What the AI Boom Means for Precious Metals

We are living through the early stages of a technological revolution, and Wall Street is salivating over artificial intelligence. AI is being hailed as the new electricity: a transformative force destined to rewire nearly every industry, capital flows, and the very nature of human productivity itself. 

The typical investor sees AI as an opportunity to buy Nvidia, ride momentum, and fantasize about a fully automated future. Those aren’t entirely unreasonable points. But here’s what they don’t see: AI isn’t just changing Silicon Valley—it’s affecting some of the fundamentals of gold and silver markets in ways that may take years to understand.

Over the next five years, the AI boom is going to impact the markets for precious metals in profound ways through industrial demand, monetary policy shifts, and a volatile new class of AI-powered traders. And while the average speculator will focus on the next chip launch, the real long-term winners will be those positioned for what this technological transformation means for real assets.

Before AI can dominate the software world, it must first exist in the physical one. Every AI data center, every high-performance GPU, every cloud server stack relies on physical materials. When it comes to reliability and conductivity, gold and silver are irreplaceable.

Nvidia 5-Year Chart

Silver is the standout precious metal for industrial uses. Unlike gold, which gets most of its demand from jewelry, investment as an inflation hedge, and central banks, over 50% of silver’s annual use comes from industry—and much of that is now AI-adjacent. Palladium is another industrial metal that is essential for automotive production, but since its use falls squarely into the manufacturing of catalytic converters, EVs don’t require it. If the EV trend continues—hype has slowed down, but the overall model isn’t going away—silver will be the long-term winner there.

As for silver, semiconductors, 5G antennas, EVs (which use up to 50 grams of silver per vehicle), MLCCs (multi-layer ceramic capacitors, which also use palladium), photovoltaic cells to power anything from homes to data centers, all require silver. In 2024, global silver demand for industrial uses hit a staggering 1.2 billion ounces, the second-highest on record.

Supply, however, is a different story. Silver is mined on its own, but many don’t know that it’s mostly mined as a byproduct of base metals like copper and lead. Nearly half of global silver is extracted during the production of other metals. That means even as prices rise, supply doesn’t respond as quickly as you’d expect. Mine output has struggled since COVID, and industry analysts are predicting an increasing structural supply deficit by 2026.

Gold, while less involved on the industrial side, still plays a key role in AI systems. It’s used in chip packaging, bonding wires, and high-reliability printed circuit boards. That only makes up about 6–7% of gold demand, but even a modest increase supports prices.

But let’s not pretend gold’s main story is about circuitry. Gold is money. In the inflationary aftermath of the AI-driven spending boom, money is being destroyed. Tech booms require capital. And capital today is printed out of thin air. The Federal Reserve added over $4 trillion to its balance sheet between 2020 and 2022, and the AI revolution will likely trigger more of the same. Governments are already piling subsidies into chip manufacturing, green infrastructure, and AI development. Any excuse to print money, central banks and governments will embrace wholeheartedly.

That money has to go somewhere—and it’s not going into productivity. It’s fueling bubbles, government deficits, and eventually, inflation. While Silicon Valley and Middle Eastern wars print headlines, the Fed prints dollars.

In a world where fiat money is being endlessly debased to fund endless fantasies, gold remains the only real-world (read: physical) hedge that doesn’t rely on counterparty trust. Central banks know that gold is the only real money. That’s why they bought nearly 900 tonnes in 2024, and are on track for another record year in 2025.

You can expect even more gold accumulation, especially from non-Western central banks like China, where de-dollarization is increasingly becoming a priority.

Silver will ride this wave too. Retail investors can’t always afford gold, especially in emerging markets. Silver offers a cheaper on-ramp, and when inflation picks up, its dual role as an industrial and monetary metal makes it twice as sensitive to the macro landscape.

AI may be global, but the world is anything but united. Trade wars are back. The U.S. and China are increasingly entangled in a technological arms race, and tariffs are flying. Meanwhile, conflicts in Eastern Europe and the Middle East continue to rattle markets.

In times of geopolitical stress, nothing outperforms gold. In 2025, we saw gold jump 30% during trade tensions—proof that despite the digital age, human fear still drives markets. Forecasts for mid-2026 see prices near $4,000/oz, and that may prove conservative if conflict worsens, with only small price pullbacks along the way.

Silver tends to follow gold, albeit with more drama. Expect more volatility, but also more upside in bull runs. A spike to $37/oz has already happened in 2025, and silver often outpaces gold in periods of monetary panic.

For a bit of irony, the same AI systems that create industrial demand for gold and silver are also beginning to trade them. AI-powered platforms now scan social media, analyze central bank minutes, and trade in microseconds. The result is increased volatility. Silver, with its smaller market and speculative crowd, is especially vulnerable to AI-driven swings. A bullish tweet or geopolitical rumor could send prices soaring or crashing, which provides great buying opportunities for silver investors who see the long-term value.

Gold is less prone to wild AI-led swings thanks to central bank presence and deeper liquidity. But make no mistake—during market stress, even gold can experience sharp AI-driven moves. Traders should prepare for higher frequency volatility in both metals.

Let’s entertain another view: what if AI doesn’t trigger inflation but instead causes deflation? After all, if AI makes everything cheaper, wouldn’t that lower prices and kill gold and silver demand?

AI-powered productivity might make silver-based technologies like solar panels and EVs cheaper and more widely adopted. Even in a deflationary environment, silver demand could hold, especially if clean energy remains a priority, which seems likely globally even in the Trump 2.0 era.

At the end of the day, reality is physical, and money isn’t the end game. It all comes down to people being able to acquire what they need. As Peter Schiff said last year, we don’t need money; we need stuff, and with the current status quo, AI-driven productivity increases would ultimately end up being inflationary anyway:

“We need shelter, we need clothing, we need entertainment. There are a lot of things that we need. And we can’t have them unless we produce them…and we have to do something of value to exchange with the productive people…the way governments are set up today, those workers just might immediately start getting government money…and that’s more inflation.”

Gold performs poorly during mild deflation (rising real rates), but in extreme deflation, like Japan’s lost decade, it regains favor as a store of value. Add in geopolitical stress or central bank intervention, and gold finds footing. But here’s the catch—deflation would likely be temporary. Central banks, terrified of debt deflation spirals, would return to money printing. And that’s bullish for gold.

Some claim AI will revolutionize mining with accelerations achieved though faster discovery, cheaper extraction, and automated robotic drilling. But don’t expect miracles in the next five or even ten years. Finding metals in the ground is a process that can’t be entirely automated. Mining is capital-intensive and slow-moving. Even with AI, it still takes 7 to 10 years to develop new mines. And for silver, which is mostly a byproduct, supply doesn’t just ramp up on demand. Geological constraints and declining ore grades remain a reality that the industry has to contend with. Mining is also subject to regulatory and jurisdictional red tape.

Yes, AI may make operations leaner, but that won’t suddenly flood the market. Recycling will rise, but it’s capped by cost and technology limitations. We’re looking at marginal changes rather than a paradigm shift. Gold and silver aren’t about microchips or machine learning. They’re about trust, stability, and value in a global central banking system that is making those things increasingly scarce, but no less essential. AI may boost industrial demand and create short-term volatility, but the real story is still macroeconomic.

Inflation, currency debasement, geopolitical instability, and unsustainable debt are the real drivers. AI just speeds them up. And that’s why smart investors will continue to allocate to physical gold and silver, not just as commodities, but as the ultimate insurance policy against the hubris of a digital future built on unsustainable deficits, money printing, and fiat sand.

Don’t be fooled by the next bubble headline. Real wealth isn’t artificial, it’s physical, and that will hold true just as much in the AI era as it did in decades past.