By Ludger J. Borger
President, Borger Capital Group LLC
There are moments in financial history when underlying tensions in the system begin to surface, and right now, precious metals markets are flashing warning signs. Gold and silver are flooding into U.S. warehouses at a rate not seen since the pandemic, while inventories in London, the heart of the global bullion trade, are quietly shrinking.
What does this tell us? At the most basic level, it’s clear that physical gold and silver are becoming harder to come by in the West. But beyond that, the bigger picture is more alarming. We’re seeing the result of years of aggressive central bank accumulation, shifting geopolitical alliances, and a monetary system that is increasingly dependent on financial engineering rather than real assets.
Gold Draining from the West to the East
For over a decade, emerging-market central banks—China, India, Turkey, and Poland, to name a few—have been buying gold at record levels. Historically, much of this gold was stored in Western vaults, particularly in London and New York. But the rules of the game changed after the Russia-Ukraine war, when the U.S. and its allies seized Russia’s foreign reserves.
That event sent a clear message to the world: if your assets are stored in the West, they’re only yours as long as the political climate allows it. Since then, central banks have been repatriating their gold, bringing it home where it’s beyond the reach of Western financial institutions. The result? A steady drain of physical gold from the West to the East.
Now, we’re seeing the effects of this shift play out in real time. Bullion banks—the institutions that operate the gold and silver derivatives markets—are struggling to source enough physical metal to meet delivery obligations.
Silver’s Shortage and the Risk of a Run on Bullion Banks
While gold is the headline story, silver might be the real pressure point. The silver market has long been manipulated through massive paper trading—where futures contracts represent far more silver than actually exists in vaults. But when investors demand physical delivery instead of rolling their contracts over, the entire system is at risk of breaking.
Right now, that’s exactly what seems to be happening. Hedge funds and institutional investors are covering their short positions, meaning they don’t want to be caught on the wrong side of a major price move. Meanwhile, industrial demand for silver is at an all-time high, and physical silver inventories in major exchanges are at concerningly low levels.
The conditions are in place for a real silver squeeze—one that could expose just how little physical metal is actually backing the paper market.
Is the U.S. Preparing for a Gold Revaluation?
One of the more intriguing theories surrounding the recent surge of gold into U.S. warehouses is that Washington may be preparing for something much bigger: a revaluation of its gold reserves.
Officially, the U.S. holds over 8,000 tons of gold, valued on the books at just $42 per ounce—a number that hasn’t changed in decades. At current market prices, that gold would be worth over $750 billion. If the U.S. were to revalue its reserves to market price, it would instantly add a massive asset to its balance sheet, potentially strengthening the dollar or even launching a sovereign wealth fund.
While this idea sounds extreme, history shows that governments make bold moves when faced with financial crises. In 1933, the U.S. government confiscated privately held gold and later revalued it—effectively devaluing the dollar. Could something similar be in the works today?
A full-scale revaluation is still a tail-risk scenario, but with Donald Trump in the White House, unconventional financial moves become more plausible.
The Writing on the Wall
No matter how this plays out, one thing is certain: the financial system is shifting in ways that will impact everyone. The gold market isn’t just about shiny bars sitting in vaults—it’s a reflection of trust in the monetary system. And right now, that trust is eroding.
If the physical squeeze in gold and silver continues, we could see significant price spikes, extreme volatility, and even government interventions. But history teaches a simple lesson: when confidence in the system starts to fade, those who hold real, tangible assets—gold, silver, land, productive businesses—are always in the best position.
What Can You Do?
The events unfolding in precious metals markets aren’t just headlines—they are signals. And those who pay attention and position themselves accordingly will be far better off than those who wait for the crisis to hit.
Now is the time to think seriously about real, hard assets. If the financial system starts cracking, the paper wealth many rely on could prove to be an illusion. The question is: will you be ahead of the curve or left scrambling when the music stops?
If you want to discuss your personal situation in more depth, I’m here to help. Schedule a free 30-minute strategy call here, and together, we can find the best course of action for your specific circumstances.
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