Gold became a Tier 1 asset for large U.S. banks on Tuesday, July 1, 2025, which means they do not have any reserve requirements. That makes gold attractive to money center banks. According to the Bank of International Settlements (BIS), Gold has “zero risk.” Is there any other asset having “zero risk?”
Actually, gold has been a dependable asset for several thousand years. As the extreme asset volatility of other “safe” assets continues, we believe more big money will move into gold…and silver.
The long-term weekly chart of GLD, ETF for gold, below shows it is in a strong uptrend, holding above support from our Dohmen Regression Channel (blue diagonal lines).
Of course, always remember that corrections, especially in precious metals, can occur at any time. We don’t attempt to call short term moves in gold or silver because they are so highly manipulated by the big banks (do a search on fraud lawsuits for gold or silver manipulations by banks).
Silver is sometimes called the “poor man’s gold.” With a small one ounce chip of gold selling close to $4000, it becomes more difficult to buy groceries and other essentials with it. The alternative for a medium of exchange is SILVER.
Historically silver has always been a “monetary metal” like gold. We believe it’s price has a lot of catching up to do with the gold price (percentage wise).
The longer term weekly chart of silver below is very bullish in our opinion, especially after its recent breakout since June.
If you haven’t already, we encourage you to watch Bert’s recent interview as he reveals how silver saved him and his family during his time as a young child in war-torn Germany.
GOLD BUYING BY CENTRAL BANKS: It is possible that the big GOLD buying the past several years is due to central banks diversifying out of the US dollar and into gold. Gold has been a “store of value” for thousands of years.
Foreign Central Banks and large Sovereign Wealth funds of countries are starting to replace bonds in their portfolios with gold more aggressively now. Hedge Funds and Family offices are doing the same. Pension funds cannot do it because they need the income from bonds to pay the retired people.
Gold is an excellent asset for the very long term. The saying is that there are two certainties, “death and taxes.” Our theory says there is a third certainty: the erosion in the value and purchasing power of all currencies.
You know that over the long term, meaning hundreds of years, all nations will erode the value of their currencies as they run up ever higher deficits. All currencies are sinking, just at different rates, versus the value of GOLD. That makes gold ideal and safer than stocks and bonds.
Of course, those gold deposits at the Fed are not audited or verified. Now that most of the trust in the US has vanished, countries want to make sure their gold is where they can control it.
According to the Financial Times,
“Germany and Italy hold the second and third largest official gold reserves in the world (3,352 and 2,452 tonnes respectively), and each stores over a third of that in the vaults of the New York Federal Reserve. The total combined market value exceeds $245 billion, according to FT estimates”
Will the US allow it to leave?
GOLD’S LONG TERM RISE: The long term chart of gold below, going back to 1969, shows the incredible rise over the past 55+ years (via Yardeni.com). The 20-year bear market from 1980 to 2000 looks so miniscule because this is a ratio scale chart. However, gold prices plunged from $800 to about $300 in the 20 years after 1980. That’s a 62.5% plunge.
In 1980, we did a cycle study of gold going back about 400 years. Of course, we had to go back to the early years in England. Our cycle studies in 1980 said there would be 20 year bear market in gold, which no one believed. But the bear market was exactly 20 years, lasting until the year 2000.
The cycle study we did in 1980 also said that the 20-year gold bear market would be followed by a 30-year gold bull market, plus or minus. Turns out, the bull market started in 2001, which would mean it should last into 2031.
However, on this chart we can see the upside potential for gold. Another big up-move seems to have started this year after breaking out in January.
Below is a chart showing the value of the U.S. DOLLAR in terms of GOLD going back to the year 1920 (via pricedingold.com). Note the huge decline after the 1971 when Nixon closed the gold window.
That was basically a default because the US had a promise to give gold to anyone abroad in exchange for his paper dollars. The promise was revoked by Nixon in August of 1971.
This revocation of the US promise was so strange at the time. Why would Nixon take such a risk? Since then there have been numerous failed efforts from people like Congressman Ron Paul to have Fort Knox audited.
We think it is possible that Nixon found out that the gold was not there, and therefore, did not have a choice but to close the gold window.
That would also explain the incredibly sharp drop of the US dollar thereafter (see chart above). Of course, we have no evidence.
You can continue reading about our outlook on gold and silver in our latest July issue of the award-winning Wellington Letter
In our latest issue we also dive into why the current market environment is so similar to the late 1970’s, the bearish divergences we’ve been seeing on a number of charts, and the importance of liquidity, credit, and the Fed, which can make or break this current rally.
Wishing you successful investing,
Bert Dohmen, Founder
Dohmen Capital Research
Editor, The Wellington Letter