The precious metals market has entered a new era as gold achieved a significant milestone in early October 2025, surpassing the psychologically important $4,000 per ounce threshold for the first time in history. This remarkable achievement represents far more than just another numerical benchmark—it signals a fundamental shift in how investors, central banks, and consumers view gold as both a store of value and a safe-haven asset during increasingly uncertain economic times.
Market Turmoil Fuels Gold’s Rapid Ascent
Gold’s meteoric rise throughout 2025 has been nothing short of extraordinary. The precious metal has experienced a breathtaking climb, driven by a confluence of factors that have sent investors scrambling for assets that can preserve wealth during turbulent periods. Economic uncertainty in the United States, combined with growing concerns about stock market volatility and broader economic stability, has created an environment where gold has flourished as investors seek refuge from traditional financial assets.
The rally has been particularly striking when viewed in historical context. Although gold prices have experienced some short-term reversals in recent days, the overall trajectory remains firmly upward, prompting investment experts to maintain their bullish outlook on the precious metal despite the occasional pullback.
Kevin Smith, an analyst at Crescat Capital hedge fund, acknowledged to Bloomberg that gold’s rapid appreciation had perhaps gotten “ahead of itself” in the near term. However, he emphasized that the fundamental backdrop supporting gold prices remains extraordinarily favorable. Smith pointed to persistent structural problems that continue to plague the global financial system, noting that “given the still unsustainable debt and deficit imbalances that we have in the U.S. and most of the developed world, it’s still a very favorable fundamental backdrop” for continued gold price appreciation.
Drawing Parallels to the 1970s Economic Crisis
Perhaps no endorsement of gold’s current rally has been more significant than that of legendary hedge fund founder Ray Dalio. Speaking at the Greenwich Economic Forum in Connecticut, Dalio drew striking comparisons between the current economic environment and the turbulent 1970s—a decade characterized by high inflation, massive government spending, and crushing debt loads that severely eroded confidence in traditional paper assets and fiat currencies.
Dalio’s analysis of contemporary economic conditions led him to make an uncommonly bold recommendation: investors should hold approximately 15 percent of their portfolios in gold. This suggestion represents a dramatic departure from conventional financial advisory wisdom, which typically recommends that investors maintain a 60-40 split between stocks and bonds, with alternative assets like gold and commodities comprising less than 10 percent of total holdings.
“Gold is a very excellent diversifier in the portfolio,” Dalio explained at the conference. “If you look at it just from a strategic asset allocation perspective, you would probably have something like 15% of your portfolio in gold because it is one asset that does very well when the typical parts of the portfolio go down.”
Dalio’s reasoning centers on gold’s unique characteristics as an investment vehicle. Unlike stocks, bonds, or even real estate, gold doesn’t depend on another party’s promise to pay. As Dalio succinctly stated, “Gold is the only asset that somebody can hold and you don’t have to depend on somebody else to pay you money for.” This independence from counterparty risk makes gold particularly valuable during periods of monetary instability and geopolitical uncertainty.
Wall Street’s Optimistic Projections
Major financial institutions have responded to gold’s momentum by significantly revising their price forecasts upward. Goldman Sachs, one of the world’s premier investment banks, has set an ambitious target for gold, projecting that the precious metal will reach $4,900 per ounce by the end of 2026. This forecast represents an additional 20 percent appreciation from current levels and would establish yet another historic milestone for the yellow metal.
Goldman Sachs’ bullish outlook is predicated on several key factors that analysts believe will continue supporting gold prices. The investment bank expects sustained central bank purchases to persist, as monetary authorities—particularly in emerging markets—continue diversifying their reserve holdings away from traditional currencies and into hard assets like gold. Additionally, Goldman anticipates that Western exchange-traded fund (ETF) holdings will increase as the Federal Reserve implements expected interest rate cuts, making non-yielding assets like gold more attractive relative to interest-bearing instruments.
The Jewelry Industry Confronts Unprecedented Challenges
While investors celebrate gold’s ascent, one industry sector is facing severe headwinds: jewelry manufacturers and retailers. For businesses that depend on gold as their primary raw material, the sky-high prices have created a crisis that threatens their traditional business models and challenges their ability to serve middle-market consumers.
Major jewelry retailers including Mejuri, Pandora, and Signet have been forced to fundamentally reassess their strategies in response to soaring gold costs. These companies are exploring alternative manufacturing methods, streamlining their supply chains, and searching for creative solutions to maintain profitability. However, despite these efforts, price increases for consumers appear inevitable as the cost pressures prove too substantial to absorb entirely through operational efficiencies.
David Hakimian, owner of DEH Jewelry Solutions, characterized the situation in stark terms during a May interview with The Wall Street Journal. “The last month has been chaos, pure chaos,” he said. “It’s affecting pricing dramatically.” The impact has been so severe that some jewelry designers are considering significant changes to their product specifications, including shifting from 18-karat gold to 14-karat gold to reduce costs while maintaining the aesthetic appeal of their designs.
Creative Industry Responses
The jewelry industry’s response to the gold price surge has revealed considerable creativity and adaptability. One increasingly popular approach involves selling gold-plated jewelry that preserves the visual appearance of solid gold pieces while dramatically reducing material costs. This “demi-fine” category has experienced explosive growth as both retailers and consumers seek alternatives to solid gold that remain aesthetically appealing.
Daniella Yacobovsky, co-founder of jewelry brand BaubleBar, told CNBC that her company has witnessed a substantial surge in consumer interest in demi-fine jewelry. “We’ve actually seen a really huge increase in interest in demi-fine,” she explained. “I think that it offers people a really fantastic alternative to solid gold. You’re going to get a really fantastic quality similar to that for a lower price point.”
BaubleBar’s demi-fine jewelry line features substantial 18-karat gold plating over a sterling silver base, allowing the company to deliver products that look and feel luxurious without the prohibitive cost of solid gold construction.
Silver Follows Gold’s Lead
The precious metals rally has not been limited to gold alone. Silver, often viewed as gold’s more volatile cousin, has also experienced dramatic price appreciation. Silver prices leapt from approximately $40 per ounce in early September to more than $54 per ounce in mid-October 2025, representing an extraordinary surge that has created additional challenges for jewelry manufacturers who work with multiple precious metals.
This silver price explosion has further complicated the landscape for jewelers, as even pieces that might have served as more affordable alternatives to gold now carry substantially higher price tags than consumers have historically expected.
Consumer Response and Market Adaptation
Colin Nash, president of the Canadian Jewellery Group and owner of Nash Jewellers, shared his perspective on how consumers are adapting to the new pricing reality. Speaking with The Canadian Press, Nash indicated that while customer traffic at jewelry stores has remained relatively stable, purchasing patterns have shifted noticeably.
“I think that we’re still going to get the traffic, it’s just a question of how much and what are they going to be buying,” Nash explained. The implication is clear: consumers continue to value jewelry and are willing to shop for it, but they’re making more careful purchasing decisions and potentially buying fewer pieces or opting for less expensive options than they might have chosen in a lower-price environment.
The rising gold prices may ultimately affect the market structure itself, potentially creating a two-tiered system where only the ultra-wealthy can afford substantial solid gold pieces, while middle-market consumers increasingly turn to gold-plated alternatives, lower-karat gold, or other precious metals entirely.
Investment Strategies in the Gold Market
For investors seeking to capitalize on gold’s continued strength, several pathways exist, each with distinct advantages and considerations. While purchasing gold jewelry represents one method of gaining exposure to the precious metal, it typically isn’t the most efficient approach for realizing investment value, as jewelry prices include substantial markups for design, manufacturing, and retail operations.
Gold Exchange-Traded Funds (ETFs) have emerged as one of the most popular vehicles for gold investment among average investors. These financial instruments offer numerous advantages, including ease of buying and selling through standard brokerage accounts, low management fees—sometimes as minimal as 0.10 percent annually—and a relatively low barrier to entry compared with purchasing physical gold. Gold ETFs can provide either direct exposure through holdings of physical gold bullion or indirect exposure through investments in gold mining company stocks.
Gold Mining Stocks represent another avenue for gold investment, offering leveraged exposure to gold price movements. When gold prices rise, mining companies typically see their profitability increase disproportionately, potentially delivering superior returns to direct gold ownership. However, mining stocks also carry company-specific risks related to management quality, operational efficiency, production costs, and corporate reputation that can impact share performance independent of gold price movements.
Physical Gold holdings, including bullion bars and coins, appeal to many investors for their tangible nature and independence from the financial system. However, physical gold ownership presents practical challenges that average investors should carefully consider. Beyond the high entry price for substantial quantities, physical gold requires secure storage arrangements, often necessitating professional vault services that charge ongoing fees. Additionally, bullion and bars are relatively illiquid compared with financial instruments, meaning they can be difficult to buy and sell quickly at favorable prices. Gold coins offer somewhat greater liquidity than bars but require extensive research to identify reputable dealers and understand fair pricing.
Gold Jewelry represents perhaps the least efficient method of gold investment from a pure return perspective. While approximately 49 percent of all globally mined gold is ultimately used for jewelry production, the substantial markups involved—reflecting operating costs, marketing expenses, and design and manufacturing labor—mean that jewelry rarely delivers attractive investment returns. The markup on mass-market jewelry designs can be particularly significant, making it difficult to realize good returns upon resale. Most investment advisors consider jewelry purchases to be speculative investments similar to fine art and other alternative assets, requiring specialized market knowledge and significant research to achieve success.
Looking Ahead
The convergence of multiple supportive factors—including central bank purchases, investor demand for safe-haven assets, concerns about currency devaluation, and expectations of continued monetary policy accommodation—suggests that gold’s bull market may have substantial room to run. Goldman Sachs’ forecast of $4,900 per ounce by late 2026 implies that investors who purchase gold at current levels could still achieve returns approaching 20 percent over the next year.
However, prudent investors should remember that all investments carry risks, and gold is no exception. The precious metal generates no income through dividends or interest payments, its price can be volatile in the short term, and it historically underperforms stocks over very long time horizons. Financial advisors typically recommend limiting gold holdings to between 10 and 15 percent of an investment portfolio, ensuring that the precious metal serves as a diversifying hedge rather than dominating one’s asset allocation.
For the jewelry industry, the path forward will require continued innovation, creative problem-solving, and adaptation to a new pricing reality that may persist for years to come. Whether through alternative materials, lower-karat gold options, or entirely new business models, jewelry companies that successfully navigate this challenging environment will emerge stronger and more resilient.
As gold continues its historic run, one thing remains certain: the precious metal’s ancient allure as the ultimate store of value shows no signs of diminishing, even as its price reaches heights that would have seemed impossible just a few years ago.
Acknowledgment: This article was written with the help of AI, which also assisted in research, drafting, editing, and formatting this current version
