Gold bull market phases: why the Fed will be forced to print

0:00Gold isn't just going up. It's doing something it hasn't done since the 1970s. And most people have no idea what comes next. Here is what nobody on YouTube is telling you. This gold move has three phases. We're barely in phase one. Phase two is when the Federal Reserve is forced, not chooses to, but forced to print money at a pace that will make COVID stimulus look like pocket change. In phase three, that's when the entire government bond market enters what's called a death spiral. Sounds optimistic, doesn't it?

0:37So if you own stocks or bonds or a 401k, a house, or anything priced in dollars, the next 20 or 30 minutes could be the most important financial education you get this year. I'm going to show you exactly what's happening, why it's happening, and how to position yourself on the right side of it. In fact, this video is so information dense, I'm going to do something even better for you. I've actually put together a full research note of everything we're covering here, which you can download for free. It's in our free community, no credit cards required or anything. Just sign up for it, I think it's felix.org/resource, it's a link down below in the description and in the first comment that's pinned to this thing.

1:21So get your hands on that so you can properly understand this. If you're wondering who I am, my name is Felix Prehn. I'm an ex-investor and banker. That's Winston back there who's our metals brain and researcher and head of absolutely everything really, has a very large head. I'm also the founder of the GOAT Academy where my retired Wall Street mentors including metals market makers teach regular investors institutional strategies and we've been doing that for 6 years now. We've taught thousands and thousands of students. I'm also the co-founder of Trade Vision and many other things.

1:56So in this video I'm going to break down 3 things for you. The 3 phases framework, a way to understand where gold is going that goes far beyond gold goes up to the moon. Now this comes from some of the sharpest institutional research on the planet and I'll walk you through it in really plain English. The Fed's impossible maths. Why the next Fed literally will be forced to print money no matter what he says. The numbers don't lie, even when central bankers occasionally do. They would never, would they, not the Fed.

2:25And I'll show you where the smart money is actually going. And it's not where CNBC tells you. I'll show you the actual data and how to access that. And let me kick you off with a principle I learned from my Wall Street mentors, guys who've been in banking for decades. And they said, never trust the news to tell you where the money is going. News tells you what happened yesterday. Charts tell you what's happening right now in real time with the real money. These are the same guys I give access to in our GOAT Academy to everyday investors. And we literally have weekly one-on-one sessions with them and everything else.

3:00So if you look at the gold chart here in Trade Vision, gold has since 2022 gone in an absolute epic tear. Not a gentle uptrend, not a nice little rally. No, it's a parabola, which is what happens when buying pressure accelerates faster and faster and faster. Now social media is, as always, extremely helpful here. Half the people are screaming to the moon and the other half are screaming bubble, and neither of them can really tell you why gold is doing what it's doing. They just have opinions, very loud opinions. And if you've been burned by a loud opinion on social media, maybe drop a guru in the comments. I want to see how many of us have been there.

3:43Gold bull market didn't start because of inflation or because some guy on TikTok told you to buy coins. It started with a very specific event. In February 2022, the United States weaponised the dollar by freezing Russia's foreign reserves. Now nobody wanted to make a big scene about it, but behind closed doors, every central bank, every sovereign wealth fund, every international insurance company with a balance sheet looked at that and thought the same thing. If they can do it to Russia, they can do it to us.

4:17So what did they do? They started quietly slowly moving out of US Treasury bonds as US debt and other dollar assets and into the only non-dollar asset with enough liquidity to absorb very very large capital flows, gold. Central banks bought over 1,000 tons of gold per year for 3 years running, about double what they normally do. Not retail investors, to the moon lunatics. Sovereign nations saying we need gold.

4:53That's literally one of the many things we track inside our metals dashboard here. Stuff like institutions are actually selling right now. Well, people won't tell you that, right? We actually show you the real data here. And then we also show you what happens actually if institutions are selling heavily. We're literally at a score of 15 here out of 100. So they're pretty pretty short there. In the following 90 days historically the last 3 years we went up 21%. Not saying that's therefore going to happen in the future. Past performance isn't the future and all that. But that's the sweet spot when they're all hating on it.

5:26And then if you scroll down here you can also see central banks gold purchases down here and a lot of other stuff. There's a free newsletter on that and everything else. You might want to check that out too. There is a link down below to that as well so you are actually up to date and informed. And that's at felixfriends.org, no there's a longer link there, it ends with metals. There's a community there, it's like I think it's $6 a week or something. You can cancel it anytime you don't like it anymore.

5:55But the beautiful part to this is that in the early stages almost nobody noticed. The Fed started raising rates 2 weeks after the Russia sanctions, which should have crushed gold. It dipped very briefly, by the way. If we go here, early 2022, we dipped a fair bit actually, we dipped about 20%. But it then started climbing again and that's an anomaly. Gold rising despite higher interest rates, that was the signal and smart money started to get into this at that point.

6:27So let me give you the framework. The way most people think about gold is gold is up, gold might go higher, buy gold. And that's like saying the weather is changing without knowing what the heck's going on and that it's going to be spring or a hurricane or something. They're actually distinct phases to a gold bull market and we're in phase one. So the forces driving each phase are very very different and important to understand.

6:53Take a note, write them down. Phase one is what we just discussed. It's the world's central banks, sovereign wealth funds, major institutions slowly, carefully replacing dollars with gold as a reserve asset. And JP Morgan, Goldman Sachs, Deutsche Bank, they've all got research teams. They all publish reports on these, and Winston gets them, we read them, and they all have bullish price targets on gold for 2026.

7:18Now if you simply want the answer to should I buy, should I sell, Felix get to the freaking point, and I hear you. I used to be that person. You want to learn the rules for when Wall Street's footsteps, the money flows, tell you which way to go. And that's all I do. I just follow the money. That's all I do, follow the money. And the rules are very simple to learn. I can teach them to you in about 2 hours or so. So if you want to learn them, join me on Saturday. I'm going to run a live session for you at 8 p.m. New York time at felix.org/training.

7:51I literally teach it. I'll give you the whole freaking formula. You can apply that to gold, to silver, to copper, to stocks, to ETFs, to oil, to crypto, anything. It's the same rubric. Did I make it up? Nope. Did Winston make it up? No. Even he isn't that smart. Actually he's very smart, aren't you Winston? Very smart. The guys on Wall Street did. The guys in Chicago did. The guys have been trading for 50 plus years. That's how long this rule book's been around. Why do you not know about it? Because the little thing called financial education is suppressed, if that's a polite way of putting it.

8:24But let's get into phase one a little bit deeper. In this phase one so far, there've been no major bank failures, just smallish banks. We've had no mass bankruptcies threatening the financial system yet. There's no break in the Treasury market. The central bank isn't being forced to buy government debt. None of the usual crisis indicators are really flashing red. This is phase one. It is calm buying, institutional, methodical. The kind of buying that happens when very smart, very large players are repositioning, not panicking, right?

9:01So they're not running from a fire. They're walking very calmly and quietly towards the exit before they'll eventually go on CNBC and scream fire. When people go on CNBC, there's a word for it amongst Wall Street banks. It's called selling your book. So you buy your positions, you buy your stocks or your metals and then you go on, want to be a talking head, and then you talk to everyone about how wonderful it is. And that way you hope everybody else buys it as you quietly sell it. That's generally the way that works.

9:29Not that I'm suggesting that they would manipulate the market. They wouldn't do that surely. But that's the rumour, not by rumour, rant. Do you think we covered ourselves sufficiently there Winston? I think he said it was okay. So why does this distinction matter? Because it means the crisis-driven phases haven't started yet. Now if you think that central banks buying gold while they're selling everybody else, it's everything's just fine, it's a little.

9:54Suspect. Put phase one in the comments or just one in the comments. I just want to make sure that this is actually landing here for you.

10:01Now, phase two is where things get really fun. This is the part that nobody really talks about because it begins when the Federal Reserve is forced to restart large scale money printing. And I'm going to show you why that's not a prediction, that's just maths. I want to also show you that they are already starting to do that but slowly. If you go into our hub again, you can join this for $6 something a week and you go into the money printer indicators here and what do you see?

10:28There are 3 levels to money printing. There's official money printing and you can see they started to do it gradually again here in January and February, up about $22 trillion over the last year. That's $22 trillion between friends. The government spent $11 trillion more, so that's a little bit of an increase there. That's also essentially money printing. And then there is the hidden money printing which doesn't really get announced. It's summarised as some vague weird general banking stability fund thing, you people won't understand, never mind. And they've done $228 billion of that in the last year.

11:07If you zoom out a bit, you see that that's actually a huge anomaly, if that's the word. The last time they'd started doing that was 2016, 2017. So that's a big, and they did $6 trillion. Didn't tell anybody about it. So you can track this here, we update that data for you live, so you can check that out in there too.

11:33But another way of looking at this, that's perhaps a little easier to comprehend for our non-golden retriever brains, is that the Fed has reported about $245 billion in losses since 2022. Now, you might be thinking, hang on, they're the central bank, they set the rules, they can print money, how do they lose money? Well, here's how. After 2008 started, the Fed started paying interest on bank reserves. Banks can park their money at the Fed and the Fed pays them interest, currently well over 4%. But all the government debt the Fed bought to bail us out during COVID, they pay a lot less than 4%. So the Fed is paying champagne prices to the banks for beer quality assets.

12:27So essentially when the Fed says it's accruing a deferred asset, that's what they call it, it basically means we're bankrupt, but we get to make our own accounting rules, so we're calling it everything is fine. And then in December the Fed announced that they would quietly be purchasing $40 billion in Treasury bills a month. And this is what I called the woo woo stuff. They call it reserve management purchases. And again, if you look at that, it's these little bars here, these little ones here. That's $19 billion in February. That year was $32 billion early in December. Before that, $16 billion, $3 billion, so on.

13:06And that's not money printing. No, definitely not. This is not money printing. It just happens to involve the Fed creating money to buy government debt to keep the banking system liquid. But it's not money printing. No, no, no, no, no. They told us very much it isn't money printing. Therefore, it can't possibly be reserve balancing gobbledygook. So maybe you think it is actually money printing and that calling it reserve management purchase is nonsense. Then put it in the comments down below. Put money printing in the comments down below and I know you're still with me.

13:44And then the plot thickens. Kevin Warsh, who's been nominated as the next Fed chair, you'll start in May, lucky chap. He said he wants to do two things. He wants to have lower rates. My handwriting has been sabotaged by this. My handwriting is usually beautiful, I can assure you. And he also wants to shrink the Fed's balance sheet. And they sound like two great ideas, right? Lower rates, it's good for borrowers, great for housing, great for everybody. Smaller Fed balance sheet means less market manipulation, sorry, stabilisation, intervention for the good of the people, something like that.

14:22Anyway, it sounds responsible. Now there's a problem with it. They are contradictory. You can't shrink the balance sheet but also keep rates low when you have $10 trillion in bonds that are maturing over the next 12 months. They need to be refinanced, $12 trillion. Not a little bit of money, quite a lot of money. And we know the banking system is already under pressure, otherwise they wouldn't be printing money already.

14:47So what can they possibly do? Well, they do the same pattern. It's a pattern that's repeated every single time. Every Fed chair starts with principles and every Fed chair abandons them when a crisis hits. Jerome Powell in 2012 when he was a Fed governor, there's an actual quote from him, he was against money printing. He said, the market will always cheer us on for doing more, it'll never be enough. And then 2019 came and he printed more money than any human being has in the history of money.

15:17But the same thing with Warsh. He was against money printing, he was opposed to it. And then the next crisis lands on his desk and he will, yes, he will print. Not because he wants to, although it must be really fun to just print money, right? He wouldn't want to print money. I don't want to print money. Do you want to print money? Let me know in the comments. Then literally no Fed chair in history has ever chosen the option of let me blow up the financial system, that would be fun.

15:41So phase two of the gold bull market begins when the market realises the Fed is powerless to save the financial system without buying the entire bond market just like Japan has. And that realisation that the central bank has no exit is what sends gold from expensive to you can't afford not to own.

16:06So where's the crisis going to come from? Oh, there are many opportunities. Just trust Wall Street to create highly risky leveraged things that pay them lots of money. And likely at the moment we're looking at private equity and private credit. They are really the two things that I'm most concerned about. Private equity funds are currently sitting on just under $4 trillion in unsold inventory. Those are companies they can't sell, nobody wants them. The number of zombie funds, so funds that are over 10 years old and can't sell their companies, just hit $440 billion in assets.

16:43So how are they dealing with it? Financial engineering, paper over the problem, they learn from the best, the Fed. It's things like continuation vehicles, which means you're selling it to yourself. Or you borrow against the estimated value of a company if you could sell it even though you can't. That's hundreds of billions of dollars.

17:03And then phase three is the end game. And I want to be very clear here. Phase three is not happening yet. This is a scenario that unfolds if phases one and two play out without major reform. I'm showing you the road map so you can prepare, not to panic. This is not a doom and gloomer video. Phase three is what economists will call a government bond death spiral. I'm one of those economists.

17:27And how does it work? Well, it works like this. You get higher interest rates because of the high inflation. So you get larger government interest payments, as in the government needs to borrow more. So therefore they issue more debt, more bonds are issued, and what does that do? Well, it pushes interest rates higher and therefore they have larger interest payments and even bigger deficit and therefore they need to sell more debt. Welcome to Japan.

17:57And we know that the US interest payment is going to be over $1 trillion just this year. Not $1 trillion to pay for roads or schools or defence. No, it's just paying interest on old debt. And that number grows every single year as more and more debt gets refinanced at higher rates.

18:14So how do you fix it? It's very simple. You tell the central bank to buy all the debt that nobody else wants, which destroys the currency, the US dollar. And every country that's been in this position, and we've got plenty of them, Argentina, Brazil, Turkey, Mexico, I can only do the accents for the Spanish speaking countries, Russia and even the US in the 70s, has chosen printing money every single time. There is no exception to the rule. And every single time gold prices went straight up. 100% consistent historic pattern. Doesn't mean the future will necessarily be the same, but it's a pretty good historical reference.

18:55And look, there is one more catalyst I want to explain just because it's so timely and you really need to understand it. But if all of this makes your head swim slightly, come and join us Saturday, felix.org/training, and we'll make this practical so you can apply this, the application rules. You now understand the big picture, the macro. So come and learn the actual rules which you will keep forever. You won't need me for that. You'll just keep the rules forever and you will therefore be in a better position to make good decisions in this market and any other market that's coming.

19:27So let's understand how oil feeds into this and I hope to see you guys on Saturday. If you join me on Saturday, by the way, put Saturday in the comments down below. Felix/training is the link again down below. The framework tells us which direction gold is likely to be going into. And again, I'm not a registered financial adviser, anything like that, so obviously you got to come to your own conclusion, this is me sharing my research. But there is an accelerant that can compress the timeline here dramatically, and that

19:52The accelerant is oil, the black stuff. It's a pattern that's been repeated with stunning consistency across 50 years of market history. Every major oil shock has been followed by a significant gold surge. Not sometimes, not often, every single time. Let me walk you through it very quickly.

20:1273, OPEC, right? Gold surged 89% in 12 months. Iranian revolution in 1979. Isn't it like we're always in the same part of the world? 276% gain in gold in 1 year. 1991 Gulf War, oil jumped just 10% in just a couple of weeks. So oil shocks lead to gold surges somewhere between 15 to 100% plus within 3 to 12 months historically. It doesn't mean it has to happen in the future, right?

20:43So the gold move starts before the headlines start to scream gold, gold, gold. That's usually when it's a little too late. And if you're wondering where the next gold shock's going to come from, again, in our community down there, $6 a month a week, we have a map and we keep track of all the energy news literally live, minute by minute. And if you zoom a little bit in on that, well, you can see there is some scary stuff happening in the Middle East, right? It tells you exactly what's going on and where.

21:15And you can also see stuff like energy infrastructure, like where are the pipelines, what's going on with them, where are the military flights going on that are unusual and all that kind of stuff. It's all there, including summaries. You can see the Strait of Hormuz and every other major maritime choke point, literally live, silver squeezes, gold squeezes, institutional selling, and everything else. It's all in there. So check it out if you're that way interested.

21:43But it isn't just Iran. It is also the Caribbean. Yes, that beautiful blue sea and Aruba, Jamaica and all that good stuff. Beach boys and all that. Cuba is 90 miles off Florida. All the Gulf of Mexico, sorry, Gulf of America. How could we? Blasphemy. All the oil from the Gulf of America passes through that Caribbean bit and I have a feeling that that's going to be the next point.

22:19So we've covered the framework, the oil accelerant, the Fed's impossible position, poor Fed. And yes, gold is more than doubled since its lows. Gold mining stocks have tripled in some cases. You'd think money is pouring into gold miners, right? But the opposite is happening. And I think it's an opportunity that's worth understanding here.

22:38The number of shares outstanding in the gold miners ETF has declined by 20%. The junior miner ETF has seen nearly 22% of its shares redeemed and GDXJ, the number of shares outstanding is down about a third. So what does that mean? Well the ETF mechanism works like this. When people buy, shares get created and the ETF buys underlying stocks. When people sell, shares get redeemed, like shredded, and the ETF will sell underlying stock.

23:10Shares outstanding declining means that money is leaving these ETFs, right, even as the underlying stocks are going up. And this is the definition of prices are rising because of the fundamentals. Gold miners are making record profits at these gold prices but the broader public, the investors, are not interested. They haven't piled in yet. Retail hasn't arrived yet. The crowd is still chasing Nvidia.

23:39So why are gold miners interesting, and there is obviously risk to this. You don't want to, you need to understand risk management really really carefully. But there is a simple mathematical rule to it. Say you have a gold miner and their cost is $1,900 to get an ounce of gold out of the ground, right? And if gold is trading at $2,000 as it was, they make $100 per ounce. Now, if gold goes to say $3,000, so gold goes up 50%, from 2,000 to 3,000, their margin goes from $100 to $1,100.

24:19So gold goes up 50%, their margin goes up 11x. Do you see why people talk about miners being leveraged? So when gold goes up 2 or 3x, you would expect the miners to freaking explode upwards. So the market is pricing this as if gold's going to go back down. Now you have to decide whether that's a likely scenario or not. I'm not going to tell you the answer to that, but there is some opportunity there for people who know how to pick the right miners and also for people who understand good risk management.

24:56Again, that's something we got in here. If you go into stocks and you type in any kind of miner, just click on Canada for example, right, there the filters. Canada, you can go in here and you can compare some of these. Say Gold, that's a miner, NEM is a miner, I think there are some other miners. Isn't AEM a miner? You hit analyse and then you can see these guys, you can see their free cash flow, you can see who's actually making money, can see how indebted they are. Just a little click click like that and gives you a nice big breakdown there. And we've done that for pretty much every mining stock there is in the world. Maybe not every teeny tiny one, but all the ones that are internationally listed.

25:40Okay, then let's bring it home. Let's wrap it up. What do we actually do about this? In my humble opinion, that's all this ever is. In Winston's researcher that he's drooled on. Safe havens are gold, gold miners, yes, silver can outperform gold. Energy majors as beneficiaries of the oil shocks and also some of the energy supply companies. Defence because war is always good apparently. And then utilities because boring works when everything is on fire and exciting not so much.

26:12Now once the war is brought to an end, we will still have money printing and we still have bailouts of all the banks and the private credit and private equity. But that could then reignite the tech growth sector, but I think for the moment it's looking a little bit sleepy. And just look at the gold outperformance pattern of the last 50 years, right? Every major crisis. So watch what's going on out there.

26:37You can join our paid community and you get access to all that geo intel stuff. So you are really insanely well informed with what's going on there in the world. You can see what's going on in the gold and silver markets at a deeper level. You can get all the stock data and everything else and a ton of other good stuff and learn better skills. That's what this is all about. That's how you calm and relax. That's how you can find and see the opportunities by having better skills.

27:03So join me on Saturday. Sign up for it. It's free. Phoenix/training. It's Winston's way of giving back and making up for the fact that I was a banker once. He says you've got some Hail Marys to work on which is what we're going to do on Saturday. I love you watching. If you got some value out of this, share the video with a friend or a golden retriever and make sure you take advantage of all the goodies that are down below in the description. Take care.

27:27Did you know there is an invisible system that controls nearly every trade on the planet? And I don't mean supply and demand. I don't mean the Federal Reserve.