Goldfingered

Central Banks tend to buy gold ahead of War. While Wall Street debates rate cuts and retail chases memes, what do CBs see that we don’t?

If your enemy is buying gold by the ton, maybe don’t bet the farm on fiat.

That would seem like common sense, but common sense has been put out to pasture, where it now munches grass next to unicorn startups, sound fiscal policy, and honest money.

Yet the biggest and most powerful financial players in the world…the central banks…are quietly stuffing their vaults with yellow metal at a record pace.

They aren’t doing this for fun. They’re doing it because they know what’s coming.

And what’s coming...well, let’s just say it doesn’t involve champagne and index funds.

The Smartest Guys in the Room Are Hoarding Gold

While retail investors chase meme stocks and speculate on whether the Fed will cut 25 or 50 basis points, central banks are doing something both ancient and deeply rational: they’re preparing for war.

Not metaphorically. Literally.

Let’s start with the facts, because that’s where the fear lives.

In 2022, central banks bought 1,136 metric tons of gold.

In 2023, another 1,037 tons.

That’s not diversification…that’s a pivot. A lunge, even.

Russia took its reserves from 400 tons in 2008 to over 2,300 by 2022. China has doubled its hoard since 2015. What do they know that we don’t?

We don’t need to guess. They’ve told us.

When trust in paper evaporates…and it always does…gold is the lifeboat.

Ask the Weimar Republic. Ask Zimbabwe. Ask Venezuela. Hell, ask your grandparents.

Gold doesn’t yield. It doesn’t compound. It just sits there, heavy and inert. Until everything else burns down, and suddenly it’s the last thing standing.

Now ask yourself: if the institutions who print the money are choosing gold over the money they print, what should you be doing?

Curious what happens when the numbers start to whisper the truth? The next section walks through gold ratios, historic parallels, and why this might just be the calm before the storm.

Ratios and Revelations

As of March 30, 2025, gold is trading at $3,084 an ounce. The S&P 500? 5,580.

That gives us a gold-to-S&P ratio of 0.55.

Not bad. But here’s the kicker: in 2010, gold was $1,400 and the S&P was 1,250.

The ratio? 1.12.

If gold were to simply regain that prior relationship…assuming the S&P holds…gold would trade at over $6,200 an ounce.

If the ratio overshoots, as it did in 1980? Try $7,500–$10,000.

And if the S&P enters a bear market while gold climbs? You're looking at a moonshot.

These aren't fantasy projections. They’re arithmetic... plus a dash of panic.

The Gathering Storm

If the last century taught us anything, it's that gold loves chaos.

Before WWI, Britain jacked up its gold reserves from 6.5 million ounces to 9 million.

Nazi Germany hoarded over 1,400 tons before WWII.

Russia's buying binge accelerated just before it marched into Ukraine.

China’s been quietly stacking while throwing elbows in the Taiwan Strait and South China Sea.

Central banks don’t buy gold because they read Substack.

They buy it because they understand the cycle: monetary inflation → social unrest → geopolitical risk → kinetic conflict → systemic reset.

Gold is insurance you hope never pays out. But central banks? They're done hoping.

The Absent Players

Despite the surge in price, the gold market is still under-owned by the players who usually drive mania: institutions and retail.

Central banks already hold around 30% of above-ground gold. Institutional investors? Light. Retail? Basically AWOL.

Gold ETFs are still a rounding error in the average portfolio.

Most asset managers still think owning gold is like investing in powdered wigs and buggy whips.

Perfect. That’s when you want to be early.

Because once Wall Street decides it’s okay to own gold again…once Goldman adds it to their “10 Surprises for 2025” slide deck…it’ll be too late. The asymmetric window will have slammed shut.

Miners: A Great Asymmetric Bet

If gold’s current price surge is impressive, gold miners are behaving like they missed the memo.

Take the GDX ETF.

It's trailing gold like a hungover intern on a Monday morning. Yet the underlying businesses?

Throwing off free cash flow yields of 8-10%. Some with 35% margins. They're trading cheaper than they have in 40 years.

Why the disconnect? Simple: central banks don’t buy miners. They buy gold.

But institutions will. And retail?

They’ll FOMO in last, as they always do…buying junior miners on margin while CNBC runs breathless headlines about gold's "parabolic" move.

Right now, miners are one of the few sectors with sky-high margins, low debt problems, and valuations stuck in 2015. That won’t last.

The Dollar Smoke Screen

Gold is up 40% in euros. Up 50% in yen. Up over 60% in rupees.

But in dollars? Up a modest 12% over the last year. Why? Because the DXY is still flexing its muscles.

But don’t be fooled. The dollar’s strength is cosmetic…a Botox job hiding $34 trillion in debt and a political class that couldn’t pass a third-grade math quiz.

As the U.S. borrows more to pay interest on what it already owes, confidence will erode. Not overnight, but predictably.

The dollar is not invincible. It's merely the last man standing in a room full of collapsing drunks.

And when that falls apart, gold won’t go up…it’ll reprice the entire financial system.

The Endgame Nobody Admits

Here’s the part most people miss: central banks don’t sell gold. Not en masse. They buy and hold through cycles, through crises, through everything.

That makes this one of the rare markets with a one-way liquidity trap: buyers accumulate, but the supply side doesn’t respond. You can’t ramp up physical gold production the way you can print more T-bills.

This sets the stage for something we haven’t seen in decades: a supply crisis in the only asset that isn’t someone else’s liability.

If institutions allocate even 1–2% of their trillions into gold, we’ll see a bid wall that makes the 2008 run look like a warm-up.

And when retail finally catches on? Buckle up.

Be Early or Be Sorry

We’re not saying sell your house and bury krugerrands in the backyard.

But if you’re not holding at least 5–10% in gold…and if you’re not seriously looking at miners…you’re playing poker without knowing the deck’s stacked.

The game is changing.

Central banks have moved. Institutions are sniffing around.

You can sit it out and hope the system muddles through.

Or you can read the signs for what they are…and position accordingly.

In a world that’s lost its grip on truth, value, and sanity, gold remains one of the few things you can hold that doesn’t depend on someone else’s promise.

Because in the end, when trust dies, gold is what gets passed around the table.

⭕️ Have you read Insider Issue #309 yet?

Disclaimer: Not investing advice! This article is for educational purposes only. Seriously, we really do hope you become a better investor after reading our work. But always do your own due diligence and/or consult with a financial professional before making any investment. Capitalist Exploits reserves all rights to the content of this publication and related materials.