They’re Buying Gold And Selling You AI
In a Nutshell
The core thesis is that the US is engineering a last-ditch effort to preserve dollar dominance by turning stablecoins into a privatized monetary system that funnels global demand into US Treasuries, while the rest of the world—led by BRICS and China—is actively dismantling that system by accumulating physical gold at record rates and building parallel payment rails. AI is positioned as the fatal contradiction: it promises infinite productivity growth but destroys the human labor/tax base the debt system requires to function, creating an irreconcilable paradox where either valuations collapse or the fiscal foundation does. Gold's repricing above Treasuries as the top reserve asset, combined with the collapse of paper-gold trading, signals the shift from financialization back to hard assets as the mechanism to rebalance global trade imbalances without war.
These notes were generated by AI and may contain inaccuracies.
There's a possibility that the market is being pumped with fake money, with $7 trillion in spending but only $5 trillion in revenue. Ray stated that we are already past the point of no return and that some sort of crisis is inevitable.
There are two competing theories about the future of money. The first theory says the dollar is not going anywhere and will rule the world because the US has figured out a way to keep the dollar dominant forever through the Clarity Act. The plan is to rebuild the world's payment system on digital rails through stable coins backed by US Treasury debt. This means every corporation will become a mini central bank, and every consumer in the world who uses a smartphone will use digital dollars to buy everything, which will indirectly fund US government debt. This is described as the petrodollar system rebuilt for the internet, ensuring demand for dollars will always exist.
The second theory says this will not happen because the rest of the world already saw it coming, which is why over the last decade the world formed the BRICS Alliance. They have built alternative payment rails and started moving their real reserves out of dollar-denominated paper and into physical gold at a pace never seen before in modern history.
Both of these things are happening at the same time, and both theories have evidence behind them. Everything happening in the world today is a result of the race to control the idea of money and the flow of it. The outcome will determine what money will be worth for the rest of your life.
Sitting in the middle of these theories is the biggest investment story of our lifetime: AI. AI is the biggest technical development in a lifetime and is so profound that its influence is hard to overstate. Its value is extremely high. The system is using its last shred of credibility to inflate itself one more time, which will concentrate wealth upward while central planners use it as an opportunity to exit the system.
Every major currency transition in history ends with a period of prosperity where asset prices go up and markets make money for everyone, then the party stops. Evidence includes the stock market: if you strip out just 41 companies from the S&P 500, the other 459 are flat. The whole market of 2026 is one trade: AI. Warren Buffett is sitting on $400 billion in cash, the most he's ever held. Consumer sentiment hit 44.8 on the University of Michigan index, the lowest level since tracking began in 1952. While this happens, central banks moved gold above US Treasury bonds as their number one reserve asset for the first time in modern history.
Everything bought has generally gotten more expensive over time, including groceries, gas, rent, and healthcare. The explanation given is inflation, measured by the CPI (Consumer Price Index). However, another explanation comes from a chart spanning several hundred years. When commodities like oil, wheat, and copper are priced in dollars, the price goes up forever since 1792. But when priced in gold, these same commodities have been getting cheaper at 0.8% per year compounded for over 200 years.
Inflation is not really about things getting more expensive. It is about the thing used to measure value getting smaller: the dollar is getting weaker. This has been happening throughout our lives. Every war, recession, and new Fed chairman has coincided with a dollar that bought less of the real world.
The system of the dollar slowly losing value only works under one assumption: more workers, more borrowers, more taxpayers, and more consumers. Every generation is slightly bigger than the last, making slightly more, spending slightly more, and borrowing a little more. The machine runs on human beings participating in the economy, and for 230 years there were always more people entering than leaving the system.
AI is the first technology in history that grows the economy without growing the need for human beings. There will be some impact on the job market over the next several years. This means the system breaks because debt cannot be inflated away. There will be fewer people paying taxes and fewer people borrowing money, leaving the dollar with nothing left to measure itself against.
This creates a paradox: either AI is so transformative that it justifies trillions spent on it, in which case jobs disappear and the tax base collapses, or AI is not that transformative, in which case company valuations are a fantasy and the market corrects. There is no version of reality where both are true. The debt system needs what AI destroys.
In 2021, something interesting happened in the race to control the flow of capital. One side is built on paper: digital promises, debt-backed tokens, and numbers on a computer screen (the dollar). The other side is built on something physical that has stored value through every empire and reset in 5,000 years of human history: gold.
For decades, gold was traded in the Western financial system as a three-card monte game. When buying gold through a bank, most people were buying unallocated gold, which is a promise that somewhere in a vault there is gold with your name on it. Banks were selling more promises than they had gold to back them. This kept the price of gold artificially suppressed for decades because unlimited paper supply prevents the true price from being revealed.
By 2021, the total value of unallocated gold in the London market was $572 billion. Adding $63 billion in COMEX futures brought the total to roughly $635 billion in paper gold claims. One analyst estimated actual physical gold available to back those claims, after subtracting central bank gold, ETF gold, and privately owned bars, was around 500 tons, or about 16 million troy ounces. At around $4,360 per ounce, that equals about $70 billion in real physical gold underneath $635 billion in paper promises, a ratio of about 9:1.
Banks discouraged customers from holding allocated gold (real physical gold with your name on a specific bar) by charging high fees, requiring insurance, and making it inconvenient. Unallocated gold was free to hold and came with tax advantages. The system was engineered to keep people in the paper version.
Western central banks were leasing their gold into the market to keep the price suppressed. One analyst estimated central bank gold leasing totaled over 10,000 tons as far back as 2002. Much of that gold flowed east into Asia and China and never came back. Western central banks were bleeding physical gold reserves into a market that pretended those reserves were still on their books.
In 2021, the BIS (Bank for International Settlements), the central bank of central banks, changed the rules. The Basel 3 net stable funding ratio requires banks to fund their gold positions with real money. They can no longer run the shell game the same way. The paper game became too expensive, regulated, and risky. If gold prices rose sharply, banks with huge short positions would be in serious trouble.
This is why gold has been replacing US Treasury bonds as the world's number one reserve asset. Central banks bought more gold in the last 3 years than at any point since the end of the gold standard. COMEX gold futures open interest collapsed to its lowest level in 13 years. These two things have never diverged like this in 40 years of data.
China imported 939 tons of gold in 2025. The world mines about 3,500 tons of gold per year, so China imported more than a quarter of all gold mined on Earth in a single year. The cumulative total of Chinese gold imports since 2015 has been 14,000 tons.
China ran a $1.2 trillion trade surplus with the world in 2025. If that gold is priced at $39,000 an ounce, China's entire $1.2 trillion trade surplus disappears and balances to zero. There is a mechanism that could allow this repricing, and incentives exist on all sides. China's gold-loaded consumers would gain purchasing power and buy more products, reducing the trade imbalance organically. The US would get a weaker dollar, making American manufacturing competitive again.
Treasury Secretary Scott Bessent said last year that the US will not be revaluing the gold. However, they could still reprice the dollar, which is essentially the same thing. The president of the Shanghai Gold Exchange said in 2014: "When China has the right to speak in the global gold market, pricing will be revealed." COMEX data confirms this is happening now.
Historically, when gold prices go up, paper trading goes up as speculators pile in. That 40-year pattern is now breaking. People who used to speculate on gold through paper contracts are leaving, while people buying physical gold (central banks, sovereign wealth funds, institutions) are not leaving.
For the first time in modern history, central banks moved gold above US Treasury bonds as their number one reserve asset.
Luke Gromen from FFTT outlined four possible outcomes:
- Path one: The West tries to control China by force, the way Britain controlled China 250 years ago through the opium trade. China's military buildup, domestic ship production, and gold buying were designed to make this impossible.
- Path two: The world fights a third world war over trade imbalances, referred to by Xi Jinping as the Thucydides trap.
- Path three: The West loses economically to China. The UK Telegraph ran a headline stating the "China shock 2.0" would destroy Europe as we know it if Europe is too slow to adapt.
- Path four: Gold is allowed to go high enough to rebalance global trade. The dollar weakens, American manufacturing becomes competitive, and China's consumers gain purchasing power. The debt imbalance fixes itself through asset repricing rather than war. Western banks were told by the BIS in 2021 to get their positions in order and are now protected from this repricing.
The US is not going to sit back. There is a plan called the Clarity Act, which creates a legal framework for payment stable coins. A stable coin is a digital currency pegged to the dollar. Tether is the most famous example, with over $100 billion in circulation, backing every token with US treasuries. Every time someone buys Tether, Tether buys a treasury.
The Clarity Act opens this model to every major corporation in America. JP Morgan, Apple, and Walmart can issue stable coins, all backed by US Treasury debt. Every time a consumer anywhere in the world uses these corporate digital dollars, they will indirectly be buying, holding, and funding the US government. This is described as the privatization of the central banking function. Instead of one Federal Reserve creating dollar demand, there will be thousands of corporations each running their own mini Treasury operations.
The network effect is huge because unlike a central bank, a consumer using Apple Pay or Walmart coin has no choice. The dollar is the rails the transaction runs on. Banks hate the Clarity Act because it challenges their control over the flow of capital. Jamie Dimon of JP Morgan Chase is in a battle with Brian Armstrong from Coinbase over this. The banks know the moment the Clarity Act allows corporations to pay a yield on the money
The banks understand that the Clarity Act will enable corporations to pay yield or interest on money, which threatens their core power source of bank deposits. People would have little reason to keep money at a bank earning 0.1% interest when they could hold something like Walmart coin earning 4%. This represents the transition underway and the dollar's final effort to remain relevant and powerful globally.
The stablecoin system is intelligent but not neutral. It functions as a mechanism for exporting US monetary policy and US influence into every corner of the global economy, regardless of whether other countries consent. Countries have limited options because smartphones and internet access are widespread, allowing anyone to download an app and obtain dollars.
This is precisely why China, Russia, the BRICS Alliance, and the Gulf States have spent the last decade constructing their own infrastructure to circumvent this outcome. These nations are directing capital into the physical world and purchasing gold. The dollar represents a make-believe world where any valuation appears reasonable and nothing is anchored in reality. Gold represents the tangible world, intended to reflect real-world assets and finite resources.
No one knows which system will ultimately prevail. The current environment shows a significant influx of money into the stock market, potentially serving as exit liquidity for early investors, though valuations could continue rising for an extended period. IPOs may signal a market top, though historical precedent from the 1995-2000 period before the dot-com bubble demonstrates that IPO waves can persist for years before a peak occurs.
The situation differs potentially due to an impending race against energy shortages expected in the US within months. Tech CEOs have indicated urgency around completing IPOs before potential disruptions from the Strait of Hormuz. Whether Iran and the US reach an agreement before any market decline remains unknown, as does whether any such deal would mitigate damage already sustained.
The speaker maintains exposure to the stock market and Bitcoin, holds substantial cash reserves, and currently has no real estate, gold, or silver holdings. Gold represents the asset class most desired at present, though timing remains critical. Gold appears to be breaking through a significant technical level and could potentially decline toward the $3,000 mark over the next one to three years before any capital rotation from equities into commodities occurs under a supercycle scenario.
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