Transcript of Countries Move to Repatriate Gold Reserves as Trust in Trump Faces Scrutiny

World leaders are very worried that Donald Trump is going to steal their gold, right? I mean, they are terrified that the guy who spent his life taking and grifting and stealing and cheating and lying is quite literally going to take the gold that has been entrusted to the United States government before, which they believed was more protected. This is not a good headline to read when you wake up in the morning. That's right. Central banks around the world are quietly stockpiling 4 times as much gold as usual and are moving it out of the United States. This is a Fortune report citing Goldman Sachs that wrote in a note earlier this week that it estimates central banks, central banks globally purchased 79 tons of gold in August, more than 4 times the amount of pre-2022 average of 17 tons. On a 3-month seasonally adjusted basis, purchases are running at 85 tons per month. Now, we have also seen headlines like this. Netherlands moves billions in gold to London in crisis preparedness move from the United States. We saw the UK do that, we saw France do that, and we're increasingly seeing signs of this, whether it's the Goldman Sachs report or other countries quietly doing it.

We're not just talking about gold. We're seeing the same thing in the US Treasury market. The US Treasury market was once seen as a safe place where the US bonds would be backed by the full faith and credit of the United States. And in terms of a chaotic global landscape, the idea that a foreign government, a foreign sovereign wealth fund, or foreign companies, or companies here in the United States could park money in Treasury bonds that returned a predictable yield Perhaps not as high of a yield as equities, but safer, right? Because equities can go down and up very quickly, but a predictable return. We are now seeing that with the United States predictability, stability being called into severe doubt, countries and companies are demanding a higher yield in order to purchase said bonds. And Treasury Secretary Bessent has tried various schemes. bond buyback schemes on a 30-year yield note, which didn't work. $6 billion. He said he was going to do these buybacks on the 30-year note. Market said, it looks like you're scared, dude. It doesn't look like someone who's pretty confident. And $6 billion in a marketplace of trillions of dollars, you're like, you're like throwing a pebble at an ocean.

Like, you think you're going to stop the wave with that? You know, you're going to encourage the wave with that because it's showing that you're scared. And he's been trying a number of harebrained schemes and none of that's working. Remember, Bessin said that he's the house and the house bet against me if you do. And then people did bet against him. And then he was asked, so you said you were the house. Do you regret saying that? Because I was just saying I'm playing the odds. That's what I meant by the house. Okay, then he's done Operation Economic Outcast. If you do business With Iran, we will severely retaliate against you. You're done. Okay. Well, you have Russia's Foreign Minister Lavrov took a trip this past week to Tehran, talked about the broad, wide-ranging cooperation between Russia and Iran in areas of economic cooperation, regional stability, nuclear plants like Bushehr, the joint venture nuclear plant there. Other nuclear power throughout Iran. And Operation Economic Outcast is Donald Trump begging Putin for diesel and doing more deals with Putin. And Kirill Dmitriev and Yuriy Ushakov, the top people at Russia, saying the diesel deal is just the tip of the iceberg.

We've got fertilizer deals, we've got uranium deals and nuclear-powered data center deals with the Trump regime coming in the future. That's Operation Economic Afghanistan. Russia's helping Iran's military and they're not hiding it like they're saying it. It's the same thing with China. China's dual-use component parts are what's being built, not just for the Russian weapons that are being used in Ukraine against Ukraine, but also they're being used by Iran as well. And Trump sucks up to Xi Jinping. Not a day passes where Trump doesn't post a weird video of the video with him and Xi from over a month ago. And Trump pretends like it was last week. I wanna bring in Justin Wolfers, Midas Touch Network Chief Economist and also the founder of Platypus Economics. That's the YouTube channel called Platypus Economics. Subscribe there. Justin, we talk a lot about stability of markets, stability of, you know, things like the gold market or Treasury bonds, and you don't wanna see a great deal of volatility you know, in these areas. And we're seeing across all of these sectors, and I'm not going to suggest that they've had a past free of volatility, but we're certainly seeing unusual patterns that are reflective of the instability coming from the top.

So talk to us about what you're seeing.

Yeah, the gold story is just absolutely fascinating. So what we have is a bunch of governments from around the world. They own gold bars. Those gold bars are often just being stored in the US. Got to put them somewhere. Why not here? And they're deciding, no, no, actually, we're not sure we want them in the United States. So this is countries like the Netherlands, France, Germany's doing it, Italy, India's done a bit as well. And you might be wondering why. And one answer is you could say— this is the one you hinted at, Ben— they're worried the Americans would steal it. There's something to that. The Venezuelans certainly worried about the Americans stealing Venezuelan oil. And the Iranians must be somewhat worried about that in their future. And I do remember when the CEO of Intel went to the White House and managed to walk out having accidentally left 10% of his company behind. But I think there's a broader statement here. It's not just a question of stability. The question that you're really asking with gold is, gold is something that's really valuable if there's a geopolitical crisis, if the old ways of the world can't be counted on.

And the question is, if there's a geopolitical crisis, do we think America is the bastion of stability, that it will have a democracy and the rule of law and it will respect property rights and everything will be all right here even if it's not all right elsewhere. Historically, that's been the case. That's why when things go haywire in the world, historically, people would send as much of their money as they could to the US. They called us a safe haven. Now the question is, if we were in a geopolitical crisis, would the US actually be part of the problem or part of the solution? And what you're seeing here is a fear Not a certainty, but a fear that we might actually be part of the problem instead. So I can understand this. If you were Canada, you would have thought that you're our nearest neighbor, our closest ally. We're friends. You're not a threat. You can rely on the United States. These are friends that you've had military, cultural, political, and economic integration with for years. You couldn't possibly see a problem. But all of a sudden, we're somehow in the middle of a trade war with Canada.

And so that's going to lead other countries who are very naturally allies to say, well, wait, what happened to them? Could that happen to us? And that's the questions that they're asking themselves right now. And you want to combine this with the idea that the way Trump works is he's a fan of coercion more than he is of cooperation. Global trade is mostly built on cooperation. What the president's tried to do is use access to the American market coercively. You can't sell stuff to Americans unless you do what I say. And in all of what the president's been doing, it's coercion, coercion, coercion. And now I suddenly don't want to leave my gold in America because that's another tool of coercion. What if we got in a tiff with the Americans? You can imagine the Aussies or the Canadians or the French saying, would they just threaten to steal our gold? Well, that was unimaginable for decades, centuries even. But today it's imaginable. And when you're talking about billions of dollars worth of gold, it's just not worth the risk. And so it's not that I care which country the gold is in. It's that I think each of us should listen to the message that's being sent, the information that's leading other countries to think, you know what, I'm not sure I want to keep trusting the Americans.

Their coercive approach makes them an untrustworthy dance partner.

Yeah, I mean, to your point, usually in conflicts, gold markets, gold futures would do very well. Yeah. You know, when I looked at, as of this recording, the price of gold in the futures market, I mean, you look over the day, it was down about 1.15%. The past 5 days, down about 4.4%. The past month, down 7%. The past 6 months, down 15%. Year to date, down about 7.28%. And with all of the instability globally, you would expect actually, based on at least past trends, perhaps something different, you know, over there. But to your point, it is now viewed as a tool when there is instability. Trump can hold all of this over your head. And there was a relationship that actually benefited the United States, which Trump viewed as we were being taken advantage of here. No, we were the architects We wrote the rules in the United States of a post-World War II world. Whatever your critique of it, one thing that most people would acknowledge, there was a bit of an element of heads, the US wins, tails, you lose if you're going to go against the architecture, because those rules benefited the United States at the ultimate endpoint as the main place where the petrodollar, the dollar generally, all cycles.

and kind of swirls back to the magnet that puts it out to begin with. It's a crude example, but now everyone's being told that's, you know, the same thing with American military weapons. And, you know, it could be a kill switch. Look what happened with Starlink and Starshield. Elon Musk can turn it off whenever he wants. Why would we do that? You know, that's going to hurt Elon Musk down the line as well, because people are going to— why would we use Starlink and Starshield? He's going to screw us over. We see what he did with Ukraine. Why would we get an F-35 over a Gripen regardless of our view of what performs better? Get the Sweden Gripen. We trust them. You know, why would we do this submarine? It's a broader narrative right here. And gold highlights, I think, a piece of it. I'll give you the final word.

I was just going to come back to this broader idea, which is what do you think the foundations of prosperity are? Is it coercion or is it cooperation? Count me as team cooperation. We have scores of evidence. Many countries, decades of lived experience, which says cooperation is the way to a better, more peaceful, more prosperous world. The stakes here are absolutely enormous. And somewhere along the way, our economic model became one of coercion rather than cooperation. And I think we, the people, need to have a good and honest discussion about that. What do we think is the appropriate economic model for the United States? There's a lot of security with being with friends. There's a lot of gains from cooperation. There's also a lot of security that comes with cooperation.

Everybody subscribe to Justin Wolfers' YouTube channel, Platypus Economics. Subscribe now. And Justin, great to have you as the Midas Touch Chief Economist. Great to see what you built with Platypus. I hope for its— and I know it will have continued growth. Let's get that 1 million subscribers. Thanks, Justin.

Thanks, Ben.