Why Physical Gold Availability May Matter More Than Price

Gold prices climbed roughly 40% over the past year and a half. That number gets the headlines, but it is not the story that matters most.

The more consequential shift is not in price at all. It is in who is buying, how much of it they are taking in physical form, and whether the systems built to deliver that metal can keep pace with the demand arriving from several directions at once.

Central banks have added more than 1,000 tonnes of gold annually for three consecutive years. China alone imported more than 1,000 tonnes in the first eight months of 2026. Large non-bank financial entities are now beginning to accumulate silver at scale. These are not momentum trades. They are structural repositioning by actors with long horizons and balance sheet capacity that ordinary investors cannot match.

This analysis maps the architecture of that repositioning: who is driving it, how the supply chain behaves when heavy demand hits from multiple sources simultaneously, and what the research suggests you should understand before the next period of physical tightness arrives. The aim is not to tell you whether to own precious metals. It is to change how you think about that exposure in the first place.

The sovereign accumulation picture is larger than official figures suggest

Start with what is verified. The World Gold Council’s full-year 2025 data, published on 29 January 2026, confirms the People’s Bank of China (PBoC) added a net 27 tonnes of gold in 2025, lifting reported official reserves to 2,306 tonnes, roughly 8.5-9% of total foreign exchange reserves. Reuters reported on 7 February 2026 that by the end of January, holdings stood at 74.19 million fine troy ounces, extending the buying streak to 15 consecutive months.

Those are the official numbers. They describe the floor, not the ceiling.

Equiti’s central-bank gold review, citing World Gold Council data in February 2026, found that a large share of official-sector buying never appears cleanly in published reserve figures.

Approximately 57% of total central bank gold purchases in 2025 were opaque. (Equiti, citing World Gold Council data, February 2026)

Sit with that figure. More than half of what the world’s central banks bought last year is inferred rather than disclosed, which means any supply model built on reported reserves alone is working from a materially incomplete picture.

China is the sharpest illustration of the gap. El País, summarising research from a French bank, reported that China may have added up to 250 tonnes in 2025 while officially disclosing only around 27 tonnes, with the difference inferred from import and domestic production flows. That is nearly a tenfold divergence between what was reported and what independent analysis estimates.

The takeaway for you is not that the official data is wrong. It is that the reported figures systematically understate the physical demand pressure building underneath the market, which is precisely why conventional price models keep being caught off guard.

What is actually driving the shift, and why it differs from previous cycles

The instinct is to read gold accumulation as cyclical: prices rise, reserve managers chase them, prices eventually fall, buying cools. That framing misses what makes this cycle different.

The motivation this time is strategic insulation, not return. Central banks are buying gold as a neutral reserve asset, one not issued by any single sovereign and not exposed to unilateral financial sanctions. That rationale sharpened considerably after 2022, when a large tranche of Russian reserves was frozen.

Reuters framed China’s buying explicitly as diversification against its enormous existing stock of US Treasuries and dollar assets, not as a directional bet on the gold price. The distinction matters enormously for durability.

South China Morning Post, citing European Central Bank research, reported that in 2025 the value of gold in global official reserves overtook that of US Treasuries. That is a structural marker, not a sentiment reading.

When the reason for accumulation is geopolitical insurance rather than profit, demand does not slow simply because prices climb. The price-sensitivity assumptions underpinning most conventional precious metals analysis may not apply at the sovereign level at all.

Three distinct demand sources are now active at the same time:

• Central bank and sovereign reserve accumulation, running above 1,000 tonnes annually for three years
• Institutional accumulation by large non-bank financial entities, a category historically absent from these markets
• Government-encouraged domestic retail buying within China

Each would matter alone. Together, they arrive at the same refineries, fabricators and dealers simultaneously.

The retail multiplier that most models do not price in

The original source reported that Chinese authorities are actively encouraging citizens to buy physical gold and silver. The arithmetic here is what makes it worth watching.

China’s population exceeds 1.4 billion. A shift from roughly 1% to 2% of that population buying physical metal is not a rounding adjustment. It is an incremental demand block that dwarfs the annual output of most single producing nations.

This remains a potential multiplier, not a confirmed flow, and you should treat it as a risk factor to monitor rather than a data point to trade on. But if even a fraction of it materialises, it lands on a supply chain that is already stretched.

How physical supply chains actually work, and where they break

The comfortable mental model runs like this: prices rise, miners dig more, refiners produce more, supply rebalances. Every stage of that model has a bottleneck the model ignores.

Begin at the mine. Getting metal out of the ground is rarely the constraint. The constraints sit downstream, where physical metal becomes something a buyer can actually take delivery of.

The four sequential stages where supply can seize up are:

1. Mine output and concentrate processing
2. Refining to good-delivery bar standard
3. Fabrication into retail coins and small bars
4. Dealer distribution and vaulting logistics

Refining is the first genuine chokepoint. A small number of large facilities globally supply the bulk of good-delivery bar output, and many already run close to economic capacity under normal conditions. That leaves almost no slack when sovereign, institutional and retail demand surge at once.

The retail layer is narrower still. Coins and small bars pass through fabrication plants and dealer networks sized for ordinary consumer flows, not simultaneous multi-region spikes. When demand jumps, lead times stretch and dealers cap orders.

During a prior shortage, dealers reported continuous incoming call volume with delivery delays extending to six weeks. That period ran from roughly December through late February or early March. (Original source, direct business experience)

These are not theoretical bottlenecks. They have already happened.

There is also a structural asymmetry worth naming. The number of commercial banks in any given city vastly exceeds the number of reputable bullion dealers, yet crisis demand routes through the smaller dealer network, not the banking system.

The clearest documented precedent is 2020. Pandemic-related refinery shutdowns in Switzerland, flight cancellations and border closures made it difficult to move large bars between Zurich, London and New York, producing wide dislocations between COMEX futures prices and physical spot premiums. That divergence took months to resolve.

The read you should take from this is uncomfortable but important. The amount of metal in the ground is largely irrelevant to whether you can take physical delivery within a useful timeframe. The binding constraint is refining and distribution, and it is far narrower than most price analysis assumes.

New institutional players and what Tether’s silver move signals about where demand is heading

A new category of buyer is entering these markets, and one reported move captures the shift better than any aggregate figure.

The original source reported that Tether, holding approximately 146 tonnes of gold, had begun purchasing silver. The significance is not the volume. It is the category.

Disclosure: The Tether figures cited here, including the ~146-tonne gold holding and the commencement of silver buying, originate from a single unverified source and could not be corroborated through named independent publications at the time of writing. The same applies to reported COMEX outflows toward Asia. Treat these as indicative rather than established fact and seek independent confirmation.

With that caveat firmly in place, the direction it points is what matters. Silver has historically been dominated by industrial users and retail investors. A large non-bank balance sheet moving into it represents a different kind of buyer entering a market not built to absorb that scale.

Silver’s structure amplifies the effect. Compared with gold, the silver market carries proportionally smaller physical inventory and more concentrated refining and distribution, so each additional large buyer moves the physical availability needle further.

The relevant contrasts between the two markets for institutional entry:

• Market size: silver is markedly smaller and less liquid than gold
• Annual mine supply: proportionally tighter relative to investment demand when large buyers arrive
• Above-ground investable stock: a smaller cushion to absorb sudden institutional demand
• Refining and distribution: more concentrated, so bottlenecks appear faster
• Typical buyer profile: historically industrial and retail, now potentially institutional

If even a subset of large balance-sheet holders follows the pattern Tether is reported to be establishing, the structural demand base for physical silver could shift in ways the market has not yet priced. That is the leading-indicator read, and it is worth watching even though the specific figures behind it remain unverified.

Where the thesis holds and where it does not: reading the risk layer honestly

By this point the argument leans bullish. A calibrated view requires meeting the counterarguments at full strength, not in caricature.

Start with the plainest one: demand slowed in 2025. Global official-sector purchases fell to approximately 863 tonnes, down 21% year-on-year, according to Equiti’s review of World Gold Council data.

Global central bank gold purchases fell to approximately 863 tonnes in 2025, down 21% year-on-year, despite remaining well above historical norms. (Equiti, citing World Gold Council data, February 2026)

China’s own trajectory reinforces the point. Reported buying dropped from 225 tonnes in 2023 to 44 tonnes in 2024 to 27 tonnes in 2025. Structurally motivated buyers can downshift hard without abandoning the strategy.

The four risks you should weigh honestly:

• Demand normalisation: once reserve portfolios reach target gold allocations, annual net buying can slow sharply even as high holdings are maintained
• Paper market dominance: COMEX and LBMA still set the benchmark through leveraged and macro-driven trading, so physical tightness does not mechanically produce steadily rising prices
• BRICS cohesion limits: member nations differ markedly in economic structure and priorities, and collective accumulation is not a coordinated plan with a single endpoint
• Retail accessibility: in stressed periods, small investors face higher premiums, wider bid-ask spreads and outright availability gaps even while large-bar markets keep functioning

The 40% price rise itself carries a warning. Much of it was driven by speculative and paper-market activity that moved largely independently of physical flows, which means price and physical availability are not the same signal.

What the risk layer tells you is this: the structural case is real, but it is not deterministic. Timing, position sizing and delivery logistics matter as much as directional conviction, because the supply chain can constrain your access regardless of whether the thesis eventually proves correct.

What the structural picture means for how investors position now

Pull the five threads together and one conclusion holds. The convergence of sovereign accumulation, institutional entry and supply chain constraints means physical availability may become the binding variable in these markets before price alone signals the shift.

That is why standard market signals can lag the underlying condition. When roughly 57% of central bank buying is opaque and refining sits near capacity, the surface price may look calm while the physical system tightens beneath it.

The 2020 episode is the clearest documented case of that divergence, and it lasted months, not days. China’s 2026 import pace, more than 1,000 tonnes through August, is the most current evidence that the physical intensity has not eased.

The research supports a structural thesis over a medium to long horizon. It does not support high-confidence short-term timing calls, and you should position with that limitation in mind rather than against it.

Physical versus paper: a practical distinction for the current environment

The most actionable output of this analysis is the difference between owning a gold price and owning physical metal. They are related but not identical.

Consider the contrast across four dimensions:

• Delivery risk: physical metal is in your possession or allocated to you; paper instruments give you price exposure but not necessarily metal when the delivery system tightens
• Counterparty exposure: physical holdings carry minimal counterparty risk; ETFs and futures depend on the solvency and settlement capacity of intermediaries
• Stress-period liquidity: physical can command high premiums and face availability gaps in a crisis; paper trades freely but may diverge from physical value
• Cost of carry: physical involves storage and insurance costs; paper is cheaper to hold but delivers a different kind of exposure

The structural case described throughout this analysis applies most directly to physical holdings. Before drawing any conclusion about your own positioning, verify which type of exposure you actually hold, because the two behave very differently when availability, rather than price, becomes the constraint.

This article is for informational purposes only and should not be considered financial advice. Investors should conduct their own research and consult with financial professionals before making investment decisions.

Past performance does not guarantee future results. Financial projections are subject to market conditions and various risk factors. Several data points in this analysis originate from a single unverified source and are flagged as such; they should not be treated as established fact without independent confirmation.