Why Countries Are Desperately Selling Their Gold 🪙

Added: 2026-06-01

[00:00:00]They're desperate for dollars, which is going to exacerbate their local inflation. That's the dollar wrecking ball. Soaring commodity prices, even if commodity prices ain't going up.

[00:00:10]You can't have a global economy that's just collapsing and have the US come out unscathed. There's not enough dollars that are being created, zero. Turkey.

[00:00:19]So, you guys know they've suffered from hyperinflation for quite some time.

[00:00:23]And according to this article and according to the data, the charts, they're liquidating almost all of their US Treasuries.

[00:00:33]Now, is this to piss off Trump or is this because the debt and the deficits in the United States are just too high and they're not holding these Treasuries anymore?

[00:00:45]They're just selling the Treasuries to buy gold? No. No, no, no. It's actually not even close to that. It's that they have to sell their Treasuries to get dollars because they're desperate for dollars.

[00:00:58]And so, if they don't sell the Treasuries or if they run out of Treasuries, then what do they have to do to get the dollars they need to import the oil?

[00:01:07]They're going to have to sell lira.

[00:01:09]And what's that going to do to the value of the lira relative to the dollar? It's going to go down, which is going to exacerbate likely their local inflation.

[00:01:18]So, you see, this is a perfect example of what I'm talking about when I say that I'm much more worried about the dollar crashing up than crashing down. This is I mean, you look it up in a textbook and this is what you see. As far as you if you look up dollar crashing up, you'll see a picture of Turkey.

[00:01:39]>> [laughter] >> Right right there. And uh it it it it you know, again, let's keep going through this here and I think you guys will connect the dots.

[00:01:50]So, here are the gold reserves. I mean, we we talked about that in the title of this video, but check that out.

[00:01:59]Now, this is interesting.

[00:02:01]I would have to look at a chart of what were Now, okay, now I'm really curious.

[00:02:07]I didn't really notice this part of the chart. I was just looking at this part of the chart, which shows you that they're just dumping gold. Now, they they haven't sold all of it. Um but they're just I mean, look at that.

[00:02:18]Straight down. Looks like they've sold that much in just the last month or so.

[00:02:22]So, they're really drawing down their gold reserves.

[00:02:26]And who knows? Maybe they'll keep this pace up, they'll definitely sell all of their gold. Looks like this.

[00:02:33]Russia invades Ukraine, OIL SPIKES. AH, WE NEED DOLLARS. QUICK, QUICK, QUICK, QUICK, QUICK. GOT TO sell gold all the way down to this point. And then once the price of oil subsides, then they can go ahead and replenish their gold reserve until a point where oil does the exact same thing, and then they just go through the same kind of routine. It's like a broken record. Okay, because now I want to look at a chart of what's happening with Treasuries, because that's what's just really crazy. But it's the same reason. They're selling Treasuries for the exact same reason they're selling gold.

[00:03:08]It's just because they need dollars. So, let's go through this article here. Two months ago at the end of March, we reported Turkey was aggressively dumping its gold reserves in a panic scramble to obtain dollar funding, which Erdogan regime was using to keep the Turkish lira from crashing, and to also pay energy imports, which had suddenly soared in uh price. Okay, so a couple different things there. Uh we all know how the energy stuff works.

[00:03:39]You got to import oil, you need dollars, and if you don't have the dollars, you're really, really screwed. Because then you're going to have to sell lira to get those dollars, and that's going to put downward pressure on the lira. We talked about that at the beginning of this live stream. But what they're talking about in addition to that here with Zero Hedge is them needing dollars to sell and to buy back lira to prop up their currency.

[00:04:03]Right? So it's kind of two-fold here.

[00:04:05]But it's the same problem. It's the exact same problem and that's the dollar wrecking ball.

[00:04:11]The violent selling by Turkey and other emerging markets was behind a brutal plunge in gold prices which tumbled more than a thousand dollars. So, why is it that gold prices tumble but bond prices, although they've tumbled as well, but they're tumbling for a different reason.

[00:04:31]Why is that?

[00:04:33]It's actually quite interesting. Because if you're a bank, you've got to match up your assets and liabilities.

[00:04:39]So, if you guys watch my last video, you know that the reason why treasury yields always track nominal growth in uh excuse me, nominal GDP in the United States or its growth in inflation expectations is because the banks will be the marginal buyer and seller. So, if the yields get too high versus growth and inflation expectation, the banks will buy. It's a great arbitrage opportunity, free money basically, and bring that yield back down. And same thing if interest rates get too low, then they'll be a seller and you bring it right back in line more so with nominal GDP.

[00:05:14]And again, that's just a proxy for kind of global growth and inflation. So, anyway, uh they have to match up their liabilities with their assets. In terms of FX, but they can't take that FX risk.

[00:05:28]So, what happens if they have a dollar liability but then they buy a euro or a yen asset? They got a big problem there, don't they?

[00:05:36]Because if you get that FX rate going the wrong way, now of a sudden you're upside down. You could be bust because your liabilities exceed your assets just because of the FX change.

[00:05:50]Or the difference between the yen or whatever's on your asset side of the balance sheet and the dollars that are supposed to be the offset there. So, they don't want to take the FX risk, these banks. No one would. You wouldn't if you were a bank.

[00:06:03]But what's the exact same thing as taking FX risk? It's where you have gold as an asset on your balance sheet. So, the banks can't come in there and be the buyer or the marginal buyer and the marginal seller of gold like they are of treasuries.

[00:06:17]Because again, they can't take that FX risk and they can't have dollar liabilities and gold as the offsetting asset. Because though gold goes up in price, okay, you're fine, but gold goes down in price in terms of dollars, now you got big, big, big problems. You could be bust just like that. I mean, it's basically Silicon Valley Bank, right? Same thing that happened.

[00:06:37]It's just the asset side of the balance sheet took a big hit because interest rates went up. It's the exact same thing if gold, the price plunges if you're a bank and you have those dollar-based liabilities. In other words, checking accounts. That's why I talk about dollar liabilities on a bank's balance sheets, that's what I'm talking about, the bank accounts.

[00:06:55]So, that's why just I wanted to step outside of this article really quick just to kind of connect those dots for you because I know a lot of you that kind of follow my videos would say, "Okay, well, George, why are the marginal buyers in the treasury market banks but not the gold market?" And that's why.

[00:07:14]Okay, getting back to this here. The violent selling by Turkey and other emerging markets, brutal plunge in gold prices, which tumbled more than a thousand bucks from near all-time highs.

[00:07:24]Yeah, we all know that. Here's a chart of gold.

[00:07:29]Earlier this week, we got another confirmation from Turkey's wild liquidation spree when the latest central bank data showed Turkey's foreign reserves had their biggest monthly decline on record as the Iranian or the Middle East war triggered global sell-offs in emerging market assets and strained the lira.

[00:07:47]Yeah, I mean, think about it this way.

[00:07:49]Let's take it to an extreme. Let's say the DXY is the proxy for all currencies, all currencies versus the dollar, not necessarily, you know, specifically the yen and the euro.

[00:08:01]And let's just say that the the DXY right now is at 100. Let's say it goes up to 200 as a result of this. Now, all of a sudden, all those other countries, the price of oil just doubled in terms of their local currency. Now, what are you going to do?

[00:08:16]I I mean and that's if the price of oil in dollar terms doesn't go up.

[00:08:21]You you see how how the dollar is can be by far the biggest problem to an an an econ an economy other than the United States. So, why is it a problem for the US? Because the US depends on all those other economies.

[00:08:38]Right? You You can't have a global economy that's just collapsing and have the US come out unscathed. It's not the way it works. According to the balance of payments, Turkey's official reserves cratered 43 to 43 billion.

[00:08:50]Uh part of decline, state intervention to offset portfolio outflows. The current account deficit, meanwhile, widened to 9.7 billion from 7.3 billion in February as a a result of soaring commodity prices.

[00:09:04]But, again, I I want to emphasize, soaring commodity commodity prices in their local currency.

[00:09:11]So, what that means is you can have soaring commodity prices even if commodity prices ain't going up.

[00:09:18]Why? Because they're all priced in dollars.

[00:09:20]So, if your currency's tanking relative to the dollar, those commodity prices are increasing in your local currency even though in dollar terms they might be flat to down. And And here's the real problem right here.

[00:09:33]Turkey's a big energy importer, like Japan.

[00:09:36]Hit hard by oil gas prices caused by the effective closing of the Straits of Hormuz, Turkey will have no choice but to pursue another accelerated devaluation of Turkish lira.

[00:09:47]>> George Gammon argues that countries selling gold are not rejecting the dollar. They are desperate for it.