Gold is up 46% in less than a year. That’s double the gains of the NASDAQ and the S P500 in the same period. A historic bull run for gold. But when gold moves like this, it’s never just about inflation or market demand. It means something is breaking in the global monetary system and most people have no idea why. And here’s the shocking part. This surge isn’t just another rally. It’s a deeper crisis that’s triggering the biggest shakeup in the gold market in a century. So in this video, I’m going to break down what’s really behind the gold price surge, why the paper gold system is on the brink of collapse.

Two possible outcomes from here. And we’ll look back to history to see when this has happened before and of course, what you need to be doing to prepare for this. Now, real quick, I’m Mark Moss. I’ve built and exited multiple tech companies, invested through several booms and busts, and today I’m a partner at a leading bitcoin venture fund. I also write the Quantum Wave investment report where I help people navigate the biggest shifts in tech and money. And I make these videos to give you insights that we’re using so you can navigate and profit from these shifts as well.

So let’s go. All right, we’re going to jump right into this. I’m going to try to get through this as quick as I can, but I got a lot of charts and graphs. But unless you’ve been living under a rock, you don’t look at the news or any kind of financial or economic data, then you already know that the price of gold is completely surging. But what you don’t know is, is why and what is going on beneath the surface, the fundamental system that’s causing this to happen. Now, as I always tell you, you can get the news from anywhere.

What I’m trying to do is give you the reading between the lines, what’s really going on? So we’ll look at that. Now, of course, most people think that it’s because central banks are buying up massive amounts of gold. And they are, they’re buying records amounts. Central bank’s hunger for gold shows no sign of, of being quelled this year. This is just February 5th. So there’s no signs that their appetite, their desire for gold is going to be quelled. So we have central banks buying massive amounts. Now to put this. You know, I always like to show you the charts and the graphs so you can understand this.

This is central bank gold buying this goes back to 2010 and you can see how much they were buying here. 2011, 12, 13. We had a little dip here in 2020, 2021. And look at how much this new baseline rat. This is over a thousand tons that they’re adding every single year right here. This blue line is the average they’re on. So something happened these years. 2018, 2019 were a little bit above average, but something happened right here. 22, 23 and 24 have changed the appetite for gold from governments and central banks. What could it be? Well, two things.

Number one, it could be, uh, you remember right here, the massive amounts of debasement, monetary debasement, of government printing spending, if you will, that happened right here. So in times of massive monetary debasement, central banks are going to do what they do, which is try to do protect their wealth with gold. Also what happened right around here, 2022 was when the Russia Ukraine war broke out. The United States and NATO decided to seize basically Russia’s bank accounts. And all the governments of the world were put on notice that your savings in the financial system are not saf safe and you might want something physical like this.

Two big catalysts that happened and changed that. And of course since we’ve seen that massive demand for gold, we’ve seen the price continue to go up higher and higher and higher. Now some of you look at things way too short and yes gold went down and yes it went down and yes it went down, but you can see the trend is going up. So if you’re a long time investor, long term thinker like I am, then you know that you just want to continue to hold gold. Here we are at almost about 3,000. Now there is some going on beneath the surface that really show us what’s going on.

I want to break this down for you. What we’ve been seeing is that there’s basically two big gold markets. Well now there’s three and we’re going to talk about that. But the two big ones have been in London. The London, the lbma, London Bullion Market association, that’s lbma. And then we have, in the United States we have the comics. And what we’ve been seeing is that the London gold market is facing unprecedented strain. Unprecedented as in like historic, as in like never seen before. A rapid outflow of gold to the US Comex warehouses. So the gold is flowing from London and not just the LBMA but also the BOE bank of England is flowing from there over into the US markets, the comics warehouses, while the LBMA data shows 279 million ounces stored on paper.

They show that there’s 279 ounces stored at the London Vaults. As of December 2024, only 36 million of the 279 million the float are theoretically available. So even though they Show they have 280 million, theoretically, there’s only about 36 million available. That means they’re short, big time. Right. A critical liquidity shortfall against an estimated 380 million ounces of outstanding spot cash contracts. The spot cash contracts. That’s going to tell us where we have to go to look next. So there’s about 380 million ounces of demand in these contracts. Spot cash contracts. But yet there’s only 279 on.

On the books, on paper. But the reality is there’s only 36 million. Do the math. It’s about 10%, sort of like a fractional reserve banking. And what happens if everybody wants to pull their money out or their gold out? Well, you see a run on the banks and that’s exactly what we’re seeing. The current crisis suggests much of the vaulted gold is either pledged to central banks, ETFs or foreign governments. So it’s already pledged. That’s why it’s not available. Of the 279 million, it’s not available. This is part of what is known as rehypothecation. We’ll talk more about that in a minute.

Okay. Now, the real reason that we see the price of gold going up is. Yes, because there’s massive demand. Why is there massive demand? We already talked about the debasement. We already talked about being able to hold your assets in a way that, you know, governments like the United States can’t steal from you. But really we see these central banks hoarding and we want to understand the dynamics of these things. So why are central banks accumulating in large quantities? I’ve already sort of given you some of this accumulating gold to diversify reserves, reduce dependency on the US dollar.

China in particular has been on a gold buying spree for the 17th consecutive month. Now, nobody really knows how much gold China has because nobody can really trust the data coming out of there. Whatever they show us, it’s probably three, five, maybe even ten times more than what they have. We can see here the People’s bank of China, the pboc, continued a streak of gold purchases. It’s diversifying its reserves away from the dollar. In February, China divested. Divested meaning sold off treasuries 22.7 billion in US treasuries sold to Treasuries buy gold. Strategic move by China reflects a deliberate effort to reduce its dependency on the dollar.

Shoot, these Treasuries could get taken from us like what happened to Russia. We should probably sell those and buy an asset like gold that can’t be taken away. China is not the only country doing this and it’s a massive move. The PBOC required, I’m sorry, acquired 224 tons. 224 tons of which and only 62 tons in 2022. So from 62 to 224 they have really stepped up the rate at their buying now sort of again trying to understand the differences of these markets. We can see that again in London, the LBMA and now tap it into the BoE that London’s record gold outflow is going into U.

S stockpiles now this is record again. This is historic. This is unprecedented. We can see here that shrinking by the fastest amount on record as banks, dealers and speculators fly bullion to New York. So they’re all taking it out of the BOE and the LBMA hands and moving it over to the US So what is going on? Why is all this gold moving? Well, part of it is because the demand is so high. We’re going to get into some of this paper manipulation that’s breaking right now. But it’s also been because. And we can see, I have another chart here just to show you how big this is.

I love to show you these charts. So we can see this is the gold inventories in New York at the comex and you can see that they are absolutely exploding. That’s what we call parabolic right there. But to understand sort of these mechanics, what we kind of want to understand is what’s really been driving this is China, China’s insatiable amount, desire for gold as well as their, you know, continued buying as well as they’re divesting from Treasuries to buy more gold. But more specifically them setting up the Shanghai Gold Exchange. And what’s happened on the Shanghai Gold Exchange is it’s sort of meant to break the grip of the paper markets that the US with the COMEX and London with the LBMA have.

So gold investors, if you, if you’re a gold investor, a gold bug, you know, this been talking about it for years how, how manipulated this market is because of the paper gold that’s sold against it. And the reason why that’s done is you can’t really get the Gold out of the market. So you buy them through ETFs and so then they’re able to rehypothecate, meaning loan it out, loan it out, loan it out over and over again and really build up the supply of gold on paper, even though it’s not physical. I’m going to talk more about that in a second.

But what China did is they launched their Shanghai Gold Exchange and now it’s physically settled. That means that I can go actually redeem and receive my gold. Now what’s, what we’re finding is that that physical gold today, when you’re worried about a run on the bank or a default, you want the physical. And we’re seeing a massive premium being paid for physical gold. So when I can buy it for cheaper on one market and sell it for a higher price on another market, that’s called arbitrage. That’s what traders do. And that’s exactly what’s been happening. One big factor pulling Western markets upwards, the price of gold upwards, is the arbitrage happening in China.

And it’s the fact that the Shanghai International Gold Exchange, SG S G E I is a physically settled market, which is different from the cash settled markets in the west, the US and London. So you can do your options, you can make your bet on gold, but at the end you get settled in cash, not physical gold and China’s change and all that with a physically settled market on the scene and with that market trading at a significant premium above what the west, the US and London traders were able to buy up the COMEX or the LBMA futures and then demand delivery.

So I bought them cheap and I demand delivery. I don’t want just the cash. And then they sell the physical into Shanghai. This is what traders do. Traders exploit arbitrage opportunities. It’s sort of like the carry trade in, in Japan, right? We’re always trying to buy low and sell high in different markets at the same time. And China, by setting up this Shanghai Gold Exchange, gives us opportunity for these traders to now buy it for cheaper in London and the US and sell for higher in China. Now why is it cheaper in the US and London? Well, a couple reasons.

Number one, again, we know that physical gold right now at this point is more in demand. The governments are like, I don’t trust anybody else, I want my gold. Also, investors are like the same, doing the same thing. And then what happens is when the traders start getting involved, it starts to push that even more. All right, so that is the mechanics that really started pushing this higher now there’s a lot of rumors about China wanting to have a gold backed currency. I’ve done videos talking about how the US might even try to preempt China in that.

We’ll come back to more on that in a minute. Okay, now what we’re really seeing is the illusion of the gold market is starting to crack. The paper illusion. Now we don’t really know. I’ve seen estimates that there are somewhere between 100, 300 to maybe even 500 paper ounces of gold for every one single physical ounce. And again that’s because these funds, the, the ETFs, they take in gold, the banks and then they loan it out. And then they loan it out and they loan it out. That’s called a rehypothecation. Let me explain how that works.

So let’s say for example, for easy use cases, I have a candy bar, but I’m not hungry, I don’t want to eat it. So I’m going to loan it to my friend. Now he has a candy bar in his hand and he owes me one, so on my books I shall have a candy bar. But he decides he doesn’t want to eat it and he loans it to the next guy. That guy loans it to the next guy, like the guy loans to the next guy. Now there’s five candy bars in existence. The guy who physically has it, the guy who’s owed one.

Owed one. Owed one. I’m owed one. So now there’s five candy bars on paper, but there’s only one actual physical one. But what happens if the guy at the end gets hungry and eats it? Well now he’s eaten one candy bar, but five candy bars have now disappeared. And so that’s what we’re seeing when we start to rehypothecate this gold. We start expanding the supply without actually adding it. So we have all these paper claims. What we’re seeing, as I said, is now people are like, I want the gold. And so we’re seeing that gold bullion has a premium over the paper claims and that’s why it’s starting to break this cash, settle the market.

Now there wasn’t a mechanism for this before, which is why it’s something new now. Gold futures contracts opting for delivery are surging. So we have something called backwardation. And this is in the options market. And so what this means is that people are paying more today than they could pay in the future. I’ll pay a premium to get it right now rather than waiting for it. And that shows the Urgency that’s here we can see that there’s been a surge in gold futures contracts opting for delivery in the order of 28% of registered gold be required to fulfill orders.

So this massive surge for delivery, everybody wants the gold, they don’t trust the markets. Now the markets are set up to not have this happen. So it’s very difficult for a trader to actually get the gold out of the market. And it’s even more difficult to get the gold back into the market. This is a a piece that I’ve taken from Peruvian Bull. Shout out to Peruvian Bull. We’ll link to the full article down below if you want to check it out. He did some really good work on this. To take physical delivery, a trader must 1.

Hold a long position in a futures contract. You have to buy the futures contract and you have to hold it all the way till its expiration. Usually they’re trading these things, not holding them all the way to the end. Number two, issue a delivery notice to the comics. There’s a lot of paperwork, formalities have to be done. Pain in the butt. 3. Receive a warehouse receipt which represents ownership of gold in an approved depository. Key piece in an approved depository. Another hurdle you have to jump through. Four, arrange for physical withdrawal if desired, which involves additional fees and additional logistics and additional pain in the butt that makes it very difficult.

5. Gold is delivered in 100 troy ounce bars, meaning an investor must purchase contracts in multiples of 100 ounces to take delivery. This is not for small players. There’s a hundred ounce minimum. You can do the math. This is a significant amount of capital. Comex only allows deliveries from a few approved depositories. So now if you want to take the gold out and then you want to put it back in, that might be a problem because they only allow it from a few approved depositories such as Brinks, JP Morgan and Malcolm it. Moving the gold out of these vaults requires additional approvals and transport logistics and fees.

So again, you can only get it out to a couple places. But that’s even more expensive and even more time consuming and so forth. Taking physical delivery is expensive, including storage fees, insurance, transportation costs. If you don’t know, gold is heavy, so to take delivery of it is very expensive. But then if the gold is withdrawn for personal storage, it may lose its COMEX good delivery designation, the status making it harder to resell it at market prices. So they do almost everything they can to keep people from taking the physical out. Why? Because they want to retain control of it, so they can continue to have it on their books to rehypothecate it over and over and over.

That’s why 90% of trading is on paper. They can sell naked shorts to depress the price, all these things. But again, now they’re seeing these huge withdrawals and it’s moving. And we can see here that gold, it says here, bullion banks are borrowing GLD. So GLD is one of the biggest gold ETFs out there. Bullion banks are borrowing GLD shares and converting the units to physical and gaining control over the metal. So they’re borrowing, they’re buying and they’re trying to convert as fast they can. GLD ETF alert. The borrowing fee on GLD ETF has gone vertical today.

Why? Because of the demand for everyone borrowing to try to fix the system. Or I should say they’re trying to paper over the system, which I’ll show you the two options. We have for that in a second. But we can see the price of gold set a new record high on Friday. Is data shows stockpiles in London. Data showed stockpiles in London shrinking by the fastest amount on record. So again getting completely drained. Speculators fly bullion to New York. London’s gold fixed today above 2075. We don’t have to worry about the pricing, but we can see that it’s these discrepancies that traders are going after.

This is a really cool chart. This is from Shift Shift Gold. And we can see this is gold for deliveries. And so again, you can sort of see this baseline of how much gold is. Is out for delivery. Now, typically, January is a very low month. And look at this record that we’ve set for January 2025. Way above normal, way above where you see January. And so we can see there’s this urgency. People are freaking out. They’re paying massive premiums to get their hand on the physical. Why is that? That’s because the entire fundamental market is shifting.

All right, so what’s next? Where do we go from here? Well, I really see two options, two ways out. Now, this is a fundamental transformation of the entire gold market. But we only have to look back to history to see when this has happened before. In about 80 years. You know, about every 80 years we have this financial revolution and we can see exactly what happened last time. So let me show you what history tells us. Now, the first thing is scenario number one. They try to patch the cracks. Of course they’re going to. How can we patch the cracks in this scenario to make it look like we don’t have a problem.

So this gold depository could on paper loan more to this gold depository. So they could double count them, for example, they can borrow back and forth. But the problem is now we have a physically settled market. And this is what changed everything. So as I already showed you, there’s the LBMA has 279 supposedly available on their books, but there’s only 36 million available for draw. But there’s over 300 million in demand. When that starts to be physically settled, then we have a problem. So what happens is in the beginning they try to patch the cracks, they try to loan to each other, they try to show that they have it to maybe bring some confidence back into the market.

Right now it’s like if there was a run on the bank, you need to show everybody, hey, you don’t need to pull it out. It’s very expensive, it’s very hard, it’s very time consuming to get it out. It’s better to keep it here. Look how safe we are. But we can see that they’re also trying to help each other out as best we can. Here we have US Demand squeezes India’s gold supply. Leasing rates rise to records. So they’re leasing it, they’re borrowing it, they’re putting it on their books to make it look like they have it.

Now what we can see, why is it all moving from London, the LBMA and bank of England over to the us? Well the US is also trying to prepare for this. So they’re all trying to patch the cracks. But again, history gives us so many valuable lessons and history shows us what happens in the gold markets when they become over manipulated and they’re trying to patch the cracks. So we can see back here something called the London Gold Pool. Now you might remember in 1944 we had the Bretton woods agreement where the entire world went onto a gold back standard.

The US dollar would be the reserve currency of the world. It’d be pegged to gold. So US$35 would equal one ounce of gold and the whole world would peg to the US dollar. But the problem is pegs never work. Traders are always going to exploit those pegs. And we also have the problem with humans and governments wanting to always print more, manipulate the system. And so we can see this is exactly what happened back in the 1960s with the London Gold pool. And so basically this is the same situation, a very similar situation to what we’re seeing now.

And it was the pooling of gold reserves by a group of eight central banks, so the United States and seven European countries. So they all pooled their gold to try to help each other’s books to show that they had enough liquidity so they wouldn’t break the system down. All right, so on November 1, 1961, they cooperated in maintaining the Bretton woods system that was set up in 1944. It was already breaking apart in 1961. That’s how quick these things fall apart. The system of fixed rate convertible currencies and defending this is the whole thing, defending the price of, of gold at $35 per ounce.

And so they did all these interventions in the London gold market, the lbma, all right, the central banks coordinated, concealed, I’m sorry, concerted methods, working in unison, working together of gold sales to balance spikes in the market price of gold. So when the price of gold was spiking in different markets, they would work in a concerted way, in a, in a group way to dump more gold, more supply into the markets to bring those prices back down. But the problem is again is that traders will continue to exploit that. And the problem is you start to run out of the gold.

And that’s exactly what happened. The price controls were successful for six years until the system became unworkable. They could no longer suppress and manipulate the price. So China set up their physically settled gold market years ago. We’re seeing it coming to an end just like it did here. It says the price of gold peg was too low. And after runs on gold, the British pound and the US dollar occurred, France decided to withdraw from the pool. The London gold pool collapsed in March of 1968. So a few years after they set it up. But think about this.

Here it says that the price of gold was too low, so the price of gold needed to come up because there was more demand. And after runs on gold, the British pound and the US dollar occurred. And so runs on gold, everyone was trying to get as much gold as they could out of the system as well as runs on the pound and the dollar. They had to go ahead and drop, it says right here. But this gold window collapsed in 1971, finally. So the controls followed with an effort to suppress the gold price. They tried to keep the game going for a little bit longer, but it closed officially in 1971 with the Nixon shock, resulted in the onset of the gold bull market, which saw the price of gold appreciate rapidly to us $850 by 1980.

So 1971 it was $35 and by 1980, nine years later went from $35 to $850 when the concerted effort, the London Pool, when the manipulation broke. And what broke it? The physical demand of that gold. Okay, now what does this mean for all of us? Well, this means that gold is surging. I expect gold to continue surging for the reasons we’ve already given you. Mainly governments don’t want to hold us treasuries that could be seized from them. Like what happened to Russia. Number two, the entire world, not just the US but all the central banks are doing massive monetary stimulus and will continue to increase that monetary stimulus.

And so gold will be that inflation hedge. Then we add on top of it the fundamental breaking of the system and this cash settled market doing that. And so we expect gold to go higher. Right. So what the smart money is doing is moving to gold. You and I were considered dumb money. Hate to break it to you, the smart money is, is the institutions, the funds and yes, central banks, they’re all moving to gold. I already showed you the record demand. And what we’re seeing is that physical is much more in demand than paper at this point.

As I’ve shown you, they’re willing to pay a massive premium for the physical over paper in the system because that paper might not be there. So if you have a bunch of paper gold, you might want to consider moving that into some physical gold that could at least be stored in a vault somewhere else like that. Also, gold mining stocks should continue to do good. I mean if they’ve been struggling over the last couple of years, inflation has pushed costs up super high. The price of gold hasn’t been moving that much. But with the demand for physical moving up, we might see an increased demand for gold mining.

Also what we’re seeing is a massive demand for bitcoin which is digital gold. And bitcoin is not just in demand by retail like us now, it’s also Wall Street’s instit and even central banks. I think we have 21 states in the United States doing a bitcoin reserve or working on one other nations as well. We’ve seen bitcoin move up, I think 500% over gold in that same time frame. And then most importantly, think about the long term. All right, As I showed you that gold chart in the beginning, nothing moves up or down in a straight line.

This will not be a smooth path. We’re talking about the change of this 80 year old system, this financial revolution cycle coming to an end and an entire new system being introduced. But when this all happens, expect the price of gold to pop. 5,000, 10,000, $20,000. I don’t think it’s if. I think it’s a matter of when. And if you want to find out more about that, I did a whole video on this to show you why I think the US Will do this and circumvent it. Let’s go ahead and put that video right here if you want to watch that.

Otherwise, let me know what you think about this video. Thumbs up if you like it, thumbs down if you don’t. That’s okay. At least tell me why in the comments. And that’s what I got, right? To your success. I’m out.
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See more of Mark Moss on their Public Channel and the MPN Mark Moss channel.