What Games Is US Playing with Gold? (Uncut) 03-04-2025

UK Gold Deliveries in ‘ Technical Default’? What Games Is US Playing with Gold? Willem Middelkoop

Kitco News special coverage of PDAC is brought to you by Gold Mining, Uranium Energy Corp and Uranium Royalty Corp. Hey everyone, welcome back to Kitco News coverage of PDAC 2025 here in Toronto. A billionaire investor and founder of the world’s largest hedge fund Ray Dalio says America is in the midst of a quote civil war warning of irreconcilable differences that could push the nation towards a dangerous path.

Now, Dalio’s message is that the U.S. is spiraling into a debt crisis that could trigger an economic heart attack, in his words. Meanwhile, something extraordinary is unfolding in the gold market. Over the past year, gold has surged more than 40 percent, repeatedly smashing record highs as it inches closer to the $3,000 an ounce mark on the spot side.

And if it wasn’t enough, gold is making waves beyond the financial world. Both former President Donald Trump and Elon Musk are calling for an audit of Fort Knox, the vault that holds over half of the U.S. government’s gold reserves. And on top of that, gold continues to flow from the London vault to the United States at an unprecedented pace.

So, what are the markets really telling us? Well, to help uncode what’s really happening, of course, we’re joined by one of our favorites here at Kitco, Willem Middelkoop. He’s a founder and CIO of the Commodities Discovery Fund. Nice to see you, my friend.

Good to be back. An interesting time at PDAC. Right off the top, we were just talking about the geopolitical situation, you know, Donald Trump, what happened with Ukraine.

I want to start with that. And what’s your take on what’s happening? I mean, how dangerous is the situation right now? We just had U.S. President Donald Trump telling Ukraine President Volodymyr Zelensky, obviously, quote, you’re gambling with World War III. Is he right? What are your thoughts? Well, I just had a panel in which I talked for one hour on the de-dollarization and the need for monetary reset.

And I’m even more interested in what’s happening in the U.S. It’s actually a situation where you’re near civil war. You have Elon Musk saying that we are broke, we need to cut the budget. He came in with an axe and a chainsaw.

It’s the way he changed Twitter. He sent away 80% of the staff at Twitter. You can do that with a private company.

If you do that with the government, there’s a risk you destabilize the system. So I’m getting a bit worried. What’s the nervousness about it? I mean, is it about cutting these bloated costs with Doge? Or is it more about debasing the currency? It’s everything.

It’s everything. You know, you have a new administration. It’s the second time Trump is president.

It’s totally different from the first time. The first time Trump was surprised he won the election. He didn’t have his team ready.

He has a very alternative team now. I think he’s very well prepared and they have a plan. Just read what a guy like Pete Hexhead, the new Secretary of Defense, has been writing in his book.

Just listen to what the new chief of the FBI has been saying in interviews. They want transparency. They want to open it all up.

It reminds me actually of Gorbachev in the 1980s who brought glasnost, but he brought down the system as well in the USSR. So what is the concern here? I mean, there’s a lot of volatility in the markets waiting on tariff conversations. You know, it seems like there’s new news every day.

What’s your biggest worry with that market right now? Is it just debt? No, I think markets are, as you know, very overvalued, US markets. So actually, it’s a bubble in search of a needle. This could well be the needle which will lead to a huge correction because stocks, especially tech stocks, are so overvalued.

If you look at Nasdaq, Nasdaq is down a year today 2%. Our fund is up 10%. You see the resources, the gold funds are doing pretty well this year.

But you see like some sector rotation ongoing. And I’m afraid that we’ll have more destabilization, more chaos. And the political situation in the US is so weird.

It’s so strange. It looks like a Hollywood movie. Yeah, yeah.

I want to bring up a tweet that you said. You just recently posted a worrying post the other day, and it says, quote, what could possibly go wrong in 2025, 2026? You said China is in a large economic crisis with zero interest rates near zero. Russia is on the verge of collapse after 30 years of sanction in a war economy.

Japan has been in crisis mode for 30 years, and now rates are exploding. Europe has way too many problems to even start naming them. And then the US finally understands that they have to cut their budgets while mortgage rates are around 7%.

The Middle East, still a mess, except Saudi and the UAE. Break down the biggest risk that you’re talking about over the next two years. Well, in the session I just had on de-dollarization and the need for monetary reset, I pointed to the 80 year cycle.

You have the fourth turning, the famous book by Neil Howe, that every 80 years you see like a change in leadership. You see like big changes coming to society. And actually now, this year, 2025 is 80 years past 1945, the end of the Second World War.

So we are in this period of change, and change, it might bring chaos and crisis. If we’re unlucky, it might bring a large war. I hope we don’t end up there.

But this list is showing there’s so much chaos in the world. There’s so many risks. And now you have the US really destabilizing the world a bit more.

It feels like it was almost sown in a more global context before Trump came to office. I mean, is this just a part of undoing the globalist agenda? Is it just shaking up everything? I mean, your summary there did a great job explaining it. Well, I think it’s part of this 80-year reset, which I described in my book The Big Reset, that we needed to have changes.

I focused on the international monetary system. So we needed to go from a unipolar world centered around the dollar to a multipolar world. And now even Rubio, the new Marco Rubio, he even said that we need to move away, that the US is the leader of this free world.

So he pointed to the multipolar world, which is happening as we speak. So everybody has to adjust. We in Europe are quite shocked that we even are in, let’s say, a fight with the US.

We need to find our own foreign policy. We need to build our own defenses. So it’s a crazy world out there.

Yeah. What does that mean for gold? I mean, there’s been a lot going on in the market. We have a lot of information going on critical minerals.

It seems as though there’s a lot of countries trying to fastly absorb as many as they can and try and get them. And then we got this story of gold coming to the US at record rates. And nobody knows the real story.

What is the real story? It has been spinned. This is all about tariffs. But I think that’s only the spin.

I think that’s something much larger at stake. Nobody knows. We’ve been researching this.

We’ve talked to a lot of experts. Nobody knows exactly why there’s this huge move from physical gold from London to the US. We know there’s this call to open up Fort Knox and have some transparency there.

I’ve been writing about that for 20 years. An audit is long overdue. The last audit was over 50 years ago.

It could be connected to that one. But what we do know is that central banks in over 25 countries are fleeing towards physical gold. We’ve seen record demand by central banks for three years in a row.

I think let’s concentrate on what we know. Let’s concentrate on the larger trends and then see where we go from there. But I was at Eric Sprott’s keynote this morning.

Eric Sprott said if they’ll open up Fort Knox, some eyes will really go wide open. So he is expecting some news coming from that front. It’ll be interesting.

I mean, you know, there’s even talk about live streaming. Are you going to tune in for the reality show? Yeah, well, I warned Elon Musk that it’s not enough to have a visual inspection because you know about the gold-plated tungsten. You can have bars which look the same size, same weight.

So you need to really analyze them well. And I’m quite sure that tricks have been played by the US because gold is just too important. The dollar was backed by gold until 1971.

Since 1971, the dollar is unbacked by gold. So there’s every reason for the US to play games in the world of their physical gold holdings. You know, the wait time is still around two months to get physical gold from the BOE.

I mean, is this still happening? Is that where we’re at? Well, that’s a technical default because these contracts are T plus one, which means delivery should be done the next day. And now it’s T plus 60 or 90. So that’s a technical default.

And I don’t think that situation will go away. So in the next few weeks or next few quarters, next few months, we’ll learn what the repercussions will be. But I think the rise and the rally for gold will have lags.

It won’t stop here. If you look at average gold rallies in the last 50 years, you can expect $5,000 gold within 18 months just based on the average rallies we’ve seen in the past. Yeah, yeah.

Okay, well, I have to ask you because you also posted on X very recently on the physical gold stress a little bit here on the market. You said that refineries are imposing surcharges and suspending production. You still seeing that, Willem? Well, once the high net worth guys, the family officers, see that the central bankers who can create money and they have the license to print money are fleeing towards gold, they start to get a bit nervous.

And don’t forget you have these institutional investors who never invest in gold unless there’s a smell of war in the air. Well, we have that as well. So I think the demand for gold will stay very strong.

And if you look at the paper gold system, the paper silver system, I just wrote a piece for the London-based think tank, monetary think tank, OMVIF, that for every physical ounce which is in the vault in London, there are 270 paper claims on that one ounce of physical silver. So we could see some really big ones. We’ve been hearing this supply crunch for a while.

We’ve always been talking about the silver supply and demand issue potentially. This crunch, is this the most it’s been? I mean, is this the most serious it has been in 50 years? And this could be the big one. This could lead to the big one.

And now the US is getting creative to, well, let’s say refinance their balance sheet. They want to monetize their assets. They want to start building a Bitcoin reserve.

It shows you this administration is willing to think outside the box. They feel the need to do something creative because the road we were walking on and we were kicking the can down the road for so long, it’s a dead-end street. They do understand that.

What happens if gold is revalued? There are two scenarios. You could revalue it at current prices. This will benefit the US because the US is the only country which still has the gold on this balance sheet for the $42 pounds.

So this will help the US and not their enemies. You could revalue gold much higher, let’s say to $10,000, but then it’s also very beneficial to China and Russia. So I think that’s not of the interest.

That’s not the road the US wants to go. Yeah. And if they do revalue it to the current spot prices, even around $2,600, $2,700, what does that mean for the gold market? I mean, does the price go up? Well, it shows gold is coming back into the system.

The US tried to convince us that gold is just a commodity. After taking the dollar off the gold standard, the US has been working very hard to convince, especially central banks around the world, that gold is just a commodity. You better sell it.

You don’t need it as a national reserve. After the fall, the collapse of Lehman in 2008, this mood changed in the world. And I think it’s quite clear that gold is back as an essential part of the monetary system.

And even the president of the Dutch Central Bank, he said in a national television interview last year, we need gold to, well, stabilize the system when things go wrong. Yeah. We’re here a year ago, you and I sat down at this very conference.

Here we are. It’s our 15th year covering it. I want to change to over to mining for a second.

We’re at PDAC. You’ve been on the ground. You’ve been talking to some of these miners.

And you had another interesting take, writing that mining gold is like a license to print money right now. Some of these big caps, I mean, five billion dollars on the free trade cash flow. What’s happening? Explain the market.

Well, I was just covering like your team at the BMO conference in Miami, where you see the larger gold producers. They really have a license to print money now. If you look at the free cash flow, if you look at their profits, but if you look at the valuations, it’s a great buy as an investor.

They’re trading eight times earnings. The Barricks, the Newmans, they’re eight to ten times earnings. So I think there will be some nice surprises if we look at their profits.

And the junior miners are still valued like nothing is happening. We invest in companies who are discovering gold, and they’re valued at seven or ten dollars an ounce gold in the ground. And I think we’re in for a very big re-rate in the junior space.

You have the Commodity Fund. Have you seen retail? I mean, we’ve seen the inflows in the ETF side, but have you seen retail investors come to the market yet on miners? We’ve been very lucky because we haven’t had inflow every year since inception 2008. It died a bit down in the last few years, but last year we had an inflow of 15 million euros.

And in the first two months this year, we already have seen inflow of 5 million euros. So it’s really picking up. And what we see is the tickets are getting larger.

So we get more of the family offices, so the real high-net-worth people who are getting quite nervous. And they start with tickets of 1 million, half a million. Well, we used to have many retail clients who started with just 50k or 25k.

Yeah. No, that’s a big change. Okay, I gotta switch over to the dollar.

An interesting time. I want your take on what’s happening with the US dollar and what’s next for the world’s reserve currency. It’s no surprise that we’re moving away from this unipolar to a multipolar world.

The dollar will survive. Like the British pound is still there. We don’t have the British Empire anymore.

British pound is still there. So I think we’ll end up in the same situation. The Western world will still trade around the dollar, while the Eastern world, let’s say the BRICS alliance, and the BRICS alliance is getting stronger by the day, they will work on a separate system and don’t trade that much in the dollar.

Actually, if you study the bilateral trade of China, most of that trade isn’t done in dollars anymore. It’s done in their own currency. So China, of course, has a large reason to work on a parallel system, and they are the leaders of this BRICS alliance.

And that also explains why Trump is threatening the BRICS alliance with 100% tariffs. And that shows that the US is afraid of the BRICS alliance. But it seems like it’s worked.

It seems like BRICS has said, OK, we’re going to rethink this a little bit. But the unintended consequence will be that more and more countries, they understand the bully politics of Trump, and they will move away from the dollar. If you start to threaten other countries, it shows weakness.

That doesn’t show strength. Yeah, almost using it as a weapon at that point. Do you believe in the resource curse, the reserve currency status? JD Vance has brought this topic up with Fed Chair Jerome Powell, I think back in 2023, that with manufacturing and everything else that’s been swallowed up, other than connecting the money printer, I mean, Washington, Wall Street, how’s the dollar going to fare with all this? Well, I think the Trump administration and Trump himself have been quite open that they want the lower dollar, not the higher dollar.

And since Trump started, since he arrived in the White House, what was it, January 20th? The dollar has been trending lower, and we think the dollar topped out. It’s trending lower now, might continue to go lower. Of course, that supports the gold rally as well.

What’s the game plan? They’ll get back to QT, get QE? We’re going to just take the money on the market over the next six months? The game plan is that they will work on something very creative, where the crypto, the Bitcoin reserve is part of it. I think he has quite a strong financial team, Scott Basson, who’s a Wall Street veteran. He understands this very well.

He used to have his training with the Soros guys, he worked for Soros. He’s no dummy. He knows what he’s doing.

And I think he will try to keep Elon Musk out of Fort Knox, because that might destabilize it. Interesting, you know, because Scott Basson has been on the record kind of saying in the past little while, that in six months, we’ll see Trump’s economy, almost like a little hint where it might get worse before it gets better. Is that your take? Yeah, and they will blame, of course, we will enter a recession in the US.

But they can always say that’s what we inherited from the Biden administration. Now we’re going to solve it. We’re going to work on this new golden era.

But we’re in for a while, right? And it won’t be boring. Yeah, it won’t be boring. All right, Willem Middelkoop, joining us now.

Thanks for making the trip across the pond from Amsterdam. Of course, the founder and CIO of the Commodity Discovery Fund. Thanks, my friend.

Okay. Appreciate it as always. I’m Gerry Savage for all this here at Kitco News.

We’re here all week at PDAC. It’s our 15th year covering and we’re gonna have some great guests coming up all week long. Don’t forget to hit the subscribe button.

We’ll see you next time. Kitco News special coverage of PDAC is brought to you by Gold Mining, Uranium Energy Core and Uranium Royalty Core.