Gold and silver prices: three forces behind the super cycle

0:00Goldman Sachs, JP Morgan, basically every investment bank and every central bank on the planet is scrambling to get their hands on as much gold as possible. So either the entire global financial establishment has lost its mind or they know something that most retail investors don't. So today I'm going to break down the three forces for you that are driving this gold super cycle and more importantly what you can actually do about it. If you can guess where I am, you'll get a golden cookie on top.

0:33But quick intro for anybody who's new here. My name is Felix Prehn. I'm an ex-investment banker and I've spent years watching and following institutional money moves. So what we do here is we don't tell you the noise like CNBC. We actually tell you what billions of dollars are doing right now. I don't sell gold at another gold fund. I'm not a broker. I'm not a registered financial advisor. All I do is I share with you what I've learned and I believe this will help you understand the gold and even the silver move better than 95% of people talking about it online.

1:10So let's backtrack a second. In 2025, gold didn't just go up. It went up 55% in a single year. It broke 53 all-time highs, basically a new record every single week. It's the strongest annual performance for gold since 1979.

1:28Now, for context, in 79, disco was still alive. The Shah of Iran had just been overthrown and inflation was eating people's lunch. So the average gold price last year was about $3,400. The last quarter, $4,100. Look at it right now. It's looking pretty impressively close to $5,000.

1:50But the weird part is that gold is supposed to go up when everything else is falling apart, right? So it's the fear trade, the thing you buy when the world is ending. But last year, the S&P had a stellar year, yet gold outperformed it. Both went up bigly, as your president says, at the same time, and that almost never happens. And then we hit that all-time high in January 2026.

2:16We've moved down a little bit from that. Goldman Sachs, those bankers with the golden heart, just came out and they raised their end of 2026 forecast to $5,400.

2:28But that might be a disappointing number for you, right? But what most people miss is this. They didn't call $5,400 a target. No, no, no. They called it a forecast with significant upside risk. Let me translate that from Wall Street speak to English. They're basically saying we think it could go a lot higher and we don't want to look stupid when it does, so we put this in there. And when a Goldman Sachs type bank says there's upside risk, they're telling you their model is probably very conservative. So they're hedging their own forecast significantly up.

3:04JP Morgan is a lot more aggressive, and these guys, I was going to say run the metals market, but you know what I mean. They're looking for a $6,300 gold price by the end of 2026. And that's their base case. Their upside scenario is, wait for it, drum roll, $8,000 to $12,000.

3:29Now, before you run out and you buy anything, when I started out investing, I had no idea how these Wall Street guys pick their trades, be they stocks or metals. And I've been very lucky to learn from my mentors over the years, people who worked at Goldman, at Deutsche, Merrill Lynch, and all these big banks. And if you're interested, I'm going to teach you their very three-step system to picking those stocks and trades, whatever they are. And I'm going to run that for you this Saturday.

4:00And for all of you guys in the UK, in Europe, you've been pretty vocal for a session that isn't at 2 in the morning for you, this one's for you. So the last session literally had 3,000 people in it. It was just our capacity. So sign up early and show up early at felix.org/webinar. There's no charge for it. It's just spreading some good old-fashioned financial education, all Wall Street.

4:23But the question you have, is gold going up? Is silver going up? But that isn't actually the right question. The question is why is every major financial institution on the planet suddenly obsessed with a metal that humans have been digging out of the ground for 5,000 years? And the answer comes down to 3 things. One, two, three. It's a challenging number for an ex-banker. And I think once you understand them, the whole move will make a lot more sense. And I think you'll be in a place to make better decisions, which is really what this is all about.

4:55Now I want to take a quick detour here because there is a related story that most people are completely missing and it tells you something critical about what's happening with physical metals. COMEX, which is the main exchange where gold and silver futures trade in the US, the people who make the market function smoothly for the benefit of everybody, their silver inventories are running very, very low. Total COMEX silver stock has fallen to about 82 million ounces.

5:25If you look at the chart here and I'll try to put it on the screen for you, editor please. We have a tool, actually I call it Better Stocks, but there is a big metal section in there and we track the institutional data that the market makers look at, COMEX. And one of the things we look at is how much silver and how much gold is actually left, what's the move, and you can just see that in there every single day. That's a premium tool, $27. We like to make things very affordable and very much available, but there's also a huge ton of other cool stuff in there for retirement planning and stock selection, all that stuff. But for you metals geeks out there, you might want to check that out and just cancel it anytime if you don't like it.

6:03But why am I highlighting this number? Because it's 75% lower than it was in 2020. So they're literally running out of silver. And if you think 80 odd million is a lot, well, in December 47 million ounces were claimed for delivery in 4 trading days, which is 60% of all the silver inventory, right? So the silver market is really running a supply deficit. They've been doing that since 2021. And the total deficit over those years is something like 800 million ounces, which is pretty much the entire year of global production just missing basically.

6:42Why? Because industrial buyers who used to keep a lot of silver, they used to keep 3, 4 months worth of silver, they now only have about a month's worth of silver. So the AI chip guys, the solar panels, the battery guys, they all need silver and there's less and less of it available.

7:04So why does this matter for this video a little bit more focused on gold? Because it tells you something very important. Precious metals are getting scarce. The paper market says one thing. It's all whatever they want the number to be. But we have this divergence. Physical silver is getting less and less and less. And in the end, I believe physical silver will actually win.

7:25Why? Because the central banks, they're not buying paper gold. They're buying physical stuff. They're buying bars, right? They're taking physical delivery. They want the real stuff in their vaults. And if you think about it, if the paper price was much cheaper than the metal physical price, wouldn't you just buy the paper and ask for delivery of the physical metal? Well, that's exactly what happened at the beginning of last year in the gold markets. So the same thing is likely to happen in the silver market.

7:53So get yourself that data. There's a link down below. Betterstocks.goacademy/metals, I think it is. Just click down below in the description. I'll put it down there for you.

8:01But let's really understand these 3 forces and bear with me because the third one is actually the most important. But number one is the foundation that everything is built on. It is called currency debasement. Sounds very fancy, but what does it actually mean? Well, I've used a pizza analogy before. Imagine you have 8 slices. You and 7 friends each get one slice, right? Very fair.

8:23Now imagine the government says, "Hey, we need more pizza." But instead of making a new pizza, they just cut the existing pizza into 16 slices. Everybody still gets a slice, but each slice is now half the size. That's basically currency debasement. Maybe not the greatest analogy. Give me your analogy that will be better in the comments. I don't know. It's always pizza on my end.

8:43But the government are not taking your money away. They just make each dollar worth less by creating more of them. And the actual numbers are pretty wild. The US money supply, which is basically all the cash, checking accounts, savings accounts, and all that stuff in the economy, it went from $15 trillion to $21 trillion just during the COVID period. That's crazy, right? We added about 40 odd per cent in just 2 years.

9:12So the government created 40% more dollars in just about 2 years. And they didn't stop there. No, it's gone up another 30 odd per cent since then. Now sits at $22 trillion. And globally, this story has happened in pretty much every major economy.

9:31Now, we actually have a money divided by gold price chart historically in also in our little tool there. And if you look at that, and we'll get back to that in a second, you see that gold prices, basically the lower that is, the more expensive gold is compared to money. But it's nowhere near the crazy number we had in the 80s. We're about 4.6 right now. It went to about 2.5. So gold could massively increase just on the basis of what happened in the 80s. And if you believe the money printing isn't going to continue, which I certainly do, then the upside potentially here seems pretty significant. So what does that all come from? What's the elephant in the room for lack of a

10:14Well, it's the national debt, the US debt. And by now you're thinking, "Yeah, $38 trillion. What's $38 trillion between friends and 16 slices of pizza?" Well, the debt to the economy ratio has blown past tinpot hut country levels. And interest payments are going through the roof. Interest payments have tripled over the past five years. Tripled, right?

10:40So the US is spending $1 trillion on interest a year, more than they're spending on walls, which is pretty hard to do, you'd think. And I remember a mentor of mine, old Wall Street goat, he said to me, look, governments have two choices. The debt gets really, really high. They can either default, which they never do because it would just be catastrophic and they would be remembered as a lunatic. So what do they do? They create inflation because inflation, while it makes your money worth less, it also makes the debt worth less. That's an odd concept to get into your head, but that's exactly what happens.

11:20And gold is the only asset that's been keeping score for about 5,000 years with all the money printing. And when he told me that, I thought it is a bit dramatic, right? A bit dramatic. But I think he is actually being conservative. So here's the connection between money printing and gold and silver. When the government prints money and they run up debt, the value of the dollar goes down. But because gold is actually limited to whatever is in the ground in the earth, it retains its value or maybe even massively outperforms the amount of inflation.

11:53And if you look at the 70s, gold surged 2,300% as the money printers went nuts. 2008, gold went up 170% as the money printers went on. 2020, gold jumped only 40%. And that's because everybody was told Bitcoin was the new gold. You might believe that. Completely fine with me. No strong feelings about it. I just think one or two or three letters might have something to do with that if you understand what I'm talking about.

12:22So if you're thinking, is gold expensive? Is gold at $5,000 expensive? Well, if you look at it relative to the money supply, and I just mentioned just how much money is there, what's gold worth, then gold is arguably still undervalued. If gold returned to its 1980s ratio, we would need gold of about $9,700. Yeah, $9,700. I'm not promising you that. I'm not saying it's going to happen. Just saying that's what we were in the 80s. And I think we have a similar insanity level of money printing and inflation going on.

13:00So there is some information for you you probably didn't have, right? Again, you can keep up to date with that chart if you check out the little tool links down below in the comments. And maybe you think, "Oh, Felix is a bit nuts." Well, WisdomTree, respected house out there, they published projections based on the different money supply growth scenarios. How much money printing is there actually out there? And they're saying if money just goes up by 5% every year, so they print 5% more money, we get to $55,000 on gold. And about $13,000 by 2050, by the way.

13:33Now, if they print 7% more money, we hit $7,000 and then $25,000. So the base case in the real money printing case is pretty extreme here. And no matter what the scenario is, even if you go into deflation, their model still shows gold goes up.

13:52Now, there's also been some speculation out there. You might have seen that there's some options trades essentially betting on $20,000 gold. I'll try to find the trades and put them on the screen for you as well. They found those trades. And what does that assume? Well, a lot of money printing, higher inflation or possibly this rumour of a gold revaluation. The government could essentially revalue its gold and therefore wipe out its debt.

14:18I don't think they're going to do that. Why not? Because I think it's one stretch too far for the market to accept. I think just quietly printing money is a much more elegant solution. No one's really going to notice it. It also deals with the debt. So I'm not really on that train. Feel free to convince me otherwise. I know some smart people are. But yeah, I think that's an unlikely scenario. Possible, but unlikely.

14:42But you now understand force number one. A little bit of a long one. Okay, let's try to make the next two a little bit more succinct. Force number 2 is the central bank. So what is it? Well, the central banks are all around the world doing one thing.

15:02From February 2022, when the western nations froze Russia's foreign currency reserves after Russia invaded Ukraine once again, they froze about $300 billion. Now, whatever your politics and love for Russia or Ukraine or whatever, it doesn't really matter here because this is about the financial system. It changed how the world and the central banks of the world think about money and dollars. Especially the emerging markets watched what happened and thought, "Wait, if they can freeze Russia's dollars, they can freeze ours." And just like that, the global reserve system had a trust problem because the global reserve system is based on the dollar.

15:39So what happened? Well, it's one of the biggest shifts we've seen in central banking history. Central bank gold purchases quintupled. That's 5x after Russia. And we've now had 4 years in a row where central banks have bought more than 1,000 tons of gold per year. And it's not one crazy country. It's all the major countries. The top buyers are like Poland, Azerbaijan, Kazakhstan, China, Turkey, all the countries who might not want to be exposed to the dollar here.

16:14And actually a word on China. China has official gold reserves of about 2,300 tons of gold, which is about 8% of their reserves. Now the US, Germany, France, Italy all have about 70% of their reserves in gold. So the gap is enormous. So China has therefore been buying gold every single month in 2025 and they keep doing that. That in itself will keep gold prices fairly elevated in my humble opinion.

16:44And the smart lovies at Goldman Sachs said this is a structural shift in reserve management behaviour. So what do they mean by that? Claiming central banks have permanently lost trust in holding other countries' IOUs, which is what your money is. There's no value in that piece of paper. It's just an IOU. So this is not a phase. This is the new normal.

17:06And 95% of central banks expect global gold holdings to increase. 43% plan to increase their own gold holdings, which is just bonkers. And the Russians are part of that by the way. Their actual gold holdings have increased very significantly in value because gold's hit an all-time high and those guys have quite a lot of gold, right? So the West froze Russia's dollar assets to punish them, but basically it just increased the value of their gold. Generally speaking sanctions are very effective. I know they're popular. It makes you feel like you're doing something, but they very rarely achieve what you actually want them to achieve.

17:48So let's put some numbers on this. And I apologise this is a little bit numbers dense but Goldman Sachs estimates that for every 100 tons of gold purchases it increases the gold price by just under 2%. Now they're projecting central banks will continue to buy about 750 tons a year for the coming years. Slightly less than last year but could also be more. And if you just take that maths into account, that would already exceed their gold forecast and certainly move us towards the $6,000 plus.

18:25So that's item number 2 I want you guys to understand at a bit of a deeper level, which is central banks. They're just using their money to not buy dollars, but to buy gold. And then number 3 is what I call the gap. The gap because the crowd hasn't shown up yet. You're watching this, fantastic. Maybe you'll share the video if you find it useful.

18:47You'd think that with gold at about $5,000, everybody and their grandmother would be loaded up on gold, right? That everybody would be in on this, but that isn't the case. Yes, we had record inflows into gold ETFs last year, very significant. And a lot of the Wall Street goats are now recommending you put 5 to 10% of your portfolio into gold. Morgan Stanley are recommending 15 to 20%. But the average for all the portfolios out there is less than 1%.

19:18So that means the biggest gold rally in half a century has happened and retail investors barely noticed and are barely participating. Now it's starting to pick up a little bit and we had the largest inflows into gold ETFs last year, particularly from the US, but we're still in the early innings. So the total allocation is less than 1% of global funds. So there's an enormous amount of money that could shift into precious metals.

19:49And if you just replace the 60/40 portfolio with what a lot of people are now talking about, which is the 60/20/20 portfolio, and that comes from Morgan Stanley CIO, which means 60% stocks, 20% bonds, and 20% gold or even silver. Well, what does that mean? What would that mean to the gold price? Well, JP Morgan, the bankish to the needy, have actually modelled this and they said if it just increases by half a percentage point, it would drive the price up to $6,000 per ounce.

20:23So if you take it all together, you have a significant physical shortage, especially of silver for industrial use. You have central banks hoarding gold because they don't trust the dollar. You have the dollar which is by all intents and purposes going to be devalued because it's the only way to deal with the debt, right? Interest rates are going to come down and they're going to tell you the economy is going to be growing a lot and

20:44I hope it really truly is. But a lot of that will just be inflation and they will just not give you the real inflation number. The inflation number I always look at is what's the stock market doing? The stock market goes up 20%, that's 20% inflation because a lot of people go 20% richer. If you're not in it, then well, you are now 20% poorer than them.

21:02And the same story applies to gold. If gold goes up 50%, and you're not in it, then well, some people go 50% richer and therefore that causes 50% inflation in my humble opinion because the piece of paper, as I say, it's just an IOU that is fairly meaningless. So, if I take all of this together and I watch the data, and I would recommend you keep watching the inventory data, I think that's one of the most exciting things to watch at the moment. That's where we put it into our little metal stool down there.

21:31Watch that. Watch how much money is getting printed. And just next week, I think it's about $16 billion, which is just mad. Asset prices are going to have a really good year, a really good decade, I would imagine. And I think gold will be at the heart of that, as well as quality stocks.

21:48I think a lot of what's going on at the moment is a little overblown. I don't think Google is going anywhere anytime soon. I could of course be wrong on that, but that's my view. But I do think the gold hounds are going to have a very, very good year. It's a very good year for blue-blooded golds and gold hounds, little musical reference there for some of you.

22:08And I would therefore think about how your portfolio is positioned and if it's a part of what you should be doing. I'm not telling you to do it. I'm just saying it's something you might want to think about and plan for some exposure. Now, for you people who are jumping into the miners, gold and silver miners, and we've been doing that since about May of last year, you got to be very careful with those and you got to have very good risk management. That's really the key thing.

22:34Why? Because they're a lot more volatile. They're essentially a leveraged play on gold and silver. So, especially the junior ones, you're not really digging anything out of the ground yet. Be very careful with those and just think about what is the amount that I could lose here. Is that something I'm okay with losing? Because the risk there is pretty tremendous.

22:52If you're just buying gold and you're intending to hold it till death do us part then the risk profile is a little bit less significant. But yeah I think it's an interesting time. I think we're going to have a very, very fun year. You want to learn how we position ourselves and when and how to implement Wall Street's buying rules. Just the three basic buying rules that I followed, essentially follow the money. That's essentially the plan.

23:17And how do we really do that? I'll break that down for you on Saturday. felix.org/webinar. There's a link down below. Join me there and if you got some value out of this video, share it with somebody. All the best.

23:26If you have a stock portfolio, a 401k, or really anything denominated in US dollars, what I'm about to show you has cost people everything repeatedly throughout history. And it's