (the ask). This means that if you immediately bought and sold gold, assuming no fees except the cost of the cost of the gold, you would lose money equal to the spread between the ask and bid prices of gold. Generally, an investor wants the spread to be as little as possible all things equal.

Now, let’s talk about the spot price for gold. Most markets, investors, and stakeholders of the gold industry think of the spot price to be the market price. Large gold retailers list gold spot prices on their websites, here are what they are as of 9:30PM (CST) on November 11th, 2025:

• JM Bullion – $4135.39
• APMEX – $4138.60
• SD Bullion – $4133.73

The differences are small, but this is the number that is being projected as the market price for gold on the front page of three of the largest retailers of gold in the U.S.

Because there are many buyers of gold in the market with relatively few sellers, these sellers have considerable market power. Major retailers get a little bit of leniency in determining the spot price for gold because real time price updates are hard to measure.

However, the London Bullion Market Association (LMBA) is an independent organization that provides benchmark prices for gold twice a day. The prices are based on extensive research in the market to determine the price that is as close to accurate as possible. The numbers I used at the beginning of this post are based on LMBA’s report on the afternoon prices on November 11th. LMBA is globally recognized as an accurate benchmark for the gold market. Major buyers and sellers utilize LMBA’s pricing. This means that it tracks the current price of gold very closely. This is why the spot prices shown by retailers are less than 1% different than the LMBA reported price.

This is how gold is priced, now let’s look at what is going on in the market for gold.

What has caused drastic shifts in gold market?

Just like with anything, the price of gold is determined by the market. With these rapidly increasing prices, either supply decreased, demand increased, or a combination of both.

If the skyrocketing gold prices are because of the supply side of the market, we would expect to see a negative shift in global supply. If the asset is relatively rarer, it becomes more expensive. Utilizing the World Gold Council publicly available data and research, there has been a 2% growth in gold mining, 6% growth in recycled gold, and an overall production increase of 3% from Q3 2024 to Q3 2025. This indicates that the reason for the vast increase in prices is not resulting from the supply side of the market.

The increase in prices must be resulting from the demand side of the market. Gold is used in several different industries such as jewelry and technology. Additionally, gold has historically been used as a store of value or a method of trade which makes it a valuable commodity for investors to hold.

Looking at demand data from the World Gold Council, here are some key one year shifts in gold demand:

• Jewelry fabrication is down 23%
• Jewelry consumption is down 19%
• Technology is down 2%
• Other Industrial Uses is down 5%
• Over-the-counter gold is down 33%
• Investment Demand is up 47%
• ETFs (and similar) is up 134%
• Total gold demand is up 3%

These numbers show a very clear picture. Uses for gold other than for investments are down this year. This makes sense as the price has risen so much for gold. Industries are having to find ways to substitute gold for their items. End products, such as jewelry, that have gold as an input are seeing massive price increases which they may not be able to pass on to the consumer. This would hurt margins and make producing gold jewelry or other items less attractive as a business opportunity. This is likely why we are seeing the decline for gold jewelry consumption.

Interestingly, over-the-counter gold demand is also down by a significant margin as well. If gold is being utilized less for inputs and people are not purchasing physical gold, how has the demand and price of gold risen so much?

The demand has undoubtably increased, and this increase is largely from utilizing gold as an investment tool. However, as indicated in the over-the-counter decrease in gold demand, people are not buying physical gold as an investment. Increasingly, people are purchasing gold from large ETFs that hold the physical asset for the investor. These ETFs are run by large investment firms that own physical gold assets that then sell ownership of these assets on stock exchanges. Two of the largest ETFs are shown below:

• SPDR Gold Shares (Ticker: GLD) owns 33,641,367.05oz of gold (as of 12 November 2025). These assets are worth almost $140B.
• Blackrock’s iShares Gold Trust (Ticker: IAU) owns 15,506,601.79oz of gold (as of 11 November 2025). These assets are worth almost $64B.

When you purchase part of the ownership of these ETFs in the stock market, you now have ownership stake in ETF’s assets. This essentially means purchasing a gold ETF means you own that much gold.

 The price of gold has increased so much because the demand for gold as an investment piece has increased. There are many reasons why investors would choose gold over traditional stocks, bonds, or other investments. Gold has been used as a store of value and a bartering commodity for thousands of years. The purchasing power of gold has stayed relatively stable historically while inflation decreases the purchasing power of money every year. This makes gold a traditional long-term option for investors to make modest returns to stay with or ahead of inflation.

The accessibility of ETFs allows investors to buy small or large quantities of gold with ease. Additionally, gold needs to be kept safe because of its value, and it can be cumbersome to hold large quantities. These issues are mitigated when the ownership stake of gold is intangible for the investor. When purchasing part ownership of the ETF, the investor does not physically receive any gold. Additionally, these large ETFs increase the liquidity of gold, meaning individuals can buy and sell faster than ever.

Market conditions can also be attributed to the rising price of gold. There are uncertainties in the market with high inflation risks looming due to President Trump’s tariffs and the lowering of federal interest rates by the U.S. Federal Reserve. The nature of gold being inflation resistant makes it an even more attractive asset to purchase. High returns have also signaled to potential investors that this market may be very lucrative, which is also a factor in why investors would want to put more money into gold. Be warned that this behavior tends to form bubbles as is discussed in the future of gold markets segment.

The emergence of ETFs that facilitate ownership without requiring physical possession and uncertainty in the market are significant factors contributing to the substantial increase in gold prices.

What does the future of gold markets look like?

Nobody can predict what the future of any market will be for certain, but this level of growth cannot be sustained. There will be a slowdown in the rapidly increasing price of gold. It remains to be seen if gold prices will fall back to 2024 prices, or if the rate of increase will just steadily slow down.

Is the price we are currently seeing in the gold market a bubble? Probably a little yes and no. A bubble appears when the price of a commodity starts to far exceed the intrinsic of that commodity. The question becomes, do the factors mentioned above account for all the increases in gold prices or is some of the growth due to a bubble forming?

Some of the increases in the price of gold are justified. With more political instability and an increase in economic uncertainty, gold has just become a more attractive asset. However, there are many investors buying gold just because the price is rising so fast. These investors are hoping that the price will continue to rise at the same rate. This level of growth is unsustainable. Assets increasing this fast are almost certainly at risk of forming a bubble because investors do not want to feel as if they are missing out on the growth.

What is likely to occur is that gold prices will continue to rise for at a rate equal to what we are seeing now. As the price increases, more risk-adverse investors will stop investing. More risky investors will keep buying, hoping the price will continue to rise. The higher the price of gold rises, the riskier it is to buy gold. There will be a point where almost all investors will stop buying gold because it is too risky. Once that happens, the price will start to fall. If the prices fall too much, investors will start to sell. People, by nature, are very loss adverse. Once some investors start selling off, others will follow suit to avoid being stuck “holding the bag.” This will only make the prices drop further. This rapid de-escalation in price is referred to as a market correction or the bubble bursting. The market for gold is certainly not going away anytime soon, and it continues to be a viable investment and store of value. These increases could be a bubble or just resulting from rapidly increasing demand due to economic uncertainty. Only time will tell.