The voice behind “Sam the Snowman” in the 1964 animated Christmas special “Rudolph the Red-Nosed Reindeer,” was an entertainer named Burl Ives. Those of you of a certain age undoubtedly know this and remember the man. However, anyone under the age about 40 probably doesn’t. So, you are welcome. You now know the snowman’s real name.
Of course, just about everyone has probably seen this show at least once in their lives. If not that, then they have made a conscious decision not to see it. At one time, it only came on the television once a year. These days? Well, you can pretty much stream it all year, if you are so inclined.
Now, if you have seen it, you probably remember Sam singing the song “Silver and Gold” as a sort of homage to Yukon Cornelius, Rudolph’s prospecting buddy. You might further remember the following lyric:
“How do measure it’s worth / Just by the Pleasure / It gives here on Earth?”
Well, one way of doing so is observing the spot exchange rate price for precious metals at a specific point in time. On 12/19/2025, the closing spot price for silver was $67.158/troy ounce. For gold, it was $4,338.88/troy ounce.
Twelve months ago, at the close of business on 12/18/2024, the spot prices were $29.35 and $2,585.36 respectively. Obviously, that is quite a move over a relatively short period of time.
You don’t need to be Yukon Cornelius, Sam the Snowman, or even Santa Claus himself to recognize such price movements may have given lucky investors much pleasure here on Earth this year. Can I get a ho ho ho?
While stranger things have happened, the likelihood of precious metals repeating 2025’s returns in 2026 is uncertain. That doesn’t mean I am downplaying the asset class. It simply reflects how unique it is for any asset class to almost double in a single calendar year. Two in a row? That would be a neat trick for any asset or asset class, yet one that is highly unusual.
Again, it isn’t necessarily impossible, just a little improbable and far from assured. With that said, at present, the long-term story for precious metals, and arguably other hard assets, seems to be pretty supportive for the macroeconomic view.
The primary reason is simple: as the supply of U.S. dollars circulating in the global economy increases, each individual dollar may lose purchasing power over time. Put another way, precious metals often serve as a hedge against the devaluation of fiat, paper currencies. Historically, the greater the supply of the latter, the greater the return of the former.
To illustrate: the spot price for gold at the end of 1975 was $140.05 per troy ounce. As noted earlier in this post, that price was $4,228.88 on 12/19/2025. Mind you, those are the number of U.S. currency units required to purchase 1 ounce of gold on those specific days. Neither the quantity of the metal nor the metal itself changed.
Now, according to M2, the most commonly used gauge, the U.S. money supply was $1.0162 trillion in December 1975. In October 2025, it had grown to $22.2981 trillion. Obviously, that is quite a difference.
But what does this suggest?
It suggests that the supply of gold went up at a much slower rate than the supply of U.S. dollars. As a result, it requires a lot more money to purchase the same troy ounce of gold. This isn’t rocket science. It reflects simple supply and demand relationships, rather than a future outcome.
With this in mind, what is the likelihood that the powers that be in the world’s central banks, Treasuries and Exchequers are going to restrict, suppress, slow or otherwise shrink the supply of money moving forward? Not just here in the United States, but everywhere and anywhere? I mean, unless you are in some sort of hyperinflationary economy, that isn’t a page in anyone’s playbook.
Therefore, it is pretty easy for me to predict that the supply of money will likely grow faster than the supply of precious metals available to the investing public. If this is in fact the case, the long-term story for gold, silver, etc., is probably okay.
Near term? Another year like 2025? That remains uncertain.
Probably not, but what in the world took so long? The world has been awash in monetary and fiscal policy largesse since the end of 2008, if not longer. M2 exploded in 2020 and 2025, and I mean exploded. Global Treasury departments have been running eye-watering deficits without any realistic means of paying them back.
While previous metals have been on an unbelievable tear, it would be even more surprising had they not been.
This has nothing to do with predetermined — or preconceived — ideas about revenue, profitability, earnings per share or market share. It has everything to do with financial responsibility, and the global supply of metals that human beings have desired for millennia.
Put another way, in my opinion, there is a very strong positive correlation between precious metals and financial irresponsibility. The greater the deficits and the easier the money supply, the better the chances for precious metals.
But, I still haven’t addressed the original question, have I? What can silver and gold do for an encore in 2026 after such a feverish 2025?
Let me give you this one to usher in the new year.
Precious metals are shiny rocks. On their own, they don’t generate any revenue, let alone profit. They don’t pay any dividends or interests. They are inert. As such, any return they generate is from price appreciation, which may or may not meet individual investor’s expectations.
If that seems a little vague to you, it is completely intentional. After all, uncertainty is avoidable and I don’t want to give Sam the Snowman any tips, let alone that scoundrel Yukon Cornelius. My compliance people at the North Pole don’t like that sort of thing.
Thank you for your continued support. As always, I hope this newsletter finds you and your family well. May your blessings outweigh your sorrows on this and every day. Also, please be sure to tune into our podcast, Trading Perspectives, which is available on every platform.
John Norris
Chief Economist/Chief Investment Officer, Oakworth Asset Management
Please note, nothing in this newsletter should be considered or otherwise construed as an offer to buy or sell investment services or securities of any type. Any individual action you might take from reading this newsletter is at your own risk. My opinion, as well as those of our Investment Committee, is subject to change without notice. Finally, the opinions expressed herein are not necessarily those of the rest of the associates and/or shareholders of Oakworth Capital Bank or the official position of the company itself.
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