Is the hottest stock market right now setting up gold prices for a historic run? Felix Prehn, Economist and Ex investment banker, says the answer lives in a handful of overlooked numbers most investors never look at twice. What follows could change how you look at your retirement account.
Estimated read time: 9 minutes
AI Stocks Effect on Gold: Why Nvidia’s Debt Could Push Gold Higher
Gold and silver have dropped to some of the cheapest levels in about 50 years once you adjust for inflation, and almost nobody is watching closely. Felix Prehn lays out four alarming events from a single week in the stock market, connects them to a $500 billion financing deal, and explains why he recently bought a new stock position with his personal funds.
Key Takeaways
- AI stocks are building pressure which could push gold prices higher.
- Nvidia arranged a $500 billion loan deal so its customers can afford its chips.
- The cost of insuring Nvidia’s bonds against default has doubled since late May.
- Gold mining stocks trade below the value of the gold they have in the ground.
- The United States emergency oil reserve dropped to its lowest level since 1983.
- Felix Prehn’s free research report breaks down every chart and number behind this trade.
How AI Stocks Connect Directly To Gold Prices
Four separate events happened inside one week in the AI stock market. None of them looked connected at first. Nvidia arranged a $500 billion financing deal.
The cost of insuring Nvidia’s debt doubled. The largest companies in the stock market switched from buying back stock to selling it. And the United States emergency oil reserve dropped to its lowest point since 1983.
Felix Prehn firmly argues the four events are not separate stories. They are one story about the current state of the stock market: a boom built on borrowed money, with fewer resources available if something goes wrong. The next sections walk through each piece one at a time, starting with the deal central to it: Nvidia’s $500 billion loan arrangement.
Here is the simple version of why it matters for gold. The AI bubble depends largely on debt, meaning companies are making complicated deals to make growth numbers look stronger than the cash they have in their accounts. When a boom this size rests on borrowed money, any real stress in the debt tends to push governments toward printing more money to cover the damage. A government printing more money lowers the value of the dollar.
Gold and silver stay valuable in a way paper money cannot match, since nobody can print more of either metal. Felix Prehn treats gold and silver as real assets, the kind of safe haven money moves toward when booms built on borrowed money create financial stress. Higher demand for safe haven assets is part of why gold prices could climb further.
The link between borrowed AI money and the case for gold is the basis for everything else in the breakdown.
The $500 Billion Loop Behind Nvidia’s Sales Numbers
Nvidia signed loan deals worth $500 billion with six of the largest private money firms, including Apollo, Blackstone, BlackRock, Goldman Sachs, and KKR. Goldman Sachs is a major investment bank, and its involvement shows how deep into the regular banking world an AI lending loop like Nvidia’s reaches. The money from this deal doesn’t go to Nvidia. It goes to Nvidia’s customers, so they can afford to buy Nvidia’s chips.
Here’s the loop, step by step:
- Nvidia ships chips to companies building AI infrastructure.
- The companies need capital to pay for the chips.
- Six large money firms lend $500 billion to the companies.
- The firms raise much of the lending money from pension funds and life insurance funds, meaning it comes from ordinary people’s retirement money.
- The customers pay Nvidia with the borrowed cash, and Nvidia reports it as revenue growth.
Nvidia describes its chips as durable, long-lasting assets, similar to a toll road which keeps earning steady money for decades. Felix Prehn firmly pushes back on the comparison. A toll road still works fine in 30 years. An AI chip becomes nearly worthless within about five years, because Nvidia’s newer chips make the older ones outdated almost as fast as they ship.
The six firms which arranged the deal collect their fees upfront, no matter what happens later. The real risk lands instead on the pension funds and insurance companies which supplied the money, meaning it lands directly on regular retirement accounts.
Felix Prehn compares the setup to what happened with Lucent and Nortel in the late 1990s. The two companies lent money to their customers so sales numbers looked good. They later filed some of the largest corporate bankruptcies of the decade, a financial mess which took years to clean up. The same pattern, debt hidden behind sales numbers, shows up next in the bond market.
Why Bond Traders Are Paying Double To Insure Nvidia’s Debt
The cost of insuring Nvidia’s bonds against default has doubled since late May. The insurance is called a credit default swap, and it works the same way as any other insurance: the price rises when people believe the risk of a company failing to pay its debt has gone up, and in periods of stress the price can double quickly.
Nvidia’s stock price reaches a record all-time high, and its revenue keeps growing steadily. At the same time, bond traders are paying twice as much as before to protect themselves against Nvidia defaulting, showing real concerns about how much debt is hiding behind the company’s growth.
Felix Prehn points to the widening gap as a signal worth watching closely. Bond markets show what large investors believe about risk, separate from the excitement driving the stock market. When the price of the insurance doubles while a stock trades at record highs, it tells a very different story than the one most investors are celebrating. The debt piling up around Nvidia is only one part of the picture. The next warning sign comes from a completely different corner of the stock market: the companies which used to buy back stock have stopped.
The Buyback Reversal: Stocks’ Biggest Buyer Just Became A Seller
For close to a decade, one group supported the stock market more than any other: the largest companies buying back their shares. A stock buyback works like this: a company spends money buying its shares out of the market, which reduces the number of shares available and pushes the price up.
The buying grew from about $6 billion a year in 2017 to $190 billion in 2024. In 2026, the pattern reversed completely. The same companies are now net sellers of $147 billion worth of stock, the first time in a decade the group has sold more than it bought. Felix Prehn directly ties the shift to rising AI spending: the companies now need the cash from selling stock to help pay for AI infrastructure costs.
The reversal matters to anyone holding an index fund or a 401(k), since the companies make up a large share of most of the funds and a large share of the total value of companies inside major stock indexes. The buyer which helped push the stock market higher for ten straight years has switched to selling, and the shift affects the value inside millions of retirement accounts, whether the account holder chose AI stocks directly or not.
The debt, the bond market warning, and the buyback reversal together show the risky side of the AI boom. The other side of the same boom is what it has done to gold mining stocks, which remain almost forgotten while all the money and attention have gone toward AI.
Why Gold Mining Stocks Trade Below The Value Of Their Gold
Gold mining stocks are at their cheapest valuation level in about 50 years, based on high free cash flow, meaning the actual cash a company keeps after paying its expenses. As a group, the companies generate close to 10% free cash flow, and mining currently ranks among the most profitable sectors in the S&P 500, the index made up of 500 of the largest publicly traded companies in the United States. Unlike other sectors chasing AI stocks, gold mining has been left behind almost entirely.
Here’s the part Felix Prehn finds most unusual: many mining companies trade below the value of the gold they already have in the ground. The market is pricing gold mining businesses well below the value of the metal underneath them.
Even so, gold mining stocks get almost no attention, since most investor focus and money have gone toward AI stocks instead. Felix Prehn mentions GDX, an index fund made up of gold mining companies, as one way to gain exposure to the sector without picking individual stocks. He’s clear mining stock prices swing up and down a lot, closely tied to the price of gold, and any investment decision needs personal research, since he is not a financial adviser.
Gold mining stocks are this cheap partly because almost every investor dollar right now is going into AI stocks instead. The AI focus has pushed the stock market to one of the most expensive levels in its history.
Today’s Stock Market Is Priced Above 1929 And The Dot-Com Peak
Felix Prehn looks at a chart combining eight ways to measure how expensive stocks are, and it shows today’s stock market priced higher than the dot-com peak of 2000 and higher than the 1929 peak before the Great Depression.
The measures include price to earnings (how much investors pay for each dollar a company earns), price to book (how much investors pay compared to what a company’s assets are worth), price to sales (how much investors pay compared to a company’s total sales), and market capitalization compared to GDP (the total value of everything the United States economy produces in a year). Based on the combined measure, the current market ranks as the most expensive in over a hundred years of American stock market history.
A large part of the valuation comes from a small group of AI companies which make up a big piece of major stock indexes. Anyone holding an index fund, a 401(k), or shares in large tech companies is already affected by the valuation level, whether they meant to or not.
A market this expensive, built this heavily on debt, shows one more indicator of risk: the country’s emergency oil supply has already been drained.
The Emergency Oil Reserve Hits A 42-Year Low
The United States Strategic Petroleum Reserve, the country’s emergency oil supply for use during a crisis, dropped to its lowest level since 1983. At its peak in 2009, the reserve had about 700 million barrels. Today it has about 300 million.
Felix Prehn directly connects the drop to the AI-driven debt covered earlier. When an economy drains its emergency reserves during good times, it has fewer resources available if something goes wrong, whether it’s a supply shock, an energy price spike, or a spike in inflation.
If a financial accident happens inside the AI lending loop already described, and the government responds the way it has for the last 20 years, it prints money to cover the damage.
A weaker dollar comes from money getting printed, and a weaker dollar has historically pushed gold prices higher. The mix of a drained oil reserve and a debt-driven boom is part of why Felix Prehn expects the risk of a recession to keep growing in the months ahead.
With all four warning signs laid out, the last question is simple: what does Felix Prehn do with his money in a market like this?
Felix Prehn’s Two Moves And Why Knowing When To Sell Matters
Felix Prehn openly shared two specific moves he made with his personal money. First, he has been watching gold mining stocks for a breakout above key moving average price lines, meaning the average price a stock has traded at over a set period, used to spot when a price trend is changing direction.
He’s waiting for a specific price level on GDX before adding to the position. Second, he bought a fund called IQLT, an international fund made up of quality companies from countries including Britain, Japan, Switzerland, Canada, and the Netherlands.
The move spreads his money across more types of investments, called a diversified portfolio, and moves him away from the AI stocks he already has through other funds.
Value stocks are shares of established companies which look cheap compared to their profits or assets. He used a chart from the Financial Times to explain his reasoning. It shows value stocks have done worse than growth stocks for ten straight years, the worst stretch on record, where growth stocks are shares of companies expected to grow sales and profits quickly.
Felix Prehn expects the pattern to reverse once the AI bubble reaches its peak, similar to what happened after the 2000 dot-com bubble, when investors moved back toward quality companies.
Picking the right stock is only half the job. The other half is knowing when to sell, whether it means taking a profit or cutting a loss before it grows worse.
Join The Live Seminar
Felix Prehn is hosting a free live seminar on Saturday covering a three-step system for deciding when to sell, at whentosell.org. His free research report, covering every chart and number above, is at felixfriends.org/goldsilver.
He was clear on one point throughout: he is not a financial adviser, he doesn’t tell people what to buy or sell, and every number or example he shares reflects his personal trades and opinions, not personalized advice for any individual reader.
Frequently Asked Questions
What Happened To Lucent And Nortel In The Late 1990s?
The two companies lent money to their customers so the customers could buy their products, which made sales numbers look good. They later filed some of the largest corporate bankruptcies of the period.
Did Felix Prehn Mention Interest Rates, The Fed, Or A Government Shutdown?
Felix Prehn didn’t discuss specific interest rates, rate cuts from the Fed, or a government shutdown in the breakdown. His broader point centers on what governments have historically done during a large financial accident: they print money.
Did Felix Prehn Cover Third Quarter Earnings Or A Specific Quarter’s Numbers?
No, the breakdown didn’t cover third quarter earnings or any single quarter’s results. It focused on the AI financing loop, bond market signals, and gold mining valuations.
What Is The Winston App Felix Prehn Mentioned?
The Winston app lets users search and filter gold mining stocks by quality score, country, and other factors. Felix Prehn offered a free 30-day trial at gogetwinston.com.
Watch Video: The UNTHINKABLE is about to happen to GOLD & SILVER (& Why AI is the Trigger)
Video published on August 12, 2026
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