Gold remains one of the defining market stories in recent years. Central banks have been accumulating at a record pace, investor flows have returned, and prices have repeatedly tested new highs.
Since October 2023, the SPDR Gold Shares (NYSE:GLD) has rallied 175%, far outpacing the SPDR S&P 500 ETF Trust (NYSE:SPY)‘s 63% return.
But a new report from Goldman Sachs, led by commodities analyst Lina Thomas, suggests the gold rally may be signaling something far larger for the broader commodity market than a traditional safe-haven trade.
Is The World Re-Stockpiling Commodities?
Thomas said the key similarity between gold and other commodities lies in the rise of "insurance"-type demand.
Sustained central bank buying has supported the gold rally as reserve managers reassessed geopolitical neutrality after roughly $300 billion of Russia's reserves were frozen in 2022.
That shift triggered a structural change. Central banks accumulated bullion as a hedge against financial and geopolitical risk.
But Goldman Sachs highlighted that this behavior now extends beyond gold.
Across energy, food, and industrial metals, governments have begun prioritizing security of supply over efficiency.
Strategic stockpiling has expanded. Tariffs and export controls have reappeared. Domestic production incentives have grown.
The logic is simple: resilience now outweighs cost minimization.
“Where domestic production or substitution cannot provide sufficient security of supply, governments may turn to stockpiling,” Thomas said.
China expanded coal output while rapidly building renewable energy capacity. India rebuilt rice buffers to cover roughly 103 days of domestic consumption.
The U.S. launched "Project Vault," a $12 billion strategic mineral stockpile including copper, rare earths, and lithium.
Commodities are increasingly treated not just as economic inputs but also as strategic assets.
Regional Fragmentation Risks Rise In Commodity Markets
For decades, commodity markets operated within globally integrated systems.
A disruption in one region could be offset by a surplus in another. Inventories were effectively pooled.
That system is beginning to fracture.
As countries build domestic buffers and regional supply chains, markets become more segmented. Segmentation reduces the size of the pool that absorbs shocks. And when the pool shrinks, price reactions intensify.
Copper offers an early illustration. Even amid estimates of global oversupply, stockpiling behavior tightened availability in key pricing hubs, firming prices.
Silver has displayed even more extreme dynamics.
“Thinner London inventories have created conditions for squeezes, with rallies accelerating as investor flows absorb the remaining metal in London vaults and reversing sharply when tightness eases,” Thomas said.
According to Goldman Sachs, while 1,000 tonnes of weekly net silver demand typically lifts prices by about 2%, that sensitivity surged to roughly 7% amid tight inventories.
“We think the silver market–where price action has been extreme–is currently operating on that steeper segment too,” Thomas added.
Volatility, in other words, may no longer be cyclical in commodity markets. It may be structural.
What It Could Mean for Investors
The old market saying that "high prices cure high prices" — because they encourage new supply — doesn't neatly apply to gold. Unlike most commodities, gold operates under a structurally rigid supply profile.
Nearly all the gold ever mined still exists, sitting above ground in vaults, reserves, and jewelry. Annual mine output is small relative to that stock and barely responds to price swings.
When demand accelerates, producers cannot meaningfully ramp up supply. That's why insurance-driven flows — particularly from central banks — can create sustained upward pressure rather than temporary spikes.
Goldman Sachs expects that dynamic to continue, forecasting gold could reach $5,400 by year-end, with risks skewed to the upside.
What's more interesting, though, is that this insurance-style demand is no longer confined to gold.
Similar flows are extending into copper and other industrial metals, as investors increasingly treat hard assets as portfolio hedges in a fragmented and geopolitically tense environment.
Even in markets where supply is typically more responsive to price, the story is becoming more complex.
Policies designed to secure domestic supply can unintentionally encourage production concentration. Efforts to reduce national vulnerability may, paradoxically, amplify global instability.
In such an environment, small disruptions can trigger disproportionately large price moves.
Gold's rally, then, may be less about inflation alone and more about a broader shift in the commodity playbook — one where security, sovereignty, and resilience increasingly take precedence over efficiency.
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