We ended Part 1 of this two-part series with a promise to look more closely at what recent geopolitical developments—which are bringing a global gold-backed monetary system ever closer into view—might mean for gold’s future price. In that initial article, we cited $30,000 to $60,000 an ounce as levels that could make at least a dent in massive U.S. government debt (by virtue of sharply increasing the value of the government’s gold holdings). Getting debt under control is likely necessary if the U.S. is to participate in the new world order the Global South is busy putting into place. And—as we’ve argued repeatedly— like it or not, joining that order is all that can save us from economic catastrophe.
But are those figures, which seem wildly high, remotely likely? Indeed, do we still see gold at even $20,000 an ounce—a figure we projected in our 2020 book “China’s Rise and the New Age of Gold”—as a plausible landing spot? There’s a lot to unpack to get to answers.
Clearly, for gold to rise as high to $30,000-$60,000 an ounce would be a tall order. No country or group of countries could simply wave a wand and decree that gold is now worth 10 or more times its current value.
But while that’s true, also true is that if the U.S. revalued its gold to just gold’s current price, it would signal to the world that the U.S. is willing to accept a gold-centered monetary system to replace the current system in which the dollar is the major reserve currency. That would trigger a scramble by central banks to replace dollars with gold, which would give gold an extra push.
There’s a lot more to consider, however, because if gold goes too high, there could be unexpected consequences. Realize, for example, that nearly 50% of the world’s aboveground gold is in the form of jewelry. If gold rose to $30,000 an ounce, the value of the gold component of this jewelry would jump to more than $100 trillion.
Gold accounts for about 55% of the value of all jewelry. Other metals such as silver and platinum and palladium group metals as well as gemstones also are important in jewelry and no doubt would benefit greatly from a massive appreciation of gold. If we assume that nongold jewelry would appreciate in line with gold, then the value of the world’s jewelry would approximate $180 trillion. That’s 60% of the value of worldwide residential real estate. It could translate into a huge and unwelcome wealth effect that likely would be very inflationary. Moreover, there also would likely be spillover effects on art and other collectibles. It could result in a vicious circle in which inflationary gains feed on themselves.
Something else to consider is that massive gains in silver and platinum group metals would likely have significant industrial impacts, since the metals play critical roles in virtually all major industries. This is especially true for silver, the element with the greatest thermal and electrical conductivity. It implies that while the pieces for a massive gold bull market that we predicted in our book have fallen into place, there would be a limit to how high gold can rise, at least over the next, say 10 years or so.
To determine a reasonable projection for the price of gold, then, means estimating the sweet spot—a price that would let the world unite economically without creating pricing distortions in critical metals like silver. Though a small percentage of gold is used in industry, that portion could be substituted for by other metals, especially silver. But there is no ready substitute for silver because its industrial properties are unique. In past periods when the world’s monetary system centered around gold, the gold-to-silver ratio was about 15:1. Using that as a guide, if gold were $30,000, silver would be $2,000. That’s a level that could cripple industrial production.
These considerations, which put a cap on how high gold can climb, suggest that gold won’t rise high enough to fully neutralize U.S. debt. That would make other actions necessary. Anton Kobyakov, Putin’s close advisor whom we mentioned in Part 1, is one of many who have argued that the U.S. ultimately will be forced both to revalue gold and to devalue the dollar in order to stabilize the country’s finances. When they talk about devaluing the dollar, they are referring specifically to devaluation relative to other currencies, not the automatic devaluation that occurs as gold rises.
Some analysts have even floated the idea that the recently passed “Genius Act” allows the U.S. to issue a tokenized cryptocurrency backed by the dollar. As much U.S. debt as possible would then be sold to those holding this new dollar-backed cryptocurrency. The final step would be to withdraw the dollar backing, resulting in a massive decline in the cryptocurrency along with the value of the debt sold to those unfortunate investors in the cryptocurrency. Yes, this seems diabolical, but in the end, it may be the last best choice to save the U.S.
Why China might sell—or lend—gold to the U.S.
Fortunately, though, other avenues are also possible. For example, maybe other countries could sell or lend the U.S. enough gold to make sky-high gold prices unnecessary to neutralize our debt. China’s gold holdings, according to analysts who closely follow gold flows and production, are much larger than those of any other country. Pierre Lassonde, co-founder of Franco-Nevada, the world’s largest gold streamer and royalty company, is extremely well positioned to estimate gold flows. His 2024 estimate of Chinese gold holdings was at least 35,000 tonnes, based on evidence that China has been purchasing about 70% of worldwide production since at least 2010. According to the World Gold Council, 50,000 tonnes of gold have been mined since 2010, suggesting that China accumulated 31,000 tonnes in the 2010-2024 period. If we tack on an additional 2,000 tonnes in 2025 plus Chinese holdings prior to 2010, we end with an estimated 35,000 to 40,000 tonnes. Lassonde’s estimates are consistent with estimates made from Chinese imports and also from Chinese gold withdrawals from the Shanghai Gold Exchange. Suffice it to say that China has a massive amount of gold. Other countries in the Global South—in particular India and Russia—also have large gold stockpiles.
All this suggests that China and other countries are in a position to lend or even sell substantial amounts of gold to the U.S. A direct sale of gold would likely be contingent on giving China and other sellers the option to repurchase once the U.S. gets its house in order. And if you’re wondering why they’d be willing to do all this, it would hardly be an altruistic attempt to save the U.S. Rather it’s because a collapse in the U.S. economy would be very harmful for the entire world.
For now, the most we can say is that recent geopolitical events have made a compelling case for higher gold prices. How much higher is just a guess. What also is a guess, but a pretty safe one, is that gold won’t go high enough to neutralize U.S. debt as a barrier to our joining a new gold-centered monetary system. We’ll need to take other steps, some of which may be hard for many in the Deep State to swallow, though as we’ve pointed out in previous blogs, we believe President Trump understands the country’s precarious position. We will keep you posted as the world continues to move through this historic transition.
If you didn’t catch PART 1 of this two-part blog, follow the link below to view the prelude: “Geopolitics Is Reshaping America’s Future: Gold, Debt, and the Dollar Crisis”
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