Gold rally explained: what central bank buying signals

0:00Look at your portfolio right now. Whether you know it or not, what's happening to gold is about to impact every single dollar you have invested. I'm not talking about some slow-moving trend that'll play out over decades. Gold just surged 65% in a single year, the biggest annual gain since 1979. And that's not normal. That's not healthy market behaviour. That's a warning sign.

0:27And here is what makes this terrifying. Where gold is screaming danger, the stock market is partying at all-time highs. Those two things don't happen together unless something fundamental is breaking under the surface. By the end of this video you're going to understand exactly what's driving this, why the smartest money in the world is quietly repositioning, and most importantly what you need to do about it right now.

0:51Now, I want to give you even more value than this video can deliver you. And I'm therefore going to give you free access to our gold and silver newsletter. There's one every single day. There's one every Sunday. You can decide which one you want to get. Go to felixprehn.com/metals and that'll really give you a different level of insight because this video will give you the framework, but then you're going to want to stay informed. So hop over there, it's completely free of charge.

1:17Now, let me put the whole thing into perspective. Over the last 40 years, gold has gone up by about 6 to 12% per year. Nice returns, respectable, a bit boring, the kind of thing your grandparents put in their portfolio and forgot about it. But over the last 5 years, it did 20% per year. Not so boring now. And then 2025, we got the biggest annual gain since 1979. That was 46 years ago. I wasn't even born then.

2:04So this is not gold doing what gold normally does. This is gold on steroids, chugging energy drinks at 3 a.m. and listening to motivational podcasts. Here's where it gets messy because if you go online right now, X, Reddit, financial news, everyone has a theory and I mean everyone. You've got the gold bugs screaming the dollar is collapsing and there's some truth in that and we're all going back to the gold standard. I don't think that's happening.

2:27But you've got the crypto bros saying it proves that Bitcoin's the future. You've got the doomsday preppers stockpiling silver bars and canned beans in their basements. Not such a bad idea actually. And then you got mainstream financial media basically just ignoring it because gold hitting all-time highs doesn't really fit the narrative that everything is fine and the stock market is the only game in town.

2:49So the problem is nobody can actually agree on why this is happening. Not the traders, not the economists, not the analysts. Everyone's looking at the same chart and coming up with completely different conclusions. And that's the noise. That's the stuff that's unhelpful.

3:04All right, so let's start with the obvious answer everybody thinks they know. Inflation. The reason gold is going up is because inflation is going up. And it's true, inflation sucks. Rent's gone up, grocery prices gone up, fast food prices have gone up. But here's the thing. Gold isn't rising just because of inflation, at least not in the way most people think.

3:28If gold was just reacting to inflation, it would have exploded back in 2021 when they printed $4 trillion. We had 9.1% inflation officially by the government. Remember that? That was June 2022, that was the highest inflation rate in 40 years. And what did gold do? It kind of went sideways for all of 2021 and 2022. It didn't start this rally until late 2024 and then really kicked off in 2025. So yes, inflation is part of the story, but it is not the story. It is not the answer to what's actually happening here.

4:07So here's what's actually happening. This is the part you want to pay attention to. My name is Felix Prehn. I used to be an investment banker. I've spent years studying what Wall Street does and how they really operate. I've also got Winston back there who's an insanely large nose, who's very, very good at research.

4:24I have a pretty good understanding of how institutional money thinks. And I know what signals they're watching that retail investors completely miss. Not because I'm so clever, but because I've got Wall Street mentors. I've got market makers that come from the gold and silver markets who can explain this to me. That's also why I'm the founder of the Go Academy. Winston is the co-founder and we've already taught well over 20,000 students how to navigate these exact market conditions.

4:49And I've also founded TradeVision.io. I'm going to give you a little insight into how institutions are making money out of this because right now the big institutions, they're moving and I think you deserve to understand why. And if you do, let me know in the chat. Put a little D in there for deserve because I think we all deserve financial education, don't you?

5:11Foreign countries, the foreign buggers like me, are quietly losing faith in the US dollar. Now, when I say quietly, I mean the same way somebody quietly deletes all their couple photos on Instagram before they announce their breakup. The signs are there. People just pretend not to see them.

5:35For 80 years, basically since World War II, the US dollar has been the only game in town. It's been the global reserve currency. That means it's the currency that all the central banks around the world hold in very large quantities to facilitate international trade. It's been the foundation of the global financial system since World War II.

5:58But something is changing. 20 years ago central banks held 70%, and I'm going to hit you with some numbers so you might want to write these down, of their foreign exchange reserves in US dollars. Today, 58%. Now maybe you think that is not a big deal but a 12% drop of 70% is like 16% or something like that. So when we're talking about central banks across the globe this is trillions with a T of dollars being dumped.

6:36But they're not just dumping it because that would be really obvious and it might shake up the market. What are they doing? No, we're not dumping the dollar. We have a fancier term for this. We are diversifying away from the dollar. Not dumping, diversifying slowly.

6:58It's not just that gold is going up, it's who's buying it. Because when retail investors, you and me or Winston back there, when we buy gold, that's one thing, right? When hedge funds buy gold, that's another thing. But when central banks, the biggest, most powerful financial institutions on the planet, start piling into gold at record-setting pace, that is a very different ball game.

7:22Literally, for the 3rd year in a row, we have 3 years of this. Central banks have bought over 1,000 tons of gold per year. That is a lot of gold. How much do they usually buy? They usually average 400 to 500 tons over the previous 10 years. So this is a 2x of central banks buying gold and it's speeding up.

7:53I've got the Q3 data for last year. You know how much they bought in one quarter? I said it's 1,000 for the year. Guess how much they bought in one quarter? 634 tons. That's like 63% of the annual amount, which is already double. This is crazy. They're buying more in a quarter than they were buying in a year before. The majority of central banks out there are saying they plan to buy even more gold over the next decade. This isn't a fad. This is anxiety. And gold is the anxiety drug.

8:28Poland, and the Poles are very smart, one of the smartest countries in Europe that seems to be actually run by half reasonable people. They've increased their gold allocation to 30%, up from 20. China is adding tons. They now hold about 2,300 tons of gold officially. Could be even more.

8:52But what are they actually doing with that gold? Is it just about having shiny stuff in the vault and going, "Look how much gold I've got?" No. Central banks are price insensitive buyers. They don't care if gold's $2,000 an ounce or $4,000 or $6,000 or $8,000. They're buying for strategic reasons. They're not buying to make a profit.

9:12And it creates a structural price floor for gold because when you have massive institutions buying consistently, and let's face it they can just print money to buy more regardless of price, that puts constant upward pressure on the market. So even though gold prices have more than doubled in the last few years, central banks are still buying. In fact, they're buying faster. They're buying more.

9:36So here's what's happening. You have your central bank, they buy gold, the physical stuff. What happens because of that? Well, the gold price, it goes up, right? That attracts more investors because there's momentum here. So what happens? Well, you get investors. They want to buy more gold. They're now buying more gold. So what happens then? Well, the gold price goes up more. So central banks then, well, they buy more because they need to maintain their target allocation and we are in this happy merry circular round and round and round she goes.

10:27So why does it feel odd? Why does it feel confusing? Why does our instinct say, "But we're too late." This is the part that makes everything confusing. And I want to acknowledge this because I know a lot of you are feeling this. The stock market is near all-time highs. So at all-time highs, the S&P 500 is up. Tech stocks are partying like it's 1999. AI companies are being valued like they've already replaced half the workforce. And at the same time, gold, the ultimate safe haven asset, is also at all-time highs. This is not normal.

11:08Gold is down because the world is good and there is no risk. But right now we have stocks up at all-time highs, literally all-time high, and you have gold up at all-time high. Historically markets pick a lane. Either we are in risky assets like stocks or we're in gold because we're fearful. We're never in both, not at the same time.

11:38But that's what's happening. We're seeing a world where stocks are priced for optimistic growth. Gold is priced for a troubling future, and bonds are priced for confusion, and silver is priced according to some people in Chicago. So every asset class seems to be sending a very different signal and this creates an environment where two people can look at the exact same data and come up with very different conclusions. One person looks at the stock market and says everything is great. Another looks at the gold market and says we're headed for disaster.

12:08So who's right? The answer is both and neither. I could be a politician, right? Because we're seeing a market that's deeply uncertain about the future. There is optimism about technology and innovation which is tremendous, but there's also deep anxiety about debt, inflation, geopolitical risk, invading Venezuela and Iran, and the whole stability of the financial system.

12:32Because here's a fairly shocking thing. I went on a hike with a friend the other day who's also heavily in the financial space and he said to me, do you know how long ago 2008 was? And I was like, I'm not really sure, how long ago was that? And he said 18 years. 18 years. And she found out it wasn't his. If you get that reference, put it in the chat down below.

12:54What does that mean? It means the bankers don't remember this. Why? Have you walked into an investment bank? How old's your average banker? I'd say they're 25 to 39, that's probably the space. So the 25 year old was 7 at the time. He doesn't remember it. And the 39 year old, he was 21 at the time, which means he was so drunk he doesn't remember it either. So they don't remember the risk. So what are they therefore doing? They're taking the same risk again.

13:27And that's why the gold thing actually matters. Not because gold's shiny, not because it's hitting all-time highs, because it's signalling something about the underlying health of the financial system. So what is gold really signalling?

13:41Gold does not go up when people are optimistic. When trust is high, gold is boring. When markets feel stable, gold goes nowhere. When institutions feel safe, gold gets ignored. Gold wakes up when stability starts to slip. And what we're seeing right now, it's not panic buying. It's preemptive positioning.

14:02Central banks aren't reacting to a crisis that's already unfolded. They're hedging a future they don't trust. Think about it. The US national debt, it's something like $38 trillion and obviously counting every single day. They add more than $6 billion debt a day, every single day. Interest payments on that debt are now over $1 trillion, just the interest. More than the US spends on national defence.

14:28And it's not a coincidence that Trump's come out and says I want to spend $1.5 trillion on defence, because it doesn't sound good that you're spending more in interest than on defence. So it's more than the US spends on education, law enforcement, research, all that combined. So how do you deal with it? Tax people, forget about it, they vote you out of office tomorrow. You can lower interest rates. Every 1% cut in interest rates, bear with me while this is connected to the gold story, saves you about $380 billion in interest.

15:02So what are they doing? They're prosecuting the Fed chair. I mean, he is a muppet in my humble opinion. I'm sure he's a very nice guy, but the money printing he did after COVID was lunacy. They're going to put him out of office anyway because he's out of there this year. And they're going to put in a poodle who's going to say whatever Trump thinks.

15:20So the government is lowering interest rates to make the debt more affordable. But what does that mean if the dollar interest rates go down? What does it actually mean? Well, one thing is it lowers the value of the US dollar. Now if you are a European or an Asian central bank, you're like, well, I know these assets are going to lose value. That's not great. We also know it's going to cause inflation. Prices are going to go up. That's what happens when you lower interest rates.

15:50So these central banks are looking for a plan B, and they have less faith in the US dollar and the US government because the US government is doing some creative thinking. So what are they looking for? They're looking for something with no counterparty risk. There's nobody else on the other side of that asset. Now central banks don't buy the US dollar as cash. They buy US dollar bonds from the US government. So they get interest on that bond from the US government. So there's a risk there. What if the US government decides to do something different with that?

16:27So central banks, they want something that fundamentally cannot be printed, and the money printers are going already, which causes inflation. They want something that can't be seized. It's a lot harder to go and nick a ton of gold, it's very heavy. So they want something that's been a store of value for thousands of years. When you see gold exploding like this, what it really signals is a loss of confidence in the financial system. Not a collapse, not a crisis, but a slow, steady erosion of trust.

17:05Now if you're still with me, why the heck does it matter to you if you do or don't own any gold? Maybe you're thinking, Felix and Winston, this is all very interesting, but I don't really own much gold. I'm invested in stocks, maybe in some bonds, maybe some crypto. Why should I care? Well, here's why. Because what's happening with gold affects everything else in your portfolio.

17:28If central banks are losing faith in the dollar, that means the dollar is going to weaken. A weaker dollar means what? What happens when the dollar loses value? What do you think happens to all the stuff you import? What do you think happens to those prices? Are you paying in dollars that are worth less? You're going to have to pay more dollars. So import prices go up. You add tariffs on top of that too. So you get inflation. It means your purchasing power erodes.

18:00So if the US government is stuck in a debt trap, which is what they are, they're just going to do what? They're going to create more dollars. More money printing means more inflation. More inflation means your cash savings lose value. One way I like to look at that is think about this. This is a tropical island. There are 10 of you shipwrecked on there and you have 10 $1 notes. That's all the money in the world on this island. So each dollar note buys a certain amount because there's only 10 of them.

18:36Now someone else arrives, floats to the shore, and he's got in his pocket $100. So we've gone from an island with $10 to an island with $110. Do you think that the coconuts and the things you grow on there are now worth what they were before? Or do you think prices have gone up because there's 10 times more money? That's what happens when the US government prints money. It's more money but still the same amount of resources. Therefore prices go up.

19:12And if interest rates stay low to keep the debt affordable, well, what about all the pension funds who own bonds? That's not going to give you much of a return. Now what if interest rates spike because the government has to actually pay higher interest rates to sell its debt? That's the counter side of that coin. It means stocks are going to get hammered because everyone's going to sell their stocks and move back into bonds. So it's a catch 22.

19:35All right, so let me tell you how Winston and I personally think about this. And I want to be very clear, I'm not giving you financial advice. I'm telling you how to think, not telling you what to do. I'm just going to share my framework for thinking about this and some of the things I've learned from my Wall Street mentors and so on.

19:51The first principle is you got to diversify. It is not optional, it is mandatory. I don't care how bullish you are on stocks, I'm bullish on stocks. I don't care how much you love crypto. I don't care if you think gold is some sort of barbarous relic or silver, whatever. I think you need to be diversified across multiple asset classes because we're living in a world where the rules are changing. The playbook that worked for the last 40 years, buy stocks, hold bonds, retire quite well off, that is not going to exist anymore.

20:20So you need exposure to different things. Stocks for growth, bonds maybe for income, corporate bonds pay quite well at the moment still, real estate for some tangible value, gold and silver for inflation protection. And you need to understand why you own what you own and not just follow something.

20:39Gold is not a growth asset. It doesn't pay a dividend. I know there's some financial companies out there, they're now offering some sort of finance on that. Well, that means they're lending it out, you're taking risk. It's the same thing when you toggle on that thing in your brokerage that you're lending out your shares, which I know everyone's doing. Someday that's going to come and bite you in the backside. But gold doesn't generate cash flow. It just sits there. So why do we own it? It's insurance. It's protection against the erosion of your purchasing power. It's car insurance. It's a hedge against the system breaking down. Think of it like fire insurance on your house. You don't buy fire insurance because you think your house is going to burn down. You buy it because if it does, you're protected. That's what gold is.

21:19Now, can you trade gold? Yes, of course you can. We also do that. We buy gold miners and that sort of thing. But that's a whole different skill level that we're not really getting into here because that takes a lot more experience. But you also want to pay attention to what the big money is doing here.

21:37Central bankers are buying gold. Sovereign wealth funds are buying gold. Institutional investors are buying gold. These are not dumbass people. They have access to information analysis that you may not see. We're going to give you as much information and data as we can for free.

21:52The gold rally isn't just about gold. It's about what's happening underneath the surface of the global financial system. The government is trying to pull wool over your eyes. They're trying to tell you that inflation is low, right? Why is Trump pushing to lower oil prices? Why is Trump pushing to lower credit card interest rates?

22:15Why is he pushing to lower electricity prices? Those are the kind of bills that ordinary people feel. But the real inflation is in assets, right? Just look at last year. The stock market did what? 17%.

22:30The year before it was, I think if I recall correctly, 24%, the year before that, I think it was 25%. An extraordinary rally. And you compound that, you're at 80% or something. What does that mean? People got 80% richer.

22:47Now, those very people are now paying more for the goods and services and the assets that they're buying. So real estate goes up, stock prices go up. That's the real inflation. So it's beautiful when the market goes up, I mean I enjoy it, but the people who haven't got enough money in these assets, they get poorer and poorer and poorer because the value, the purchasing power of your dollar that you earn goes down and down and down unless you're putting it into assets.

23:15So I don't know if gold's going to hit 5,000, 6,000, 10,000. Nobody knows. Anybody tells you that, they know they're lying, right? We can make bull cases, we can make bad cases and so on. But what I do know is that the forces driving this rally, the debt, the inflation, the currency debasement, the geopolitical risk, those forces aren't going away. If anything, they're going to get stronger.

23:35So whether you own gold or not, you need to be thinking about how to protect your wealth and your retirement. And that was really the purpose of today's video. If you got some value out of this, share it with somebody. That's all I ask. I love you for wanting to understand this, I love you wanting to educate yourself. Do it, spread the knowledge, spread the news, get yourself the free newsletter down below. And I wish you a beautiful day.