The Pattern That Repeats
Gold has produced three large moves over the past century. The metal went from 35 dollars to 850 dollars, from 250 dollars to 1,900 dollars, and from 1,050 dollars to nearly 4,800 dollars.
The same four conditions preceded each move. Government borrowing passed the point of repayment. Rules were rewritten to devalue the currency.
Real interest rates turned negative, and central banks bought gold. Felix argues that all four signals are present again.
In each of the 3 episodes, debt triggered the sequence. Debt reaches a level where no plausible combination of taxation and growth can retire it.
Western governments do not default, an act Felix notes is politically untenable, so the alternative is to devalue the currency.
Purchasing power erodes as the currency weakens. Central banks, watching the same arithmetic, convert paper reserves into gold. Each of the 3 moves lasted years and included sharp drawdowns.
Signal One: Debt Beyond Repayment
American government debt rose sharply in the Great Depression. The state could not service it through taxation or growth.
FDR responded in 1934 by confiscating private gold through executive order and revaluing it from 20 dollars to 35 dollars, a 69 per cent increase. Gold rose 69 per cent while the dollar gained nothing.
American fiscal commitments exceeded the economy's productive capacity again around 1970. The debt arithmetic broke a second time, and the spiral triggered Nixon's response.
After the dot-com bust and Iraq war spending, US debt roughly doubled. The government backstopped banks, insurers, and mortgage companies. Gold went from 250 dollars to 1,900 dollars during that expansion.
American national debt is now heading towards 40 trillion dollars. Felix puts that figure at close to 300,000 dollars per family, roughly 6 times the average income.
No government will repay 40 trillion dollars of debt, and the figure is not even shrinking. Headlines from late 2026 confirm the figure has crossed that threshold.
When debt becomes mathematically impossible to repay, two options remain. A government in that position either defaults or devalues. Western governments choose to make the currency worth less.
Signal Two: The Rules Get Rewritten
FDR made private gold ownership a criminal offence. Anyone caught holding gold faced a fine of 10,000 dollars, equivalent to about 200,000 dollars today, or 10 years in prison.
On August 15th, a Sunday, Nixon announced a temporary suspension of the gold standard. The arrangement has now lasted 55 years.
After the announcement, the dollar dropped 30 per cent over the following decade. Gold rose from 35 dollars to 850 dollars, a 2,300 per cent gain.
After 2008, the Federal Reserve introduced a programme it called quantitative easing. Felix argues the Federal Reserve created the term to avoid the inflationary connotations of "money printing". The programme's function was to create new money.
No gold standard constrained money creation. The Fed could print unlimited amounts. The Fed used the new money to buy assets from banks and bail them out.
Gold went from 800 dollars to 1,900 dollars by about 2015. Central banks had recently begun buying the metal at scale.
The US government passed the Genius Act, which requires stablecoins to be backed by US debt. The law creates artificial demand for government debt through the stablecoin market.
Felix argues the government is using regulation to fund the deficit indirectly. Reports from late 2026 describe proposed stablecoin rules designed to create new demand for Treasuries and support the dollar's reserve status.
FDR confiscated the metal in 1934. Nixon suspended the standard in 1971.
After 2008, the Federal Reserve introduced quantitative easing. The Genius Act now mandates that stablecoins be backed by government obligations.
Signal Three: Negative Real Interest Rates
After Nixon suspended the gold standard, inflation rose to 14 per cent. Savings accounts and bonds paid far less.
Deposit rates remained below inflation. Savers lost purchasing power each year.
After 2008, the Fed took interest rates to zero. At zero rates, a government bond returned less purchasing power than the sum originally lent. Gold went from 800 dollars to 1,900 dollars by about 2015.
Felix argues the same condition applies now. In his view, a bank paying 2 or 3 per cent while living costs rise by 6 per cent leaves a gap.
The loss is about 4 per cent a year. On 1,000 dollars, 2 per cent interest adds 20 dollars. Inflation at 6 per cent removes 60 dollars of purchasing power, a net loss of 40 dollars.
The nominal balance rises, but what it can buy shrinks.
Felix argues the Fed has been cutting rates while inflation remains high. The pattern mirrors the 1970s. In his view, the gap between the two makes hard assets more attractive than cash.
The Federal Reserve raised its key rate in late 2026 for the first time in 3 years. Felix maintains the broader direction has been accommodative.
Asset holders grow richer while cash loses value. A depositor earning 2 per cent while prices rise at 6 per cent transfers 4 per cent a year to the borrower.
Signal Four: Central Banks Buy Gold
Before 1971, France, Britain, and Switzerland were converting dollars to gold as fast as they could. They could see the Fed was printing money without enough gold to back it.
After the 2008 financial crisis, central banks flipped from selling the metal to buying it for the first time in decades. Felix calls this an institutional vote of no confidence in paper money. Central banks have been net buyers of gold for 15 consecutive years, and in 2025 alone they bought almost a thousand tons.
Poland, China, India, Turkey, Kazakhstan, and the Czech Republic are all diversifying away from the dollar by buying gold. Reports from late 2026 confirm the buying continues at record pace. China's central bank made its largest monthly purchase in 3 years.
Goldman Sachs has called this the most aggressive central bank gold buying cycle in modern history. The bank projects gold to reach 5,400 dollars by the end of this year, according to Felix. Published forecasts from the bank vary in timing.
Gold Is Not a Straight Line
In the 1970s, the metal dropped 47 per cent over 2 years, 1974 and 1976. The decline came in the middle of the century's largest bull market.
Over the full period the metal went from 35 dollars to 850 dollars. The full move from 35 dollars to 850 dollars contained that 47 per cent decline.
Gold miners carry a different risk profile. A typical mining company spends about 1,200 dollars per ounce to extract the metal. At a price of 4,800 dollars, the profit is 3,600 dollars per ounce.
If gold rises 25 per cent from 4,800 dollars to 6,000 dollars, the miner's cost remains 1,200 dollars. Profit rises from 3,600 dollars to 4,800 dollars, an increase of 33 per cent.
Costs stay at 1,200 dollars per ounce regardless of the gold price. A 25 per cent rise in the price lifts mining profit by 33 per cent. The relationship works in reverse, and a falling price compresses margins faster than the metal itself declines.
Where All Four Signals Converge
Debt came first in each of the 3 episodes. Government borrowing reaches a level where repayment is no longer arithmetically possible. Authorities then rewrite the rules to devalue the currency and manufacture new demand for their own bonds.
When deposit rates fall below inflation, the difference accrues to the borrower. Central banks convert paper reserves into gold.
In 1934, all four conditions were present, and FDR revalued gold 69 per cent overnight. In 1971, all four applied, and gold rose 2,300 per cent. Gold went from 250 dollars to 1,900 dollars over the post-2000s debt expansion.
US national debt has crossed 40 trillion dollars. The Genius Act requires stablecoins to hold US debt, creating new demand for government bonds. Felix argues that real interest rates remain negative and central bank buying is running at record volumes. Deposit rates fall below inflation in Felix's assessment, and central banks bought almost a thousand tons of gold in 2025 alone. Felix argues the pattern has repeated 3 times and the 4 preconditions are present again.