Gold crash explained: war, oil and the 1983 parallel

0:00If you own gold or your retirement account has exposure to any precious metals, you just lost more money in a single week than at any point in the last 43 years. Let that sink in. Gold just suffered its worst weekly collapse since 1983.

0:19I've got the chart here for you to prove it. Silver got also hit pretty hard. And this is happening while bombs are literally falling in the Middle East when gold is supposed to go up. Now, if you don't understand why this is happening, you're going to make the wrong move next. And that could cost you a significantly larger chunk of your portfolio than the last week did.

0:41So my promise to you is this. By the end of this video, you'll understand exactly what's driving this crash. Why gold is defying the rules for now during a war. Who is actually behind the selling. And most importantly, what the smart money, well, that's what Wall Street calls itself, just ask them, is doing right now that you should probably pay attention to.

1:01My name is Felix Prehn. I'm an ex-investment banker and my chief metal officer who's a golden beta has abandoned ship, that's how worried he is about the gold prices. I'm also the founder of the Goat Academy where my retired Wall Street mentors have been teaching regular investors for the last 6 years who've taught well over 20,000 students which is insanely rewarding. And the whole purpose of it as a community is to give regular investors, which is what I used to be, access to the same knowledge that's only taught to the Wall Street bankers.

1:36So why the heck is gold crashing? Well, it's not what the media tells you. Hey, look at a stock chart here. This is a stock from Trade Vision, which I'm also the co-founder of, will give you two very good reasons for this. That yellow line there is where traders sell typically. So once you drop significantly below that, what happens? Well, your selling accelerates, which is what you can see down here with the volume being sold.

2:03Now, there's also a super important other line on here. Don't worry, this isn't a chart video. I just wanted to mention it because we're actually literally today running a live training on how to understand these money flows, how to know what Wall Street's currently buying and what they're selling. I'll teach you that if you join me for free at felix.org/trend. Just grab yourself a seat. It's probably about now as you were watching this. So check out the time down below.

2:28And literally that line down there is currently holding us up. Very, very good point to hold us up. Now, what happens if you break through that point? Just a quick lesson here. I can't help myself. Zoom out a little bit. When did we last break through that? Well, we did it in July 2023. We went quite a lot lower as you can see. We did it in April 2022. And again, we went quite a lot lower. That is not a prediction. I'm just saying it is the money flows being triggered. You stick around, you'll understand exactly what I actually mean by that. If you want to dive deeper, join a free live training. It's about 2 hours long probably once you've answered all your questions. Join thousands of others at felixprehn.com/train.

3:11So we all know gold had a monster 2025, right? 55% up on the year or something like that. Silver did even better, over 130% up, and we really enjoyed those rallies because we got in on them fairly early on in around about May time. Why? Because we were following the money. We were following the trails of Wall Street's big footprints. That's fine. Not because I'm smarter and not because I have this unwavering conviction in metals. No, it is just because I could see the money buying it. That's really all I ever care about.

3:44So that might disappoint you. This is all about money, right? And the freedom it can give you obviously. Now after the rally, what happens? The rug gets pulled, right? Drop. Gold drops 8%, silver 17% in one session. Months of gains are gone in hours. And that's frustrating, right? If you're frustrated that bad by that, put frustrated in the comments down below. Just an F if you're really frustrated.

4:09But that was just the appetiser. We go into March, gets much worse. Gold went down 7% in a single session. But then last week really took the biscuit. This red line here shows us the weekly move that is way worse than at any time since 1983. And look, there was 9/11, there were wars, there was the 2008 financial crisis. This is way worse. Way, way, way worse.

4:36So why the heck is this happening? Well, the official explanation, the financial media says this to you. They say inflation data came in hot. The Fed's going to hold rates stronger for longer and therefore gold goes down. And that isn't wrong, but it's like explaining a car crash by saying the car stopped moving. Yeah. It's accurate, but it is also utterly, utterly useless.

5:04And the real story, what's happening underneath it, involves war, oil, leverage, algorithms, and a pattern that Wall Street has used before. And I get it. Everybody thinks war breaks out, gold goes up, right? It's in the handbook. But gold didn't read the handbook this time. We have a full-blown military conflict in the Middle East. Seems to be getting worse every day. Oil has spiked to crazy levels. So we have a proper geopolitical crisis. Yet gold is falling.

5:33So either everything you were told about gold as a safe haven is just wrong or there is something a bit more, I was going to say devious, let's go with interesting, going on. So here's what's actually happening step by step. And this is pretty information dense. So you might want to write it down. We follow the pattern or the dominoes in this case.

5:55The first domino is the military strikes hit Iran, Iran retaliates, the Strait of Hormuz gets disrupted and tanker traffic stops to basically zero. So what do we then get? Well, 20% of the global oil supply gets cut off. Oil rockets above crazy levels and it's one of the biggest energy supply disruptions since the 70s. Seriously, it's big. We've been talking about the 70s a lot on this channel in the last 6 months. Maybe it just came through because we did. I hope not.

6:25So what happens? Well, you got an oil shock. If your oil is over $100 or $120 or even $180 as Goldman Sachs predicts, the lovely Wall Street bankers there, what happens? Your gas gets more expensive, your food, your fertiliser, your plastics, your pharmaceuticals, everything is more expensive because it's really oil, just oil.

6:45So the inflation problem that we thought was going to go away and the promise that the new Fed chair would cut interest rates like a maniac to get the economy pumping, well, guess what? That isn't happening. The Fed's trapped. So the Fed is holding its rates. They're now projecting one rate cut. Some people on Wall Street are now expecting rate increases. The European Central Bank, also known as the Bank of the First Soviet that has now moved to Europe, they're going to raise interest rates, they're saying, because of inflation caused by oil prices, right?

7:20So what's the 5th domino? Bond interest rates. So the amount it costs to raise debt is going up. The dollar is going up. Why? Because you can get those lovely nice high interest rates now. And people have got money, monkey money as in not dollars, other currencies like the euro and that sort of thing. And then they're buying dollars so they can take advantage of the high interest they can get from US government bonds. That's domino number 5. And if you're still with me on this, put a 5 in the chat. I know it's a lot.

7:54And then we got domino number 6, the machines take over. I'm not talking about drones here. I'm talking about hedge fund algorithms. These are machines that trade based on preset rules, right? That's why I started you off with some rules here on the chart. And we're going to go into those much more deeply if you join us at felixprehn.com/training live. But these machines, they don't care there's a war. They don't care about safe havens. They see higher bond rates. They see higher dollar and they dump gold. Billions in paper gold gets just dumped automatically.

8:34So that's part of the story. Now, some of you might think it's completely crazy that machines run the market. If you agree with that, if that's kind of crazy and mad, maybe write a crazy or mad in the comments down below. But it's the reality that we live in. So this inflation mechanism overrides the safe haven mechanism because of the algos. So war isn't helping gold. The war is causing a chain reaction that's destroying gold. Strange, right?

9:02But there is more to this. Throughout 2025 and 2026, retail investors, regular people, not institutions, poured over $70 billion into gold ETFs, which is an enormous amount. And it shows that people like to buy things after they've gone up. Again, something we'll fix for you if you join us live. But these were mostly ETFs, but not plain vanilla ETFs. These were a lot of this was leveraged.

9:30So these are the 2x or 3x ETFs. They give you 2x or 3x the daily move, which is lovely when the market's going up, right? You feel like a genius. Gold goes up 2%, you go up 6%. You're like, "Woohoo! I've cracked this." But they have a little design feature that most investors don't fully appreciate. They rebalance daily. And if you really understand how they rebalance, the ETF has to sell. They have no other path than to sell if the price of gold goes down.

10:02And lower prices trigger these leveraged margins. So you get margin calls and therefore the retail traders are selling the ETF and therefore the ETF has to sell more gold, right? More force selling. So you get lower prices which means more selling and it's kind of a vicious cycle.

10:21Of a death spiral. This impact is now twice as big as it was just a year ago. So the very products that help retail investors ride gold to 5,500, they become the very wrecking ball that smash it back down. Now, here's what makes me frustrated. While retail was buying, institutions were selling.

10:43And I can see that here in our metals hub, which is a community we have, it's $6.20 a week, intentionally very, very affordable. And it gives you an insane amount of insight into gold and silver and what's going on in commodity prices and everything else, as well as retirement planning and stocks. And I just keep chucking everything in there that I think could be super useful. But you can see they're selling, and you have to ask yourself, well, why am I therefore buying? Now, if you're one of those hodlers, till death do us part, this might be an opportunity, but we're not talking about that. We're trying to explain why is it dropping.

11:19Now, do you remember this chart, the 1983 crash, and now this is as bad as only that one. Well, let's talk about what happened in 83 because it's the single most important historical parallel we have. I was 3 years old at the time. I talked to one of my mentors about this who's about 30 years my senior and filled in the blanks.

11:40So in February 1983, gold suffered one of its worst weekly declines in decades. Very similar to what we were just seeing. And the reason was this. No financial crisis, no bank blow up. It was a Middle Eastern oil producing country selling their gold.

11:57Because give you a bit of context. By 83 the world was swimming in oil. The price shocks of the 70s, everyone had scrambled to find new oil. The North Sea came online. Alaska ramped up. Brazil, Egypt, India, Malaysia, they all started producing oil. And US oil imports dropped significantly because the US had found a lot more oil.

12:20So the Middle Easterns, as we shall call them, which I'm sure is entirely socially and PC-wise inappropriate, but basically OPEC, right, the oil producing nations, their market share collapsed. So they now no longer control the market. So what did these oil rich Middle Eastern nations do in 83? They sold gold. They needed cash because that gave them cash to fund the government, maintain their currency pegs. Their currencies are mostly connected to the US dollar, so they have to defend that. And that selling flooded the gold market and it triggered a crash in 83.

12:58Now if you fast forward to today, the mechanism is actually very, very similar but the trigger is inverted. In 83 gold states couldn't sell oil at a high enough price because of the glut. Now in 2026, oil prices are sky high, but Gulf states can't physically sell their oil because the pathway, the Strait of Hormuz, is disrupted.

13:22Now, you'd think these guys would be swimming in money, right, because oil prices are so high, but they can't ship it out. So it's sitting in tanks. The tanks are getting hit and storage is full. Saudi and Kuwait have already started cutting production because they have nowhere to put it. They can't pump oil on the ground because the storage is full.

13:39So what happens? Same as in 83. They have less revenue coming in and governments need revenue, unless you're the US in which case you just print it. But almost, and this is honestly what most people miss, almost every Gulf state, the Saudis, the Qataris, the Bahrainis, the Omanis, and so on, they peg their currency to the US dollar. And that peg requires dollar reserves. Normally those dollar reserves are easily replenished because they sell oil for dollars, but then the oil revenue stops.

14:12But you still need dollars to defend your currency, to fund your vision, whatever mega projects, turning deserts into oases, and keep your banking system solvent and pay for all the missiles to defend you from all the drone strikes. What do you do? Well, you've only got one choice. You got to sell assets, which is what a lot of people stack gold and silver for, right? It's for that rainy day. Well, they just had their rainy day. And what's everyone going to buy off you right now? Gold, right?

14:49And I'm not saying these countries are specifically selling specific numbers because we don't know the numbers. But we can see some patterns here. The Saudis have 300 tons of gold. Qatar's 115 tons of gold. Big, big, beautiful war chests. So to me this is entirely consistent with large-scale government selling. Same pattern we saw in 1983 because these guys probably studied their own history.

15:18Now if you think that COMEX is to blame for the gold drop, put COMEX in the comments down below. And that brings us very nicely to one of the most important concepts that I want to get across in this video, in this lesson here. The difference between paper and physical gold.

15:31When gold went down 9.4% in a week, where did that happen? Well, it actually happens on COMEX, in the futures market, in leveraged ETFs, in strange financial products they call derivatives. These are paper contracts that are bets about gold. They are not gold.

15:57And at the same time, their own data shows us that gold is leaving the COMEX. It's this chart here. It's telling you it's leaving the COMEX. Silver is even worse. And the gold stress index has picked up quite significantly since last week. If you watch this data again in our community, link to that is down below, it's $6.20 a week, cancel at any time. We're seeing people pull physical metal out of their vaults as the paper price crashes.

16:26Who's buying it? Asian central banks, Chinese investors, Eastern buyers, right? They're taking it at a discount. So the paper market says gold is crashing. The physical market says gold is on sale and smart buyers are loading up. I'm not telling you to do that. I'm not a registered financial adviser, registered anything. So you got to come to your own conclusions on this. But it's two different markets telling two very different stories.

16:51And what I learned from my Wall Street mentors, guys who worked in banking for decades, is that when the paper and the physical diverge like this, you want to pay very close attention to the physical side. Paper can be manipulated. Physical, much, much harder.

17:08So what does it all mean for us, the unwashed masses? Well, the first lesson is leverage kills in both directions. If you're bullish on gold long term, and there are, I think, some compelling reasons to be, leverage products are the worst way to express that. They turn a healthy correction into a wipeout. You turn an opportunity into pain.

17:30So own physical, own unleveraged ETFs that actually own gold. Have a time horizon. Don't let a 2x or 3x product turn your investment idea into a margin call. I got plenty of people complaining on my videos the last few days about, I lost this much money on gold the last 3 days, you suck. Time horizon is all I'd say about that. This is not about getting rich by Friday.

17:55Now, are there faster opportunities than gold in the market? Hell yeah, I think so. And how do we find them? Again, we follow Wall Street's pattern. We follow where the money is flowing. I'll teach you that as I promised live at felix/training.

18:08But really what I'm looking at here is two things mostly. One is the dollar index. It's called DXY. And the other is the 10-year Treasury yield. If the DXY is above 100, that is bad for gold. If it's below, let me get a green colour to colour coordinate this, if it's less than 97, 96, we're in a much, much better state.

18:3910-year yields, similarly, if they're above, I might want to write this down, if they're above 4%, this is not a golden hard rule, this just gives you an indicator, right, so you got to come to your own conclusion. Above 4% it is also bad. Why? Because you can just make so much money from a zero-risk asset that people are going to do that. If it drops below 3.5%, the interest rate of the 10-year government bond pays, then we're again in a much happier place.

19:11Right, and the moment the Fed is forced to cut rates, whether it's a recession, a credit event, or just because the economy can't handle these interest rates, that is in my humble opinion when gold reverses very hard. So don't watch the war, watch the Fed, watch the dollar, and think about the biggest gold holders in the world, the central banks. They don't panic sell when gold drops 9.9% in a week. I'm not saying you should sell or buy or hold. I'm not saying that at all. You got to come to your own conclusion of that. I'm just saying they don't do that.

19:42In my humble opinion, if you have physical or unleveraged exposure, you accumulate patiently, especially on dips, and you are patient and you don't need to access the money tomorrow and you are smartly diversified and you have good risk management and everything else, then we see opportunity rather than, oh my god, right?

20:01Because you go back to 83, gold didn't bounce right back. It entered a longish bearish market for the rest of the decade. I know who's going to get a time. I'm not saying that's going to definitely happen this time. The setup is very different in many ways. Central bank demand, we've got de-dollarisation. Much more complex scenario, but you should be prepared for the possibility that this isn't a one-week event. Could be a much longer reset. And if it is, gold consolidates at lower levels for a while, it's a gift for the patient accumulators who've got the time horizon and the cash flow to do that. And it is not the end of gold. So if you're showing up for yourself in the live training today because you actually want

20:44To learn how to navigate this market, then write "learn" in the comments and I'll look forward to seeing you there. But let me leave you with the big picture. Gold had its worst week in 43 years. That sounds terrifying, and if you're leveraged, it was terrifying. It seemed out. Gold is still up massively from where it was a year or two ago.

21:02Central banks are buying. Physical demand is strong. The Shanghai market is still paying a premium. So what happened this week was a paper market event. Algorithmic selling, leveraged ETF rebalancing, margin calls, and possibly some sovereign selling by Gulf states who need to raise some cash, which is the 1983 playbook. So the paper price crashed, the case for gold as a store of value, as insurance against chaos and the only reserve asset with no counterparty risk hasn't changed.

21:34The fact that we're in a war that's disrupting 20% of global oil supply, in my humble opinion, it strengthens the long-term case. So the question to me is not is gold dead. The question is, are we positioned correctly for what comes next?

21:50So you want to learn how Wall Street actually works, how they actually pick their positions, not the CNBC version where they just go and sell their book. You're not afraid to sell their book as a bank, buy a bunch of, make a bunch of investments and then you go on CNBC and then you talk about how wonderful it is. That's how you sell your book. If you want to go deeper than that, join me live and I'm going to teach you Wall Street's rules for picking stocks or metals or any other trade. The framework that institutional investors have used for decades and in my humble opinion it separates Main and Wall Street.

22:24So the link is down below, felix/training, it's right there in the description. And if you got some value out of this, in addition share this with a friend or a golden retriever and I hope to see you on the next one. There is a $2 trillion time bomb buried deep inside America's retirement system and Wall Street is praying you don't find out before it detonates.