← Tom Bilyeu's Impact Theory
Tom Bilyeu's Impact Theory
China Just Made A Move That Could Wreck Your Dollar & Gold Holdings — We Had To React | Tom Bilyeu Reacts
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Host
Queen Carvania stood haloed by the morning sun. An army hung on her every word.
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Andre Jik
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Host
Tonight we feast. An offer you can feast on.
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Andre Jik
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Ad Voice 1
Pick up.
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Host
Fees may apply, boys and girls. Things are popping off in China, and they have a goal to get out from under the US Dollar. I don't think anybody's confused about that. They also want to be the global hegemon. The more you read about Xi Jinping, the more you will realize that it's act humble, act chill. You don't have ambitions beyond China. Hey, what are you guys talking about? And then ambition is going to grow in the Eden, and as you get stronger, you're going to reach farther and farther. And for anybody paying attention to what they're doing, they've just done, not nuclear testing, but testing the, I think, nuclear submarines or battleships that would launch nuclear missiles using the. The actual ballistic missiles that would carry the nuclear warhead. So they're doing that testing. They're also now pushing into the Pacific Ocean. So we're not just talking about the China Sea or being right off their coast. They're pushing into the Pacific. And eventually, as I've said many times, a country is only held back by two things, their own moral compass and the force of another to stop them. And so that's it. And so how far is China going to push out into the world? We're going to find out. But they're playing a very shrewd economic game, and they have been playing that very shrewd economic game for a very long time. And there's an incredible video by a guy, he's a YouTuber named Andre Jick. Highly encourage you guys to subscribe to him. I think he's phenomenal, and he's putting something together that I think is really on point. I've got some stuff that I want to add to it to give a a significantly fuller picture of what's going on. But without further ado, here is Andre Jik talking about a move that China's making in gold.
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Andre Jik
So the battle for what is money and who controls it just got really interesting at the start of the year. Some investors apparently made a bet that gold could be worth as much as $20,000 per ounce by the end of the year. Now, today, gold is worth closer to $4,000. But what's interesting is that on June 24, one of China's biggest banks, the Industrial Commercial bank of China, or the icbc, announced that they were shutting down their paper gold trading for their retail investors.
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Host
This is where this starts getting interesting right off the bat. So you've got there's a difference between physical metal and paper gold. And understanding that difference is going to be key to everything that we're doing here. He does a really good job of explaining it, but I'm going to punctuate some of this because I think a deeper understanding of exactly why China would want to do that becomes increasingly important. But know that there is a very real and meaningful difference between I just bought gold, which almost nobody does, and I just bought a claim against gold.
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Andre Jik
That means on July 24th, if you're a Chinese citizen who wants to trade gold through their bank, your access will get switched off. Now, the ICBC is not the only bank doing this. It was also their Postal Savings bank of China that did it first. Then Ping an bank, then China Guangfa bank announced it in June. So some of their biggest financial institutions, one after another, are now pulling the plug on retail trading. The question is, why is China doing this? The official story that they're telling us is that they are protecting citizens from the volatility, right, the extreme up and down movements of gold.
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Host
That's real, by the way. And China went through something really brutal. I forget what year it was. I think it was 2020, 2022. Somewhere in there they had this big crisis where people were, banks were creating these vehicles which were basically like perpetual swaps. They were creating these vehicles inside of their banking app. So the average retail investor who does not understand the difference between paper gold, they probably don't even really understand futures. And so in there, betting on the price movement of it wasn't gold. I forget what they were. Oil maybe. Anyway, they were all betting on something. I forget what it was now. And what ended up happening was people weren't realizing that they could effectively lose an infinite amount of money. They could certainly lose more than they had put in. And so you had, I forget how either hundreds of millions of dollars. I can't remember if we went over a billion, but it was massive and people were just getting wiped out. And you had individuals that, let's say, bet, I don't know, $40,000 and ended up owing a million dollars. It was like pure insanity. And so people were freaking out and they were like, you did not protect us from this. And so the Chinese government steps in. There's like this Whole inquiry and they're like, yes, even though the banks are all state owned, we do think this was the bank's fault. And so they made the banks end up eating all of those losses. And so they were like, we don't want to find ourselves in that position again. So that's very real. That's not like, oh, this is just a marketing message. They've really been through it. They've lived through this where you let people do these kinds of like fancy options trading and if people don't understand it, they can get themselves in trouble. And so this is a real thing. But in this case I think it is far more. They've got another reason for doing it. And we're going to hear what that
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Andre Jik
reason is because back in January 29, spot gold hit an all time high over five and a half thousand dollars per ounce.
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Host
Okay, spot gold. So this is where again, going back to that initial thing that I said, there's a big difference between physical gold and paper gold. Spot gold is okay, I'm, let's say I'm a reserve bank in London. London has massive. London in New York, but primarily London has massive influence over the price of gold. They handle a lot of the gold exchange. Spot gold is gold that's available on the spot. That's where it gets its name. Meaning you could buy it right here. There's no other claims against it. You give me, I'll give you the gold. Okay, so that's the spot price, the available for sale gold. But then there is gold that's acting as a reserve against these, the paper trading. Okay, so those are two very different things. So when he says spot gold, that's what he's talking about. Things that are available for sale on the spot. It's going to become more important as we go. And if memory serves, he doesn't ever define it.
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Andre Jik
But then it crashed. As I'm making this video, gold is trading at around $4,000 per ounce. That's a drop of about 28% from the peak. So of course to protect people, China's banks have increased what's called the margin requirement to 140%.
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Host
Okay, every alarm bell you have in your head should be going off right now. So imagine what that really says. You've got something that costs, let's say $100. And if you want to trade on that thing, a paper trade, if you want to do a paper trade on that thing, you've got to put up $140 to trade against the $100 it doesn't make any sense. You'd be way better off just buying the asset. So that, that's like the first thing that tells you. What China's doing behind the scenes is not everything that they're representing up front, because that's illogical. You've just killed the entire market very much on purpose, which is a record
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Andre Jik
high for the industry. A margin requirement, by the way, is the amount of collateral someone needs to borrow money. And by increasing that percentage like they just did, it means you need to have a lot more money to borrow less money. China's now demanding more collateral than what the investment is even worth. Okay, so the official reason is gold is volatile. Retail traders are getting hurt and big government has to step in to protect them. Now the unofficial story, though, is probably what's actually happening, which is the battle for real money and what that money should be worth. Right. Think about what China is really shutting down. They are getting rid of margin trading. They're getting rid of the leveraged deferred contracts, the paper gold.
- [08:26]
Host
Okay? Those are two sort of different things that are worth teasing apart. So trading on margin is exactly how people get in trouble. Margin leverage, same idea. You're using debt. So you put down some amount of collateral. It's usually like 5 or 10% and so 140%, like fucking crazy. You normally put down a relatively small amount if you're buying a future. I don't know if we need to go into what a future is for now. Just know there's this thing that basically lets you bet on the price. Literally, it's just gambling. And you're letting people bet on the price whether it goes up or down. And if it, you know, moves in their direction, they get paid. If it moves away from their direction, they have to pay. And you actually settles daily, which is interesting. But anyway, so this is the thing that is playing out here is you've got the ability to do those trades versus now trying to. China is just trying to move away from that. Totally. One thing that I find really interesting about China is the only way for people to get paid out is if they're willing to take that risk. And China is trying to stop people from taking that risk. And so I know, I'm sure a lot of people feel good about that. Yay, China. Don't let people take risk. To me, this is one of the most abusive things that a government does, which is not let people decide what they want to do with their own money. But anyway, this is how China plays. They force everybody basically to move as a unit. But we're going to hear more about that.
- [09:46]
Andre Jik
Basically, the easiest way to understand it is they are getting rid of the speculation, the gambling, but physical gold, that's all good. They could still buy and sell that. They're not stopping people from owning gold. They are stopping people from trading the paper claims against gold. Okay, so why is China doing that? The theory says it's because the real price of gold should be way higher than it actually is. But the reason that it's not is because it's being manipulated and suppressed by the paper markets, and it has been for decades. So in order to have what's called real price discovery, in other words, in order to figure out what something's really worth, you need to first shut down people's ability to gamble on the price of it. Now, if this were true, we'd probably see China as a nation start to buy a lot more gold than usual. And that's exactly what they've been doing. In May of this year, they bought 163 tons of gold, the most since March 2024. And that's not just true of China. That is true of all central banks around the world, which have been buying way more gold.
- [11:03]
Host
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- [15:59]
Andre Jik
the table 15 times more than they've been telling us, it makes sense, right? Which is also why the Chinese government is launching a brand new gold clearing and settlement system. It's a system that's designed to make China not London or New York, but China as the place where the price of gold actually gets set. Now, once you put all of this together, central banks and nations secretly buying gold and, and taking steps to get rid of the paper markets and building the settlement hub there, it all starts to make a lot more sense.
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Host
Now, as far as I know, China's the only one that's shutting off the paper market. Could be wrong about that, but I don't think so.
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Andre Jik
So today, let's speculate on what could be really happening and why China's doing this right now and what it all means for our investments and the dollar. So with that said, let's get into it. Hi, my name is Andre Jick. Hope you're doing well. Come for the finance and stay for the battle of money and gold. So to understand why China shutting down their paper gold market is such a big deal, you have to first understand what paper gold is and how it works. And the easiest way I can explain it is like this. Let's say I've got this sick Pokemon card called the Ancient Mew, right? It's a physical card that is sitting in my safe.
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Host
I love that he's using Pokemon, by the way.
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Andre Jik
It's real. I can hold it. There's only one of it. Now imagine then I write up a little paper certificate that says, this entitles you to one of these mews, and then I sell it to you. You're happy because you've got a claim on my card, but maybe you don't actually want to custody the card because someone might steal it and you're afraid, so you just hold the Certificate, it's easier. It also trades like the real thing, but you never come to collect it from me. So here's the problem. Once I realize you're never actually going to show up and ask for your card, what stops me from writing a second certificate and then selling it to someone else? And then a third and a fourth and a tenth? Right now there's.
- [18:04]
Host
This, by the way, is called fractional reserve banking. This is how the banking system works. If you want to be mad about something, be mad about this. This is wild. This is why bank runs exist. And the exact same thing is true of gold. I can't believe that's true, but it is true. It's called unallocated gold. It is. People just God knows how many trades against it. It's completely legal. It's in the terms and conditions. When you buy paper against gold, you're literally accepting. Yeah, I know that there are multiple claims against this. And even in Basel 3, which I'm not going to get into that, but it's like banking regulations. Even in Basel 3, you can have. I don't think there's a specific amount of gold that you have to hold. You can let people trade against. It's. That's wild to me, but nonetheless it's real.
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Andre Jik
There's 10 people who think they own this mew, but there's still only one card. I've sold 10 claims on it, though. On paper, the supply will show that there's 10 mews. In reality, nothing's changed, Right. There's still one card in existence.
- [19:07]
Host
Technically, it doesn't show that there are 10 mews, it shows that there are. It implies that there are 10 muse. But if people understand the fractional reserve nature of this, they know that there's not. But yeah, if people actually claimed their gold, or in this case, their muse, you have a. The system actually just breaks. So wild.
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Andre Jik
So what's it really worth? Well, if the market is pricing my card, based on the evidence it has, which is all that paper floating around, the price should be one tenth of what it should be worth. Because as far as the market can tell, these mews are everywhere. Right? Why would the price go up when there's so much of them available? That's paper supply. Now, the second everybody walks in at the same time and says, you know what, Andre, actually, I want my card now, the whole system would fall apart because nine out of 10 people would find out that their paper certificate is worth nothing. Bankrupt. That is the overly simplified version of paper gold. Now, in the big Western markets like London and Comex in New York. Most gold that trades every day is never physically delivered. They're what are called contracts. They are claims. People buy and sell these pieces of paper that represent claims on the gold. And the majority of people never intend to take a single physical bar. Right? Same as the MU example. And just like my card scheme, that means they can also write way more claims than there are actual pieces of metal sitting in their vaults completely legally. Now, estimates for how much paper gold there is varies because no one knows how much gold there really is in the world or how much paper there is. But the point is there is dramatically more paper than there is physical real gold. What that means then is that the price of gold today is probably lower than where it should be. That's how you suppress the price of an asset. Now hold on, where's my proof? I can't just say we think there's more paper gold there. Trust me, bros, if what I'm saying is true, how would we know? There's a couple ways that we might know that that could be true. First, there would be a disconnect between the price of the physical thing and the paper thing. Think about it like this. If the world was 100% honest and this MIU only had one paper claim on it worth a hundred dollars, the card and the claim would trade perfectly one to one, because the world knows all the details. But the moment it becomes a casino where no one knows how many mews there are and how many paper claims there are, then what you'd see is a natural price divergence of these assets. People might want to pay more for the physical thing than the paper thing. They'd be like, I don't know if I trust this system, so I'll happily pay a little premium for the real thing.
- [22:19]
Host
This is one of the most interesting things about our economy and the way that this stuff works. So much of this stuff is done assuming a high trust society, which is exactly one of the things that's breaking down right now. And part of the gamble that China is making is that, okay, we're going to become the place that everybody's going to get that physical gold. And so we've got to find ways to amass that physical gold. And by being the place that people know that they can go to to get the physical gold and that we're more strict, I imagine, I don't know for sure that they're going to be more restrict, but given that they're getting rid of all the paper betting, I Don't know what they'll do in their banking system if they ever tie the yuan back to gold, which I don't know that they plan to do, but that would be the way that they would sort of get away with looseness. But if they bring in the physical gold and hold themselves to a very strict standard, now you're sort of pre1971 US, where the US is actually, the dollar is actually backed by gold. So understanding this is a game of psychology. It's like, who can I trust as an investor? Where can I go that I know that that's backed by a real thing? But the great irony is even gold is it's fake. It's just a thing that we believe in, right? It's been seashells, it's been gold beads, it's been all kinds of things before, including salt. So right now it happens to be gold. And listen, it's been gold for thousands of years, so let me not underplay that, but it is very interesting to see as the global hegemon, the US has eroded the world's trust by printing money like crazy. And an important beat in this story is confiscated the assets of the Russians when they went to war with Ukraine. Everybody was reeling. Central banks, nation states were all like, holy hell. If you have something with the US that is conditional ownership, and the US might be able to take it away from you. And that is one of the reasons why China's like, yo, I want physical gold. I want to get this here.
- [24:21]
Andre Jik
Now, the tighter the spread between the real and not real, the more honest the market thinks the game is, the bigger the spread between the two, the more the market thinks something funny might be going on. Makes sense, right? That's one way that we might know. Okay, then, so then the question is, have we ever had price divergences between the real and the paper thing? And it turns out that we have. In the silver markets, for example, the peak hit in January, it was temporary, but it was something like a 40% price differences between the physical and the paper markets. Now, the spread today is much smaller, but it's still not nothing. There is still a premium for physical silver. Now the spread in gold is much, much smaller, which means in theory, maybe all is fair, but is it really?
- [25:21]
Host
I think that this actually speaks to something different. So there is a very big difference between gold and silver for one fundamental reason. Despite what Peter Schiff will tell you, gold basically has little to no use outside of being a store of value. Yes, people put it in jewelry and he showed there's a certain amount of it that's tied up in jewelry. But when you look at silver, the reason that silver, like the physical silver, people really care about the physical silver is because they are, it's used in technologies, advanced technologies and so it becomes a very important metal for industrial use manufacturing high end technologies. And so I think there's always going to be a much larger premium paid for silver over time than there will be for gold over time. Especially now as the use of silver is increasing, as technology becomes wider, more widely adopted.
- [26:20]
Andre Jik
How real is this casino? Let's go and find out what the price should really be by getting rid of paper speculation. This is one way to tell that something is off. But there is a second way.
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Host
Yeah, I was going to say the, the first way this, that China being like, oh, we're going to figure out the price, they have made comments about it in the past so it's probably not nothing. But I don't think that's what China is really thinking about. I think China is looking for a way to get gold into China and there's a punchline to what they're doing here that's pretty crazy. And definitely if you're anybody that thinks about how long dollar hegemony is going to last, how long it's truly going to be the world's reserve currency, you're going to want to understand this and it's even better.
- [27:06]
Andre Jik
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- [27:13]
Host
By the way, I'm going to let his.
- [27:14]
Andre Jik
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- [27:18]
Host
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- [27:27]
Andre Jik
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- [29:29]
Host
You gotta buy some in the first quarters.
- [29:31]
Andre Jik
This year alone, central banks bought a net 244 tons of gold. That is the strongest first quarter ever recorded. And it's also not a one time thing. They've now bought over 200 tons in 10 of the last 11 quarters.
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Guest Analyst
Look at that.
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Andre Jik
And the crazy part is that a big chunk of that buying was never officially reported, which is kind of interesting. According to the World Gold Council, they say their number includes an estimate of undisclosed purchases, which means gold these banks are buying but not telling anyone about it. Now this shadow accumulation has allegedly been happening since 2022. The official numbers that banks are reporting, that's just the minimum, right? The real number is probably way bigger.
- [30:19]
Host
Imagine that you've got staggering numbers, record setting numbers and everybody knows that it's only part of what they're doing. I think America is way too cocky about our position as a reserve currency. As if the world does not see that we are nearly $40 trillion in debt. If you want to know why I bang the drum about balancing your budget, here's Reason 942, maybe as much as
- [30:43]
Andre Jik
10 times bigger, especially for China. Now, that behavior, that's the first half of it. They'd buy more of the real thing, but it's also what they're selling to buy it. What are they selling? That would be U.S. treasuries, the bond market. Because for 50 years, the strategy for all central banks was doing the opposite of this. Central banks took your extra dollars and they parked them in U.S. treasuries. They basically lent the money back to America to earn a little bit of interest. That was the safe thing to do, and everybody did it. Any country that didn't do it, in fact, and tried to route around the dollar got a lot more freedom in their country. Right?
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Host
Jesus Christ.
- [31:26]
Andre Jik
But now we're seeing a reversal of that strategy. Foreign central banks have essentially quit growing their pile of Treasuries.
- [31:33]
Host
Bro, look at that graph. The line of Treasuries being consumed is essentially flat. That's crazy. But our debt keeps going up. That is bad.
- [31:44]
Andre Jik
Over a decade ago, and lately, some of the biggest holders have actually been selling US Treasuries. China has dumped hundreds of billions of dollars of US debt and rotated into gold. Now, they're not dumping all of it at once. That would not be smart, because they want to extract as many dollars as they can. If they sold all of it at once, they'd crash the value of their own bond holdings. So they have to do it slowly and strategically.
- [32:11]
Host
He's got up on screen a list of the people that have been selling. Japan, China, Taiwan, Saudi Arabia, India, uae, Norway, Singapore. Friend or foe, man. Sell, sell, sell.
- [32:21]
Andre Jik
That's true for all the other countries holding on treasury bonds as well. But what they're selling basically is the paper promise of supposedly the most powerful government on earth. And they're doing that to buy gold that pays them zero interest. And on paper, that sounds kind of crazy, because why would anyone trade an asset that pays you for an asset that doesn't? You would only do that if you no longer trusted the promise of that paper. What was the promise? The promise was, give us your paper, park your money into our assets, we'll be honest, we'll protect you, we'll trade with you, and your life will be awesome. Right? But after the Iran conflict exposed the US and after decades and decades of the forever war model, which was funded by money that could be printed to infinity, giving the US unchecked power, the world sort of had enough. The world does not want dollars. It wants real money. They want what economists call multipolarity, where it's not just one nation that rules the world, but many nations that contribute. Now, if this theory was true, how would we know that it might be true? What would be the evidence? Well, first we'd see those US Treasuries being sold off over a long period of time. There it is. And we have been seeing that. Yup. We would also be seeing investors selling paper gold. And we have been seeing that money has flowed out of US gold ETFs. We'd also see gold as an asset surpass Treasuries as the reserve asset.
- [33:57]
Host
We're hitting pause for a moment, but there's plenty more ahead, so don't go anywhere.
- [34:03]
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- [34:32]
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- [34:53]
Andre Jik
If your team isn't using your CRM, it isn't working.
- [34:57]
Host
Pipedrive is a simple CRM. It's easy to use so you can focus on closing. Get 30 days free@Pipedrive.com audio thanks for sticking around. Let's get right back into the action. If you can look at your phone, look at this chart you've got. The Treasuries have gone down a little bit in the last few years, but the gold purchases are going up and so some of this isn't. Even the flat line in the Treasuries hides the truth of what's going on because we're putting out so much more new debt. You would expect foreign investors to have a line that more or less tracks with that if they still believe that that was the right place to put their money. To reiterate something he just said, when they sell our Treasuries to buy gold, they are taking something that was yielding a return and exchanging it for something that doesn't yield a return. That's more predicated on either. In China's case, something I think very different, which is we want to surpass the US dollar and we know we're going to have to back our yuan with something if we're going to pull that off. Or you just don't trust that the US Government is going to be worth the paper that it's printing its debt on. And so even though you don't know when the exact timing is, you're going to start that migration process slowly so that you can get out from under that debt. Man, this chart is. It should unnerve any American who's going to have to contend with the debt obligation because yeah, foreign buyers are not going to help us anymore.
- [36:33]
Andre Jik
We are seeing that gold now represents a bigger share than US treasuries. Gold demand in China also hit a record 207 tons, which breaks a record that stood for over a decade.
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Host
Oh, and one other thing I'm talking, this is just back in 2020, there used to be a huge gap between the amount of reserves that were being held in US debt and gold. And now it's starting to be a very substantive gap in the opposite direction.
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Andre Jik
So combine all this together.
- [37:00]
Host
Six years.
- [37:00]
Andre Jik
How do we know the casino might not be telling us the truth? We might see things like the prices diverging between paper and the physical markets. We'd see the world selling the paper claims and we'd see the US Export gold. And we are. Gold is going east and that's because gold is the number one export out of the US for several months in a row. Now central banks worldwide are dumping the dollar's paper and hoarding the real thing and hiding how much.
- [37:30]
Host
Okay, so you've got a zero sum asset. All right. This is not a, we're not talking about gold in the fractional reserve sense. We're talking about spot gold. It was available for sale. Somebody went and bought it. This is going to be a key part of how I bring this all together in the end. And with what China is doing, they need to siphon the gold out of the west and get it into the east. And, and I'll, I'll go deeper into this in, in a little while. But they need to get the gold that is otherwise going to be used in that fractional reserve system so that they can start effectively eroding the West's ability to leverage gold in a fractional sense to make more and more money off of all of the trading. Now they're never going to be able to get all of the Gold, but you've got a lot of people asleep at the wheel. And try Drew, remind me. I don't think he brings it up. Remind me. I think it's called something like the Brown Bottom Sale. It was a UK catastrophe where they just made an absolutely asinine decision that ended up costing them money, a lot of money when you think about the fractional reserve, ability to trade on it all day long if you're going down the paper route. All right, so anyway, siphoning sound is what I want you guys to hear. Where China is sucking the physical gold out of London, very specifically Comex in New York as well. And that's going to have consequences that aren't necessarily as obvious right on the surface.
- [39:05]
Andre Jik
Is that the evidence of an honest market? This theory says, no, it isn't. This is not what a healthy honest market looks like. Alright. But there's another piece of evidence that shows us this theory could be true. And it's because China told us way back in 2014, remember when the head of the Shanghai Gold Exchange stood up and gave a speech at what's called the lbma, the London Bullion Market association, which by the way, is the Western paper gold pricing system. So while he was there, he looked at the gold establishment and he said, Shanghai gold will change the current situation of consumption in the east, priced in the West. And then he said, when China has the right to speak in the international gold market, gold's price will be revealed. So basically he's saying once China has a seat at the table, which they obviously now do, that's when the world will finally get to see the reality of the price. And that was 12 years ago, in 2026. All of this is sort of clicking into place. So then the question is, well, what is China actually doing? What are they building? And what they're building is their own version of a casino where they get to say the house can't cheat. That is why they're shutting down retail paper gold trading. That is why the icbc, Construction bank and the rest of them, that is why they all take effect on the Same Day on July 24th. This is not a coincidence because in that same time window, China's also turning on the other half of their plan, their brand new gold settlement system run out of Hong Kong. And working together with the Shanghai Gold Exchange, here's how it's going to work. Shanghai is the vault and the price. It's an exchange built on physical delivery. So when metal trades over there, right, real metal actually will have to move which means the price will have to show real supply and demand, not a mountain of paper claims that people are using to bet against on what the price of gold will be tomorrow. Right?
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Host
Really stop and think about that, boys and girls. So for a very long time, we've been in a position where people just trusted everybody. They trusted the US Let the dollar and our debt be the reserve currency. Currency. We don't need to move physical gold around. That's ridiculous. We can trade on the price for sure. Might as well. But don't move it around. That's archaic. Just bet on the price. We can do it in a fractional reserve system with essentially no reserves. Money made all around. And now we are moving backwards as we move into a multipolar world. Now, multipolar is tough for anybody that hates America and wants to see us in a bad spot. A multipolar world is wonderful. You've got somebody that's going to keep the US in check. However, I think that a multipolar world also has massive downsides. And this is going to be one of them. Where now if you want gold, you're going to take physical delivery of that. You're going to have to have it in a vault. This so reminds me of the book by Neil Ferguson about the Rothschilds and how at one point during the French Revolution, they were literally burying shit in their backyard. And I'm like, God damn. Like, we're legit heading to that point where central banks are like, I want a physical thing. I want that gold in whatever their version of Fort Knox is that people are going to be starting to have to figure out where they store their actual gold because they're holding onto physical gold, which is precisely what China is trying to put in place now. That's crazy, dude. We are about to be in a totally different world, man. That is how much money printing has cost us trust in the world. We were talking about the boy who cried wolf, remember? The real story is the wolf fucking eats the kid. He wasn't making it up. There really is a wolf there. The US Money printing, anybody calling that out is a problem. Sure, the wolf eats the village slowly, one kid at a time, but the kids are getting eaten. And so when I see this and I realize, holy bejesus, they are, and I think he covers this, but they're building out like these massive storage facilities, their version of Fort Knox so they can actually hold the gold. They are actually going to buy gold that's right now sitting in London and actually get it shipped to China like Welcome to a brave new world.
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Guest Analyst
I have a question about this because that quote that he said that the Chinese person said was, we want to stop making things in the east, but being priced in the west, does that go to like, the financialization of our economy?
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Host
He was saying something slightly different. And that to me is sort of the least interesting part of all this. The actual west, east, like, interesting phrasing that he used was about gold. Not about like manufacturing, but the. The part about once we're able to speak at the table, we're going to finally have a. Once we have a voice, you're going to see what the real price of gold is. That to me is. Is both true and like whatever it is a phase transition of the market where I've been screaming from the rooftops forever. The stock market is gambling. We've all decided it's great and it really does have massive upsides. And I love it and I'm glad it's a modern miracle. I just think people lie about what it is. And so we're saying, yeah, I can't gamble with other people because I've got counterparty risk. And so I China, I'm not willing to play that game anymore. I've seen it hurt my people because there really is a downside to letting people speculate like that. They can get out over their skis, not understand the way the vehicle works, get themselves into tremendous amounts of trouble, that that all is real. But if I'm like, dude, I'm going to take on the US I've spent my hundred years of humiliation. I've got a plan to get out from under this. I'm taking all these motherfuckers over. They do not know what it means to be a cohesive dictatorship that can just run the table. And so now they've got to get the physical gold into China. And so, sure, are we all going to find out what the real price is? Yes, because somebody that owns a huge chunk of it and doesn't allow for paper trading, because there's still going to be paper trading, just not by China. So you will get a truer signal of the price. But that's not the game. The game is that they're going to be able to control a massive amount of gold which will financially hurt the west for reasons that. I'll explain more later, but it's going to financially hurt the west and it puts them in a position where they can. Now, this is speculation. I'm now way over my skis, but I really think this is where they're headed that they're going to be able to back the yuan with gold and make a real play to become the world's reserve currency. And that's like the biggest part of the punchline for me. Speculation.
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Guest Analyst
It's not like I, that's why, because I think directionally we like what China is doing. And if America had the leeway and the gold assets, we would also want to be backed by gold. But the fact that China's actively working on it, that's what makes it a danger to the US because we are looking lose our reserve status.
- [46:01]
Host
Yeah. So yes, this goes back to the don't have a central bank. Okay, cool. Then what's your money back by? Historically it'd be backed by gold. That'd be an awesome position to be in because it's sound money. But yeah, they're making a real play for it.
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Guest Analyst
I got you.
- [46:16]
Andre Jik
That's real price discovery that we talked about. But because of China's capital controls, the foreign nations can't easily get in. That's where Hong Kong comes in. Hong Kong is going to be their front door where Shanghai sets the price based on real discovery and Hong Kong lets the world trade on it. So you put them together and what you now have is a parallel financial system that's going to be the alternative to the system in London and New York. That's going to be sitting outside the dollar.
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Host
There it is, outside the dollar.
- [46:47]
Andre Jik
Now how do we know how big of a deal this is going to be? What we know is that Hong Kong is growing its physical vault capacity from around 200 tons to over 2000 tons. They're doing a 10x increase. Obviously you would not need a vault that big for a paper casino. But if you want to settle in real gold, obviously you'd want as big of a vault as you can build. And the reason why China wants to do all this is because they understand that if you control the price of the most trusted money on earth and you settle it in your currency, the yuan, then you've given your currency what's called an anchor. Not an official gold standard, but something that ties to it, something that manages people's expectation of stability. They know the world doesn't fully trust the yuan on its own yet because it's controlled by the Chinese government. It's not freely traded, but the world trusts gold. So if every major commodity deal can be priced in yuan and settled against real gold sitting in the Shanghai vault or somewhere close to their trading nation partners, then the countries that were nervous about holding the yuan will have a reason to hold it because behind it sits that anchor, the thing that, that's massive, nobody can print that. They could then use to fund the forever war model, right? That is how China challenges the dollar without actually going to war with the us. That is China's move. Which leaves the obvious question, right? What is the US Gonna do about it? The theory says that the US will try to recreate a similar idea with gold backed treasury bonds. Now here's a fact that sounds made up, but it's actually completely real. The US government owns something like 8,000 tons of gold, allegedly. We don't know if this is what's called unencumbered gold or if it's still there, but that's what the official numbers say. Could be a lot less, could be a lot more. But on the government's books, that gold is not valued at the market price. It is valued at a price set by law back in 1973 and was never updated. Since that price is $42 per ounce, gold is obviously trading around $4,000 per ounce. So officially on paper, the United States values all of its gold at about $11 billion. In reality, at today's prices, that gold would be worth closer to a trillion dollars. It's a trillion dollar gap. It's basically hidden by an accounting rule from the Nixon era. So how the US could fight this is with just the stroke of a pen. The US could just revalue that gold and update the official price from $42 to something closer to the market price. Now the moment the US does that, more than a trillion dollars in value would appear on the Treasury's books. That's money the government could use without creating or issuing a new bond. In fact, the Federal Reserve has actually published research on this idea. The treasury secretaries talked about monetizing the asset side of America's balance sheet. Within the next 12 months. We are going to monetize the asset side of the US balance sheet for the American people. Where you're going to put the assets to work. There's also a proposal floating around from an economist named Judy Shelton for a 50 year treasury bond that you could redeem in either dollars or physical gold. Now what that would do is it would make the U.S. treasury bond partially backed by gold. Again, the exact same trick that China is doing with the yuan. So that is the West's answer to the East. If China is going to anchor the yuan to gold, then the counter is, okay, fine, we'll just do the same for the dollar Right. And that is also why some people out there believe, and this is big speculation here, but that this reevaluation could happen sometime In July, maybe July 4th. Right. America's 250th birthday, where the U.S. revalues its gold and launches that gold backed bond as kind of a monetary declaration of independence.
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Host
Think if on July 4, 2026, which is going to be the 250th anniversary
- [51:14]
Andre Jik
of our nation's founding, treasury offered for the first time since 1971 when President Nixon closed, closed the gold window and
- [51:25]
Host
ended any kind of gold convertibility for the dollar, you would be establishing a link between the US dollar and gold.
- [51:34]
Andre Jik
Now, do I think that it's going to happen on that exact day or happen at all? I don't know. I have no idea.
- [51:40]
Host
It did not happen.
- [51:41]
Andre Jik
But what I do know is that the Fed is looking into this. The Treasury Secretary has talked about this. The gold bond proposal is a real idea. And even if the revaluation is nonsense, if it doesn't happen with the repricing of gold, it might still happen anyway. But not on the gold side, but on the devaluation of the dollar side. Right. Gold does not have to go up for this to happen. The dollar just has to go down a lot. And that would be the same thing. Luckily we have a Fed chairman who's gonna show us that inflation is not as bad as we think.
- [52:21]
Host
Good Lord.
- [52:22]
Andre Jik
Having said that, though, as a disclosure, I personally do not hold any gold at all. I'm waiting for a safer entry price and when that happens, I'll let you know in the premium members section where you'll also get access to my main videos earlier. And if that is valuable, the link is down below.
- [52:36]
Host
All right, Andre Jick, round of applause. He's fantastic. Now there's something that I. Thank you. Something that I think that he leaves out that I think is, is really the thing that pulls us all together. And that is once you understand the mechanism of how this works, it becomes very clear to me what China's actually trying to do. So the reserves that are going to be held by China are going to be a pittance compared to what they're forcing their people to do. Remember, they've shut down the paper, the ability to trade on gold, but they have not killed the appetite for people in their country to find some way to get a return on their money. And one of the ways that they're going to get a return on their money is by betting on gold. Essentially, I'm going to buy low so that I can sell high. So that's going to happen. But when they do that, they're going to force them to take physical gold. They're actually going to leverage them buying it as a way to draw more into China. Now the fascinating thing that the U.S. if nobody else has proven, is that gold movements can be turned into a one way path. This is so important for people to understand. All right, so what you do is just like we did, I think it was Roosevelt ended up saying, all right, sorry everybody, you've got to sell the government your gold. You're going to sell it to us at this price. And it's illegal to hold gold on your own or China will have no problem saying you can buy gold, but you can't sell gold. And once China does that, now they create this one way, like suction of gold into the country, into the country, into the country. And that allows them to wildly exaggerate the amount that they would be able to buy themselves by having the people, the citizens of the country who would naturally be buying gold, to move them off of paper and just force them to take hold of that gold. So whatever appetite there is for interacting with gold, people are still going to do that, but now it's all going to happen within their country. And so if that ends up being true, if they end up putting any controls on it, or if down the road at any point they have to confiscate some of that gold, China is in a much better position. And if you think the US will confiscate gold, but China would never, you are out of your mind. So if I'm China and I'm like, okay, I've got to be able to defend myself against the US And I want to do that economically, cool, I'm going to go after getting as much gold as I can have it. He says anchored, the yuan being anchored by gold, I think they may push it even farther than that and really try to back it. We'll see. They're not making those noises, but that would certainly be a way for them to start gaining more credibility with people. Especially at one point they were talking about doing a gold corridor where they were essentially distributing the storage of the gold. I don't know if that's real or something they've given up on, but that would certainly be interesting stored in other jurisdictions with a country that people trust. So it's like, hey, we, China have bought the gold, we're backing our yuan with it, we're distributing it physically in vaults that are controlled by our partner. And now, dear world, you can trust us. We've gone back to sensible, sound money. Now that's I'm extrapolating so hard. I am definitely doing a thought exercise more than anything, but that would be a way that they could really make a run for the dollar. But by also just getting the gold into their country, it means that they're getting the gold out of London and the U.S. now, remember, the thing that the U.S. does well is we financialized everything. But if you want people to be able to trade on paper, then they've got to have some amount of gold. They can't trade paper on nothing. And so every bar that China is able to physically remove out of either London or New York, that's one less bar that they can use in this fractional reserve game of gold trading on paper. And so now you just dwindle and dwindle and dwindle those reserves if they'll sell them. And you're now in a much better position from the Chinese perspective simply because they have less money that they can earn on their hyper financialization. And that's something that Andre doesn't bring up in this, but I think is an incredibly important part of why China would want to play this. Now, I was saying earlier that the UK once made a mistake like this where the price of gold was like going wild all over the place and they ended up selling like half of their gold reserves at the bottom. And when you think about their ability to do all of the trading on top of that, if they keep letting the gold go now, regardless of whether the price moves up or down, they're just giving up all of those future revenues. And so this is one of those plays, man, that China is being so strategic about the different layers that they can go after the US economy to bring back in. What I was saying at the beginning about AI, you've got the whole AI play, which already our entire economy is perched on top of AI. That's a massive thing. Watch my deep dive about it just came out on Tuesday. Check that out. So you've got them doing that, then you've got this new move, shutting down the paper trading so that their own citizens can only get physical gold, which will be always more than they're going to be able to buy and hold in reserves. So now you've got their reserve purchases plus all the people, all their citizens that will be bringing gold in. And then they can decide at any point if they ever want to do capital controls on that. I mean, just an absolute masterclass in terms of how to play the long game and to take this very slow, methodical approach to eroding the dollar. And by the way, buying a lot of that gold from the proceeds of selling U S debt. Man, all eyes on China. Iran has been such a distraction when you really think about what is going to be a huge player in the economic future of the US Long term. I think China is a far more important thing to pay attention to than Iran. It's not that Iran is an important energy like really matters in terms of inflation, but man, China's being very, very
- [58:39]
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