Gold Is Under-Owned, Under-Supplied… and Overdue
Peter Reagan

Gold is still just 2% of global assets, even as physical supply runs a 1,000-ton deficit and new demand surges from central banks and a surprising new source. UBS sees silver outperforming gold in the short-term for similar reasons. Here’s what you need to know…

A closer look at gold's market cap shows us how shockingly under-owned this asset is

According to JPMorgan’s latest digital-assets outlook (as reported by Bloomberg), the bank believes bitcoin could eventually “challenge” gold’s market capitalization. That comparison raised eyebrows – and not because of price forecasts. It raised them because of what the numbers reveal about gold’s current footprint in global finance.

Today, gold’s market cap is roughly $28 trillion, versus just under $3 trillion for the entire cryptocurrency market. Even if Bitcoin hits the bank’s optimistic targets in 2026, digital assets would still sit at less than one-fifth of gold’s market size.

But here’s the part that deserves more attention: Despite thousands of years of monetary use, gold makes up only 2% of global financial assets.

That’s astonishing when you consider that most institutional portfolio frameworks today recommend 5–10% as a baseline allocation. Ray Dalio has publicly argued for a 15% gold allocation in environments marked by currency debasement and geopolitical stress.

So if gold were simply to rise from 2% to 4% of global assets, the implied price would be closer to $8,000 per ounce – and still within conventional allocation guidelines.

This is where I think the conversation gets more interesting. Bitcoin’s supply is famously fixed. Gold’s supply isn’t technically fixed – but practically, right now, it’s not far off.

The World Gold Council has noted a persistent annual deficit exceeding 1,000 tons when you compare mine output to combined demand from central banks, investors, jewelry and industry. That gap has appeared even before accounting for new sources of demand we’ll discuss in the next section.

And unlike digital assets, gold’s supply doesn’t “scale.” You can’t mint more. It must be mined, refined, transported, recast and certified. That takes years.

So while JPMorgan intended to highlight bitcoin’s growth potential, the bigger lesson may be this:
Gold’s market cap is still small relative to demand – and it’s getting harder, not easier, to increase supply.

Here's what I want you to understand: Gold doesn’t need speculative enthusiasm to move higher. It needs one thing: A small shift in global allocation habits.

And history shows those shifts often happen in response to currency stress, not headlines.

This digital-gold issuer plans to buy 100 tons of bullion (and the physical market isn't ready)

We've seen many reports on the surging demand for digital gold financial products. Now, an analysis from Jefferies argues that one major digital-gold issuer has already purchased 26 tons in Q3 and intends to acquire 100 tons this year to back customer holdings.

Crypto is joining the global gold rush:

Tether’s gold holdings hit a record $12.9 billion in September.

This equates to 104 tonnes of physical gold.

The value of its gold holdings has DOUBLED since the beginning of the year, while physical reserves have also doubled since Q2… pic.twitter.com/J3nUBnE6I4

— The Kobeissi Letter (@KobeissiLetter) November 12, 2025

For context: If we exclude China and Russia (both rely on unofficial and unreported buying that significantly exceeds reported data), the largest official central bank buyer in 2024 was Poland, at 90 tons.

Meaning: A single private company may soon buy more physical gold per year than any sovereign nation.

This is the part that keeps me up at night.

Digital gold products only work if issuers have 1:1 backing with real, physical gold. Investors want proof. Regulators will demand proof. And that means large issuers need to buy real gold bars – not futures or financial derivatives.

But physical gold’s supply chain is already strained. As we saw in the recent COMEX delivery crunch and the London logjam, a “gold bar” isn’t enough. Bullion must meet certain standards: The right fineness, the right refiner, the right serial chain and the right vaulting conditions to meet exchange or institutional standards.

Add 100 tons of new demand here… 30 tons there… and suddenly a market running a 1,000-ton annual deficit is being asked to stretch even further.

What's the lesson here? When new forms of financial technology suddenly require physical metal – not derivatives – price discovery eventually catches up. We watched this during the Basel III roll-out. We learned it when central banks became net buyers again.

In other words, there is is no “digital shortcut” to physical gold.

UBS says $55 silver is still on the table – and the gold/silver ratio says the same

In its latest commodity outlook, UBS told clients that silver’s recent pullback was driven by profit-taking, not by any deterioration in long-term fundamentals. The bank reiterated its forecast for $55 silver by mid-2026, citing:

• Tightening supply
• Strengthening industrial demand
• Valuations that remain far below historical norms

UBS also highlighted the extraordinary gold/silver ratio. Even after this year’s moves, the ratio still hovers around historically extreme levels. The bank sees a reversion toward 76, or even 70.

What that would imply today

• At a $4,100 gold price and a 70:1 ratio? $59 silver
• If gold reaches $5,000 (a common 2025–26 forecast among Tier 1 banks)? $71 silver
• If gold reaches $6,000 (not uncommon among global strategists)? $86 silver

And all of these still assume a historically high gold/silver ratio. They do not assume any return to long-term averages in the 40s or 50s.

The interesting wrinkle is this: UBS’s 55-dollar target doesn’t require gold to move higher. The bank’s models allow for silver to break out even if gold holds steady or declines slightly – which would force market participants to ask uncomfortable questions.

Why would silver suddenly surge when gold is flat? 

Why didn’t silver make that move earlier, when gold touched $4,300?

My take: When silver finally clears the $50 level – a ceiling it has bumped against for years – momentum and scarcity will do the rest.

Here's why: Silver tends to move suddenly, not gradually. And when it goes, it rarely stops at round numbers. If UBS is right about the ratio normalizing, silver’s long-delayed breakout may be closer than price action suggests.

Takeaway for the week

What ties all three stories together is simple:

Precious metals are facing growing demand from sectors that used to be irrelevant – while supply remains stubbornly slow to grow.

Central banks, digital-gold issuers, investors and industrial users are all pulling from the same pool of physical metal. That’s a new dynamic. And historically, when demand broadens faster than supply can respond, prices eventually adjust.

That’s the lesson worth carrying into 2026 – and beyond.

 

 

Peter Reagan is a seasoned financial market strategist at Birch Gold Group with over 15 years of experience in the precious metals industry. He has been featured in several leading publications, including Newsmax and Zerohedge. At Birch Gold Group, Peter leverages his deep market insights to help educate customers on how they can diversify their savings into gold and other precious metals. His commitment to education has made him a trusted thought leader in the field. In addition to the Birch Gold website, you can follow Peter on LinkedIn. 

 

 

www.birchgold.com