Future of Gold Stocks: The Gold Rush Nobody Is Talking About
Gold stocks can rise faster than gold itself, but the same leverage can punish investors who buy without a plan. Felix Prehn warns that the real story is not only the gold price, but the governments moving billions away from dollar risk. If central banks, China, Poland, and Saudi Arabia are shifting reserves, what could it mean for the future of gold stocks?
Key Takeaways
- Why gold miners can move faster than gold, and why leverage cuts two ways
- How Russia’s $300 billion reserve freeze changed government reserve planning
- Why central banks now buy gold at four times the old rate
- Why China may be moving trade surplus dollars into gold
- Why does Poland use national security language when buying gold
- How Saudi Arabia may be shifting away from the petrodollar system
- Why does limited mine supply matter while demand keeps rising
- What mistakes investors make when gold prices move fast
If you want to watch the video, please scroll down, and you’ll find it at the bottom.
Gold Miners Carry More Risk and More Reward Than Gold
A gold miner is not the same as gold. A mining company is a business with metal below ground and costs above it.
When gold prices rise, the value of underground reserves rises with them. Revenue can climb faster than the metal price because some costs stay fixed. Felix calls gold miners a leveraged play on gold for exactly that reason.
The leverage works both ways. When gold drops, miners can fall harder than the metal itself.
Gold miners carry risks that physical gold does not:
- Management decisions affect output and costs
- Mining operations can face delays or failures
- Market sentiment can punish miners even when gold holds steady
- Price volatility in miners is higher than in the metal
Gold stocks are highly volatile and heavily influenced by operating costs, inflation, and market sentiment, not just spot price movements.
A gold ETF tracks the price without business risk. Felix says ETFs work for short-term price exposure, but they are a paper claim, not a physical asset.
Lowering interest rates typically makes gold more attractive compared to yield-bearing assets, acting as a tailwind for miners.
Dollar Reserves Now Carry a Risk Most Investors Ignore
For decades, US dollar reserves were the safest asset a government could hold. February 2022 changed the calculation permanently.
When Western governments froze $300 billion in Russian central bank reserves, every other government saw the same thing. A reserve asset held in someone else’s system can be switched off. Permission just needs to be withdrawn.
Gold held in a national vault carries no counterparty risk. No foreign government can freeze it. No political decision can make it disappear overnight.
European central banks have been repatriating gold from New York storage. A country storing gold abroad depends on the host country’s goodwill. A country with gold in its own vault does not.
For investors, the lesson is practical. When governments shift reserve strategy, money flows follow. Central bank gold demand is structural, not speculative.
Central Banks Are Buying at a Historic Rate
Before 2022, central banks bought about 17 tons of gold per month globally. Since 2022, monthly purchases have reached about 60 tons. The increase has held for roughly four years.
Central banks are aggressively accelerating gold purchases to diversify away from the U.S. dollar, reshaping structural demand.
In 2025, gold demand from investors and central banks totaled around 980 tonnes, over 50% higher than the average over the previous four quarters, driven by economic and geopolitical uncertainty.
No comparable period of sustained central bank gold buying exists in modern financial history.
The World Gold Council surveyed central banks about their 2026 plans. Ninety-five percent said they plan to add more gold. None planned to reduce holdings.
Central banks are expected to purchase around 755 tonnes of gold in 2026, maintaining elevated demand levels compared to pre-2022 averages, as they diversify away from U.S. dollar-denominated assets.
Central banks globally hold nearly 36,200 tonnes of gold, accounting for almost 20% of official reserves, an increase from around 15% at the end of 2023.
Countries actively adding gold include:
- Poland
- Kazakhstan
- India
- Ghana
- Brazil
- Indonesia
Central bank demand at the current rate matters because it absorbs supply. Mining produces about $0.5 trillion worth of gold per year. When institutions buy at the current pace, little new supply reaches retail or investment markets.
China May Hold Far More Gold Than Official Numbers Show
China officially reports about 10% of its reserves in gold. Independent analysts believe the real figure is higher.
About 57% of all central bank gold purchases last year went unreported. Central banks are not required to disclose every transaction. The market only sees unusual import volumes or exchange data.
China runs a large trade surplus. Export revenue arrives in US dollars. Converting some of the dollars into gold reduces exposure to dollar assets without making headlines.
The pattern is visible in trade data even when purchase reports are absent. Gold imports into China have exceeded what jewelry and industrial demand alone can explain.
Poland Treats Gold as a National Security Asset
Poland’s central bank governor used national security language to explain gold purchases in January. Finance officials rarely frame reserve decisions in military terms.
Poland borders Ukraine and has watched sanctions and asset freezes play out in real time. For Polish policymakers, gold in a domestic vault is not an investment thesis. It is a contingency plan.
Poland is the most aggressive publicly reported gold buyer in the world. Countries near geopolitical risk are moving faster than countries far from it.
Saudi Arabia May Be Quietly Leaving the Petrodollar System
The petrodollar system began in 1971 after Nixon ended the dollar’s gold convertibility. The US reached an agreement with Saudi Arabia. Oil would be priced and sold in US dollars globally.
Saudi Arabia officially denies buying gold. Swiss trade data tells a different story. Analysts tracked roughly 160 tons of gold imports from Switzerland into Saudi Arabia in recent years. Volumes at that scale point to institutional accumulation, not jewelry demand.
Some oil revenue now appears to move into:
- Renminbi
- Euro
- Gold
A shift away from the petrodollar by its original architects would have long-term consequences for dollar demand globally. Felix does not watch the headlines here. He watches the money flow.
Supply Cannot Keep Up With Demand
All gold ever mined above ground is worth about $29 trillion. Annual mining output adds about $0.5 trillion worth per year. The new supply is small relative to the total stock.
New mine supply growth remains strictly limited due to declining ore grades and rising operational costs.
Central banks have absorbed nearly all newly mined supply for over three years. Other buyers still compete for the same limited pool:
- Institutional investors
- Retail investors
- Jewelry markets
- Industrial users
Increased volatility, tariff anxieties, and systemic risk are also driving safe-haven demand from private investors.
Private wealth and institutional allocations to real gold assets remain 50% below historical averages, indicating significant potential retail momentum.
Gold’s price tends to rise during periods of economic uncertainty or conflict, as it is viewed as a safe-haven asset, leading to increased demand from both institutional and retail investors.
Gold supply cannot respond quickly to price signals. New mines take 10 to 15 years to permit and build.
Three Mistakes Investors Make With Gold
Mistake 1: Assuming the rally is over
Gold dropped about 16% from its peak before recovering. A 16% drop in a bull market is a consolidation, not a collapse.
In the 1970s, gold dropped 50% in the middle of a 2,300% rally. Drawdowns are a normal feature of long bull markets. Gold prices now show rapid moves above 10% in short periods. Strategy, allocation, and exit rules matter more than conviction alone.
Mistake 2: Putting too much into gold
Gold is a reserve asset, not a full portfolio strategy. Many investors view 10 to 15% as a reasonable allocation.
A 50% drawdown in gold is possible even in a long bull market. Investors who hold too much can be forced to sell at the worst moment. Position size should match risk tolerance, not conviction alone.
Mistake 3: Treating paper gold and physical gold as the same
A gold ETF tracks the price. Physical gold is the metal itself.
Central banks buy London good delivery bars and store them in national vaults. ETFs carry counterparty risk. Physical gold does not. ETFs work for traders who want short-term price exposure. Physical gold works for long-term holders who want insurance against currency weakness.
Physical gold requires extra planning:
- Reputable dealer
- Vault or secure storage
- Insurance
- Piece size affects markup per ounce
Where Gold Prices Stand Now
Gold prices have shown strong momentum, with projections for the metal to continue rising and potentially reach $5,500+ per ounce.
Gold prices surged by 55% in 2025, surpassing $4,000 per ounce for the first time, driven by trade concerns, reduced demand for the U.S. dollar, and increased central bank buying.
Spot gold prices recently crossed the $5,000 threshold. Some projections reach $6,300 per ounce by late 2026. Gold was near $1,800 per ounce when Russia lost reserve access in 2022.
J.P. Morgan forecasts that gold prices will average $5,055 per ounce by the final quarter of 2026, potentially rising to $5,400 per ounce by the end of 2027, supported by strong investor and central bank demand.
The ride will not be straight. Volatility is higher now, with rapid moves above 10% happening in short periods. Gold exposure should be small enough in a portfolio to avoid emotional decisions during drawdowns.
The dollar is not disappearing. The dollar’s share of global reserves is shrinking. Gold stocks are in a structural bull market driven by aggressive central bank diversification, sticky inflation, and persistent global trade uncertainties.
Gold mining equities remain valued on lower historical baselines, setting up a potential long-overdue valuation re-rating.
Gold may hold value through the shift, but no outcome is guaranteed.
Felix Prehn’s Tips and Insights
- Learn the difference between gold miners and physical gold before buying anything.
Felix is clear about leverage: “Miners are a leveraged play on gold. They can go up more than gold, but they can also go down more. You need to know which one you are buying and why.” - Know your risk tolerance before putting money into gold.
Felix is direct about drawdowns: “A 50% drop in gold is very possible even in a bull market. If you cannot stomach that, buy less, or learn some exit rules before you start.” - Do not confuse a paper gold ETF with physical gold.
Felix draws a hard line: “Central banks are not buying GLD. They are buying London good delivery bars and putting them in their own vaults. There is a reason for that. Counterparty risk is real.” - Buy physical gold from reputable dealers and store it properly.
Felix shares a practical rule: “Ask an AI for reputable dealers in your country. Buy the biggest piece you can afford. The bigger the piece, the lower the markup. Then store it in an insured vault.” - Keep gold to a reasonable share of your portfolio.
Felix sets a clear boundary: “Gold should not be your entire portfolio. Most people think 10 to 15% makes sense. You can go higher, but you need to understand the risk you are taking on.” - Buy gold as insurance against currency weakness, not as a get-rich-quick trade.
Felix closes with a clear framing: “The point is not to get rich from gold. The point is not to depend on a system that can be switched off. You buy gold because you understand how money actually works.”
Frequently Asked Questions
How do gold futures differ from physical gold?
Gold futures are contracts based on the future price of gold. They can help traders gain short-term exposure without holding the metal. Physical gold is direct ownership, while gold futures depend on contract terms and market liquidity.
What can affect gold investments in the global economy?
Gold investments can be affected by the global economy, interest rates, inflation, and central bank demand. A weaker dollar can also support demand from buyers using other currencies. Geopolitical tensions and trade tensions can add more demand when investors look for safety.
Why does consumer demand matter in the gold industry?
Consumer demand matters because jewelry, retail buyers, and industrial users all compete for supply. The gold industry already faces limited new mine production. Higher prices can attract more sellers, but they can also reduce affordability for some buyers.
Is gold a long-term investment?
Gold can be a long-term investment for people who want a reliable store of value. It does not pay income like bonds or dividends like stocks. Risk tolerance and portfolio size matter.
What does historical data show about gold during high inflation?
Historical data shows gold has attracted demand during high inflation and economic uncertainty. Gold can act as a safe haven when investors worry about cash losing purchasing power. Results vary because interest rates and market sentiment also affect price moves.
How has gold performed over the past decade?
Gold has gained attention over the past decade because central banks, investors, and emerging markets increased demand. The transcript focuses on faster buying after 2022. The past year also showed momentum as gold prices reached new highs.
Why does opportunity cost matter in gold investing?
Opportunity cost matters because gold does not pay interest or dividends. When bonds offer high yields, some investors may prefer income. When interest rates fall, gold can become more attractive compared with yield-bearing assets.
Can gold have low correlation with other investments?
Gold can have low correlation with stocks and bonds during some market periods. Gold may move differently from other investments. Low correlation is one reason investors may include precious metals in an investment portfolio.
Is this article tax advice?
No, this article is not tax advice or personal financial advice. Gold investments can have different tax treatment by country and account type. Investors should check local rules or speak with a qualified tax professional.
What data should investors watch before buying gold stocks?
Investors can watch data on central bank demand, inflation, interest rates, mining costs, and company cash flow. Market cap, reserve quality, and debt levels can also matter for gold mining equities. The GOAT Academy approach also stresses money flows over headlines.
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Link to the YouTube Video:
The $29 Trillion Gold Race Has Begun (Hint: Act Now!)