Rising precious metal prices and the hidden risk of underinsurance

The price of gold has recently enjoyed record highs, with its value predicted to rise even further. But, while market activity might feel arbitrary and distant, there’s a very real impact on the value of the assets you own.

Rising prices make the gold you own even more valuable, so it’s vital that your insurance policy reflects that. If not, it can leave you underinsured and financially vulnerable.

We explore the factors that affect precious metal prices and what you can do to protect your assets.

What is the current status of gold and silver prices?

Gold, silver, and platinum prices have soared in value over the last year. In January 2026, gold prices reached a record high, with one ounce costing £4,046 (an 81% increase from January 2025). Despite prices fluctuating since the start of the year, it’s predicted that gold will end the year even higher at around £4,600 per ounce.

It’s a similar story for silver and platinum. This year, silver was valued at just over £88 per ounce, up from £24.95 a year ago, while an ounce of platinum in January 2026 cost £2,141, up from £771 the year before. Market predictions also suggest that both metals will continue to trade at higher-than-ever prices.

What affects the price of gold and silver?

Gold and silver prices can fluctuate dramatically and are affected by several factors, many of which overlap, including:

Global economy

Precious metals, especially gold, are considered stable assets. During periods of economic uncertainty (such as US tariffs), investors are more likely to invest in tangible assets, such as gold and silver. Tangible investments also seem safer when inflation rises and fiat currency value drops.

Investors are also more likely to diversify into gold and silver when interest rates are low, as this makes traditional savings accounts and bonds look less attractive.

Political and geopolitical events

The stability and governance of major economies, sanctions, and trade agreements all strongly affect precious metal values.

If governments are perceived as unstable or are experiencing upheaval, investors are more likely to invest in safe, tangible assets instead of currency or stocks.

Supply, demand, and investment opportunities

The more investors buy, the more in demand assets become, which can affect prices.

Prices are also affected by mining rates; for example, higher outputs can steady prices as gold becomes more abundant. Conversely, prices may rise if production slows and precious metals are harder to source.

Industry sector growth influences prices, too, as demand for certain precious metals rises. The jewellery market is an obvious example, but gold is also an important part of the electronics industry, used in semiconductors.

Central bank buying

In response to political and geopolitical events, central banks may increase their gold reserves. As it’s considered a ‘safe’ investment, banks often see this as a way of avoiding future issues if there’s a risk that major currencies become unstable.

Why are valuations important?

Valuations are essential when insuring your belongings. Without an accurate valuation, you risk underinsuring valuables, which can mean your policy doesn’t cover the cost of replacing items.

More often than not, policyholders insure their valuables for their original purchase price and without factoring in appreciation. Similarly, if assets decrease in value, not reviewing your policy can mean you’re overinsured and paying an unnecessarily higher premium.

It’s always best to find a qualified professional to carry out valuations. When your valuables are appraised, you’ll usually be asked to provide receipts (if you have them), along with any previous valuations.

You can find a local jewellery valuer from:

You can get a quote for bullion coins and bars of precious metal from The Royal Mint:

The Royal Mint

Coins and paper money can be appraised and valued by a professional numismatist:

The International Association of Professional Numismatists

Insurance considerations

Your insurance policy should accurately reflect the value of your assets. To do that, it’s worth reviewing your policy terms carefully at renewal, particularly if you’ve bought new items, and to factor in appreciation.

In addition to reviewing your policy, it’s recommended that you have your belongings professionally valued every three to five years, particularly for your jewellery and watch insurance.

A professional valuation typically includes a report that you can provide to your insurance broker or insurer. This provides an accurate, informed estimate of an item’s value, helping ensure your policy provides suitable cover.

The risk of underinsuring gold and silver

Underinsurance is not just about receiving slightly less compensation; it can leave you significantly out of pocket.

When your precious metals are underinsured, your policy covers less than their current market value. If theft, fire, or loss occurs, your insurer will only compensate you up to the insured amount, not the full worth of your collection. Because gold and silver prices fluctuate and often rise over time, this issue is more common than many realise.

For example, if your collection is valued at £50,000 but insured for only £20,000, you could face a £30,000 shortfall if your metals were stolen or destroyed. This typically happens when people forget to update their insurance after prices increase.

To avoid this, ensure your collection is valued every three to five years and maintain an up-to-date inventory that can be shared with your insurer.

Peace of mind with Alan Boswell Group

Our insurance specialists know that off-the-shelf policies aren’t always suitable when it comes to protecting what means the most to you. That’s why we focus on finding out what you need so we can tailor high-value home insurance to suit you.

If you’re concerned that valuations may be out of date, speak to us, and we can direct you to reputable valuers. That way, you can be confident your valuables are properly protected – don’t wait until renewal.

Speak to us: 01603 218007

Rising precious metal prices and the hidden risk of underinsurance

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What is the current status of gold and silver prices?