gold prices have been surging to new heights recently as Global uncertainty intensifies investors are flocking to gold as a safe haven driving its value even higher this Gold Rush has sparked fears of a potential gold shortage further fueling the price rally but is the world really running out of gold do central banks actually hold the reserves they claim or is it all just paper trading my name’s Guy and today I’ll break down what’s really happening in the gold market and where it could be headed next stay tuned now if you’ve been following Gold’s recent price action you’ll know it’s been on a parabolic run lately as I record this gold is trading at an all-time high and it’s quickly approaching $3,000 per troy ounce in fact gold has outperformed stocks over the last year surging by 45% so then what’s been driving this impressive rally well there are a number of factors and perhaps the most obvious is speculation as investors catch on to Gold’s performance many more have piled in hoping to ride the wave and capture some of those gains for themselves but good old-fashioned fomo isn’t the primary force behind Gold’s rally not by a long shot the real story lies in a growing number of investors turning to gold as a hedge against a range of mounting risks for example many investors are turning to gold as a safeguard against unsustainable fiscal policies and the debts that pile up as a result spending by governments and printing by central banks has caused inflation which continues to be a huge concern and has further driven the demand for gold geopolitical tensions are also playing a major role from the ongoing conflict in the Middle East to the war in Ukraine and the rising trade tensions between the US and several other Global Powers uncertainty is everywhere and as tensions rise assets like gold become much more attractive for Citizens and sovereigns now one of the biggest buyers in this sense has been Asia particularly China which has been scooping up Gold by the bucket load the People’s Bank of China or pboc has been aggressively boosting its reserves aiming to reduce its Reliance on the US dollar following a sixth-month pause the pboc began buying gold again in November accumulating around 44 tons of the stuff throughout 2024 this brings China’s 2024 gold total to around 2,280 tons and China isn’t alone countries like India turkey and Poland have also been ramping up their gold reserves India accumulated 72 tons of gold in 2024 bringing its total to 876 tons by the end of the year turkey accumulated 75 tons to bring its total to 614 tons of gold and Poland scooped up 90 tons of the yellow stuff to bring its 2024 total to 448 tons in fact central banks around the world collectively added over 1,000 tons of gold to their Holdings throughout 2024 marking one of the largest accumulation sprees in recent history central banks have in fact been net buyers of gold for the past 15 years though and according to the world gold Council this trend is unlikely to slow down anytime soon as central banks are expected to remain a primary driver of the gold market in 20125 some reports suggest that almost 70% of central banks around the world plan to increase their gold reserves at the same time Chinese investors have turned to Gold to preserve their wealth given the weakness in the housing market oh and by the way if you’re digging this golden content smash that like button to give it a boost subscribe for more treasure and ping that notification Bell so you don’t miss a nugget of new info now this talk of central banks brings us to the primary reason why gold has been in the headlines lately and that’s the recent gold rush that’s been fueled by investors desperate to get their gold moved from certain countries namely the UK to the United States as quickly as possible for context the UK’s Central Bank the bank of England is the world’s second largest custodian of gold behind China to be to be exact there are nine underground vaults in London holding approximately 8,500 tons of gold worth around $771 billion crazy stuff however in the last few months the amount of gold being stored in London’s vaults has been falling that’s because many investors are worried that US president Donald Trump will Implement tariffs on gold as part of his wider tariff regime and they’re desperately trying to get their gold moved to gold hubs in the US like New York before it’s too late at the time of shooting Trump hasn’t officially announced any tariffs on precious metals like gold or silver but he has implemented 25% tariffs on other metals namely steel and aluminium or if you use Fahrenheit aluminum anyway this has caused Panic that other metals will be targeted with gold being at the Forefront of everyone’s mind as such around 8,000 bars have been moved from London to New York in the last few months alone roughly 2% of London’s total now that may not sound like much but remember we’re talking billions of dollars worth of gold here among the biggest names flying gold across the Atlantic are HSBC and JP Morgan why well to cover their losses on short positions you see normally physical gold owned by Banks is stored in vaults like the ones in London and that gold is then lent out for a profit the bank then protects itself against any price drops by selling gold Futures contracts on New York’s commodity exchange or comx now this setup is usually low risk since the spot price of gold is usually very close to the Futures price on New York’s comx if gold prices fall physical gold loses value but Futures contracts gain value so it balances out conversely if gold’s price Rises physical gold becomes more valuable but the price of Futures contracts Falls this balance is how Banks hedge against price fluctuations and why banks are constantly shorting gold it’s functional rather than nefarious however because of the political uncertainty in the United States particularly after Trump’s election victory in November many investors went long gold as such gold Futures prices on comx shot up much higher than the spot prices in London effectively breaking the hedging strategy this disconnect has created an Arbitrage opportunity for investors with gold stored in London since they can get it moved to New York to be sold at a higher price so for many investors this is great news but this isn’t such great news for banks that’s because all of a sudden the contracts they were using as a hedge were worth a lot more meaning Banks were losing money on them so they were faced with two options either deliver gold against these contracts fast or sell those contracts at a loss Bank wants to lose money which is why moving gold quickly has become a top priority the problem is that it’s far easier said than done moving billions of dollars worth of gold bars is a massive undertaking quite literally not only is this gold extremely heavy but it also requires extensive physical resources tight security and most crucially time put simply Bank faults just aren’t designed for sudden large scale gold movements this has resulted in a whole bunch of logistical problems that have created a bottleneck for banks and investors hoping to get their gold moved ASAP the problem with these delays is that it means that banks are then stuck with losing trades and this is a bigger deal than you might think if a bank makes huge losses even on paper they would need to set aside more Capital as a safety net rather than use that capital for Investments this opportunity cost could limit the bank’s ability to operate profitably for years put simply they can’t afford to wait in fact Bank of England employees have reportedly been inundated with calls from Banks trying to FasTrack their gold transfers however everyone is being told the same thing wait your turn the thing is this obvious desperation has only driven gold prices higher triggering a feedback loop as prices rise more Banks scramble to move their gold further clogging the system the thing is these dels have fueled concerns about a shortage of gold Supply and although this isn’t entirely accurate there is a shortage when it comes to Gold’s liquidity and this is where things get a little technical so listen carefully according to the London bullan Market Association or lbma there were around 279 million ounces of gold stored in London’s vaults as of December 2024 at the same time the volume of gold being traded through spot and cash cont contracts was estimated to be around 380 million oun now to be clear this isn’t the amount of physical gold sitting in vaults but rather the total size of paper contracts representing gold obligations in the market however only about 36 million ounces of that stored gold was actively available to be bought or sold this is called the float referring to Gold that is not already tied up in long-term Holdings Central Bank Reserves or other commitments this means that this gold float represents roughly 10% of paper trading volume which is a major liquidity shortfall that’s because there’s literally 10x more gold being traded on paper than there is physical gold readily available for delivery as a result when Banks demand physical delivery there are severe delays because that gold simply isn’t available these delays can effectively amount to a technical default as Banks and other institutions fail to meet delivery obligations on time so as you can see this mismatch between paper gold and physical Supply can get very messy very quickly now while there’s very clearly a liquidity shortfall in the gold market it’s important to note that there is technically enough gold to go around however while there’s no immediate gold shortage that’s not to say there won’t be one in the not too distant future 2025 is set to be a pivotal year for the gold industry that’s because gold production is forecast to fall as the or grades that is the concentration of gold within an ore continue to decline and aging gold mines are closed down what’s more is that some of these mining companies are considering closing down for good that’s simply because mining companies are facing significant cost increases including labor and Regulatory expenses what what this means is that despite gold’s price being more profitable than ever many miners could be forced out of business some analysts predict that this would cause gold production to Fall by around 177% by 2030 this marks a turning point for the gold market which is seeing an Ever growing demand due to things like fiscal policy changes and geopolitical tensions when you combine these factors with the depleting reserves of gold as investors scram to buy more you quickly see that a supply shortage could very well be on the horizon obviously this would push up gold’s price but while a surge in gold’s price May benefit investors it could spell trouble for several Industries for instance tech companies use gold for its Superior conductive properties making it a key component in electronics like smartphones and computers this is also why green energy companies use gold in many of their products such as solar panels gold is also very biocompatible making it a choice material for medical implants and diagnostic tools it’s even used in space since its resistance to corrosion makes it durable enough for satellite components now obviously these are just a few examples where gold is more than a luxury or an investment the point is as gold becomes more scarce and expensive costs will rise across these sectors squeezing businesses and ultimately driving up prices for consumers some companies May struggle to survive While others will pass their skyrocketing manufacturing costs onto the public so then by now we understand that Gold’s liquidity is being squeezed and while there’s no immediate gold shortage this is a real possibility in the future so this begs the question of how all this could affect gold’s price well in case it wasn’t obvious gold’s price is set to keep Rising the question is by how much this is exactly what many Market analysts have been trying to determine and what’s intriguing is that many have recently adjusted their forecasts and they’re surprisingly consistent for instance UBS strategist hovi TZ predicts that gold will hit a peak of around $3,200 per ounce in 2025 notably this is $100 more than another UBS forecast made just 3 weeks beforehand it’s a simp similar story with Goldman Sachs where analysts say that quote if uncertainty regarding Economic Policy continues including tariffs imposed by the United States speculative gold demand may increase alongside Rising gold purchases by central banks and inflows into exchange traded funds similar to UBS Goldman Sachs analysts raised their forecast to $3,100 per ounce a $100 increase from a forecast made just one month prior meanwhile Michael Whitmer and analyst from Bank of America predicts that gold could reach as high as $3,500 per ounce assuming that retail and institutional demand jumps by 10% Michael says that this is a lot but it’s not impossible we reckon it’s actually quite likely given the current state of the gold market on the lower end meanwhile City Group forecast a price range of $2,800 to $3,000 per ounce meanwhile UK Bank HSBC predicts that Gold’s 2025 price will be within a range of 2350 and $ 2,950 per ounce elsewhere AZ research predicts gold’s price will be around $285 per ounce and Commerce Bank forecasts that gold’s price will fall to as low as $2,600 per ounce however some analysts are slightly less bullish giving out forecasts lower than gold’s price at the time of shooting this this video this suggests that gold’s price could be hitting a local top overall then it’s a bit of a mixed bag however from our perspective The View that gold may be approaching a local top appears to hold the most weight no pun intended that’s simply because much of gold’s price action seems to be driven by uncertainty and the surge in investors rushing to move gold into the US ahead of potential tariffs logically then if Trump were to confirm that there will be no gold tariffs this this uncertainty would end and the flow of gold into the US would slow down significantly the same would be true if we see a lasting resolution to conflicts in places like Ukraine which would reduce geopolitical uncertainty and thus gold demand if gold’s price is indeed approaching a local top then this raises the question of how this could affect alternative assets namely silver the precious metal alternative to gold or bitcoin’s BTC which is widely considered to be Gold’s digital alternative silver is likely to perform well for multiple reasons generally speaking Silver’s price tends to follow the price of gold but with higher volatility so as gold’s price rallies the price of silver will rally even harder a widely watched indicator for assessing Silver’s performance is the gold to Silver ratio simply put this ratio represents how many ounces of silver are needed to buy 1 ooun of gold when the ratio is elevated indicating gold is expensive relative to Silver it often suggests that investors May shift from gold into silver in search of better value an Golden Rule used by many investors is something called the 8050 rule basically if the gold to Silver ratio is above 80 to1 meaning you can buy 80 ounces of silver for 1 ounce of gold silver is undervalued it’s time to switch to silver If the ratio is below 50 to1 silver is overvalued and it’s time to switch to gold at the time of shooting the ratio is sitting at around 89 to1 this suggests that gold investors are due to rotate into silver at any given moment this is incredibly bullish for Silver’s price which is already approaching his previous all-time high set way back in 2011 a breakout beyond that level would Propel silver into price discovery mode with the potential for significant upside alternatively some gold investors could rotate into BTC which is considered by many to be digital gold this could make BTC a Top Choice For Gold enthusiasts struggling to get their hands on physical gold it also helps that BTC happens to be the highest performing asset of all time just saying just like gold BTC is seen as a store of value offering similar benefits to gold as a hedge against inflation and economic instability but the thing that separates BTC from gold is btc’s convenience that’s because unlike physical gold which is proving to be impractical at times like this BTC doesn’t require physical storage and can be sent to anyone around the world in mere minutes come to think of it the recent squeeze of available gold is concrete proof of why BTC is the superior asset but of course gold investors have another form of digital gold and that’s gold backed stable coins such as paas’s PX G or tethers XA in the eyes of some of these investors these will serve more of a digital gold role than even Bitcoin they’re literally tokenized versions of gold itself and best of all it’ll be much easier for these investors to Simply convert those tokens into other cryptos such as BTC not to mention that they’ll be able to store it all on a discounted Hardware wallet from the coin Bureau deals page link below okay if you like that video then don’t forget to check out our latest one here and if you’re not subscribed yet you can do that here that’s me for now thank you all so much for watching and I will see you next time
