Central Banks Just Showed Their Hand (And It's Full of Gold)

It's really wild to watch the ongoing shift toward gold, and still have people trying to fight against it in their minds and in public.

Greetings:

If the people who ISSUE fiat currencies are buying gold…

Why aren't we?

That’s the question you should ask, given the latest revelation in global reserves?

Gold is now 20% of global central bank reserves.

It has overtaken the Euro as the second most important reserve asset… perhaps why the European Central Bank head was crowing for reserve currency status.

The shift to gold isn’t a data point.

This results from central bankers screaming, "WE DON'T TRUST OUR OWN PRODUCT…"

And they just hope you don’t notice (and it’s not like anyone in the financial media is smart enough to ask Jerome Powell during the Fed meeting this week…)

The very institutions that print money, set interest rates, and tell us inflation is "transitory" are quietly stacking physical gold like doomsday preppers at a Costco bullion sale.

When magicians buy real rabbits because they know the hat trick is failing, pay attention.

This isn't subtle. This is an admission of guilt...

The Great Gold Confession

We've been riding the commodity wave since the liquidity cycle bottomed in late 2022 and early 2023, positioning in metals while everyone else was panicking about rate hikes.

Why?

Because when you've watched this movie enough times, you know how it ends.

Central banks aren't buying gold because it "goes up."

They're buying it because it's neutral, unfreezable, and not tied to the fate of any nation's balance sheet or printer. It's what countries hold when they don't want their reserves sanctioned, debased, or weaponized.

The shift has been dramatic.

Gold's share in official reserves has climbed from 12% to 20% in just a few years.

Meanwhile, the Euro, that poorly planned experiment in monetary unity, is getting demoted to third place like a participation trophy nobody wanted.

The $300 Trillion Context

Remember that $300 trillion global debt bomb I wrote about last week?

The one that's so abstract it might as well be measured in unicorns?

Well, central banks certainly remember. They're the ones who enabled it.

And now they're hedging against their creation.

This is like an arsonist buying fire insurance on the building they're about to torch.

Except in this case, the building is the global monetary system…

And we're all tenants.

All Roads Lead to Debasement

All roads point toward more dollar debasement.

Multiple banks said at year-end that the U.S. dollar was 20% overvalued against other major currencies.

But here's the paradox nobody talks about.

If the U.S. engages in future QE (and they will), that will temporarily drive the dollar higher as QE sucks global assets back into America.

So we're in this bizarre situation where printing more dollars temporarily makes them more valuable.

It's like being the cleanest dirty shirt in the laundry.

Eventually, someone notices you still stink.

Central banks get this.

That's why they're not waiting around for the laundry to get done.

They're buying the one asset that can't be printed, diluted, or "transitored" away.

The Petrodollar 2.0 Connection

This gold accumulation ties directly into what I've been calling Petrodollar 2.0.

This new infrastructure-for-dollars arrangement is emerging with Saudi Arabia and other sovereign wealth funds.

As the old oil-for-dollars system breaks down, countries need a hedge.

Gold is that hedge.

China, Russia, Poland, Singapore… they're all stacking metal.

Not because they're goldbugs reading conspiracy forums at 3 AM, but because they understand that in a world of infinite monetary expansion, finite assets always win.

What This Means for Your Portfolio

When Moody's finally downgraded America's credit rating after $36.8 trillion in debt (was the 36th trillion the dealbreaker?), I outlined the playbook: own what they own.

If central banks are loading up on gold at historically high prices, what tells you about where they think prices are headed?

I use the Sprott Physical Gold Trust (PHYS) for long-term exposure.

I also hold physical gold and silver, coins, bars, and stackable bullion, as a hedge against systemic risk.

Because when the people running the system are hedging against it, maybe you should too.

This isn't about becoming a gold permabull shouting about the end of fiat currency from a bunker. This is about recognizing what the data is screaming: the people who issue fiat currencies have lost faith in their own product.

Twenty percent of global reserves in gold isn't a portfolio allocation.

This is a vote of no confidence in the system these banks should maintain.

And unlike their words, their actions don't lie.

Stay positive,

Garrett Baldwin