Name: WARNING: Gold Prices Are Signaling a Major Crash
Uploaded: 2025-09-29T18:13:09.000Z
Duration: 16 min 54 s
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There is something seriously wrong with gold prices.

The superlative

This is the highest gold prices has ever been.

Present continuous

Central banks across the globe are massively buying gold as if we are going back to the gold standard.

In the last two years alone, gold prices have more than doubled.

Last time something like this happened was back when Nixon abandoned the gold standard and suspended the system back in 1971.

And it led to one of the highest inflations in the history of the United States.

So are we on the brink of yet another one of the highest inflation periods?

To understand that, we first have to understand the relationship between the dollar and gold.

If you look at the entire economy, the US dollar is an artificial commodity created by the government to help us measure stuff in the economy and use it as a medium of exchange.

So the number of dollars in the economy determines what is going to be the price of gold.

So if we assume hypothetically that within the entire economy we have 5 dollars and we have 5 gold bars, 1 gold bar is going to equal to 1 dollar.

And that will be the final price of the gold bar.

The government can't possibly jump tomorrow and double the supply of gold.

Because the amount of gold in the economy is limited and in the world, frankly speaking, I mean, we are increasing the supply of gold over time, but because it's so difficult and it requires a lot of investment to extract it from the ground, the supply of gold increases gradually, while the supply of dollars is very easy to increase.

However, the government has to be very careful so that it does not massively devalues the currency.

In this hypothetical example, if the government is going to double the supply of dollars in the economy, suddenly the relationship between the dollars and gold is going to change.

In this case, because we have double the amount of dollars in the economy than the amount of gold, 1 gold bar is going to equal to 2 dollars.

This is an oversimplification because the economy is very huge.

Besides the gold, we have a lot of other products.

And because we have so much dollars on one side and we are consistently increasing the supply of dollars in the economy and the supply of goods are also rising on the other side, the relationship is not direct.

But if you actually bring it down to its core principle, this is exactly how it works.

So we have to take a look at how the government is massively increasing the supply of money.

Imagine you are working hard, you are making money, and there is a specific amount of money that circulates within the economy.

Because there is going to be inflation anyways, because people are making money, they are spending, they are buying things, and a portion of that money is going in taxes to the government.

The government takes that money and spends it on different government programs, from social security to healthcare.

That demand is going to create inflation to a certain extent, but that is a very limited inflation of 1 to 2 percent, because the exact same amount of money is circulating within the economy.

Yes, some of that money is borrowed, some of that money changes hands multiple times, however, it is still the exact same amount of money.

The problem is, when the government suddenly starts to borrow that money, not in the form of taxes like it always does, but rather, it borrows it directly from the people or from investors or from anybody who frankly has savings.

The government can't simply take that money from you, because you already pay your taxes.

The second way the government can take that money from you is by providing you with an investment opportunity that you can't possibly refuse.

So the US government is going to create a piece of paper called the government bonds, and it will simply say that, I am going to exchange these government bonds for dollars, you can hold it, and you can sell it anytime you want.

And in the global economy, US government bonds are meant to be equal to money, so they are money equivalent, because they are very liquid.

You can literally exchange any government bonds to US dollars without affecting the market.

So even if you have hundreds of billions of dollars of US government bonds, you can easily turn them into cash in a very short period of time.

So every time the US government is borrowing that money because it wants to spend on other things, it is creating US government bonds and throwing it into the economy.

And we consider these government bonds equivalent to cash, which means that we are increasing the real supply of money every single time that the US government is borrowing money.

And now let's go back to the relationship of dollars to gold.

We are not directly increasing the supply of money by printing money, but because we are creating something called US government bonds, which are equal to US dollars, we are doubling or tripling the supply of money every single time that the US government is borrowing money, which is leading to a direct increase in gold prices, because US government bonds in the economy are considered to be US dollar equivalent.

And to prove that point further, you have to take a look at the history of US deficit and compare its relationship to gold prices.

Is there a direct correlation between the US deficit and gold prices?

Before 1970s, if you look at the US deficit, the United States abandons the gold standard and suddenly the US deficit starts to rise dramatically.

And because it was a shock to the rest of the world, it led to one of the highest increases in gold prices.

And this was the period when the United States was going through one of the highest inflations.

In fact, it was very similar to a stagflation, I would say.

And then starting from 1980s to up to 1996, you can see that gold prices stabilized for a very long period of time.

In fact, there was almost two decades of stable gold prices, even though that the United States was going or running some stable deficit.

At this point, it was very clear that the US government can run a certain amount of deficit as long as that deficit is sustainable.

If we are running a 2-3% deficit every single year, and the US economy is growing, the productivity is growing, and the US budget is being filled with extra money, and we can pay off the interest on that debt, then it is leading on one side to an increase of supply of money.

On the other side, it is massively increasing the productivity of the economy.

And it is sustainable because at this point, the US government can still pay off its debts.

And that's why gold prices haven't actually increased much.

But what I want you to pay attention to is that from 1996 to 2002, gold prices have actually dropped significantly to a certain extent.

And it happened primarily because the United States for the first time since 1971 started running a surplus.

The United States stopped actually running a deficit, it began raising more money than And a lot of that money was actually spent on paying off its debts.

And you can see that it clearly affected gold prices.

Because what it did basically is, all those government bonds that were in the economy, the US government paid off the debts and they disappeared from the economy, which means that it decreased the direct supply of money in the economy in relation to gold, which led to a decrease in gold prices.

You can see that there is a huge increase in gold prices after that.

They basically increased from about 300 dollars to as much as 1500 dollars.

What did we do to the supply of money that it led to one of the highest increases in gold prices?

First of all, George Bush started multiple wars and he needed to finance those wars.

Secondly, the United States was going through the 2008 financial crisis.

When Obama won the election in 2008, he basically inherited one of the biggest crises in history.

And Ben Bernanke, the chairman of the Fed, gave him a plan that the only way we can fix this economy is by the Federal Reserve massively buying US government bonds and injecting trillions of dollars into the economy.

That is going to directly increase the supply of money, which created one of the biggest increases in gold prices in the history of gold.

Obama was actually very strict with his policies and he knew that this is not sustainable for a long time.

And when the US economy began to show signs that it's recovering, when the economy actually began to grow after the 2008 financial crisis, he started actually managing the supply of money.

It led to one of the drops in gold prices.

They went from as high as almost 1800 dollars at their peak to as much as 1300 dollars.

And this was probably the biggest drop in gold prices in recent history.

However, in 2015 and 2016, when Donald Trump becomes the president, he comes with a very different plan.

He says that we are going to cut taxes and we are going to make a bet on the growth of the US economy.

So if people are going to keep more of their income within themselves, spending is going to grow.

And even though that we will be collecting a smaller tax percentage, we will be collecting a smaller tax percentage out of a bigger economy, which is going to balance the budget.

That led to a huge increase in the deficit, which again led to one of the biggest spikes in gold prices instantly after that.

China is trying to create its own world order.

Other nations are moving away from the United States.

And the only way the United States can keep the current world order is by massively borrowing money and spending it to ensure that the United States will outspend everybody and will keep its economy at the top, which again led to one of the biggest increases in the deficits, which led to the biggest increases in gold prices.

But the real question is that why did gold prices suddenly skyrocketed from about $2,000 to $3,700 to almost $4,000?

And that's because the real question you should be asking yourself is what is next?

What will happen to the US deficit moving forward?

If you take any projection, you will see that every single projection by every single economies indicates that the United States from now onwards will be running one of the highest deficits, if not the highest in American history.

At least for the next 9 to 10 years, the US deficit is going to continue to grow.

And by 2035, the US deficit is expected to reach $2.6 trillion.

So within the next nine years, the US government will run a deficit of almost $23 trillion.

Now let me ask you a question, what is going to happen to gold prices if we increase the supply of money by $23 trillion over the next nine years?

And that's why gold prices are skyrocketing.

So if you want to know what will happen next to gold prices, all you have to understand is that by what rate or at which rate we are going to keep increasing the supply of money.

It might not be direct quantitative easing like it happened in 2008 and 2020, but because the government is still massively borrowing money, no matter from whom it's borrowing, it is still creating that kind of a deficit.

And the problem with this deficit, unlike previous deficits, is that the vast majority of that money is simply the interest that the US government has to pay.

For example, in 2022, the US government ran a $1.4 trillion deficit. $900 billion of that was the pure money that the government could spend on social programs.

But half a trillion dollars of that was basically the interest that the US government had to pay.

By 2035, $800 billion of that is going to be also on government programs.

And the reason that it is going to run such a huge deficit of $2.6 trillion is because $1.8 trillion is required to avoid a government default since the US government still has to pay interest on that massive debt.