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Gold and the central banks. I know that gold hasn't been doing great lately and I'm going to show you what the central banks have been going lately. And you might find it quite interesting in terms of what's going to happen next to gold. So, pay attention here because this is important. Let's take a look at this chart together. On the horizontal axis, you have time, right? Running from January 2024 to around May of 2026, which is the most recent data we have from the World Gold Council and the IMF. On the vertical axis, you have tons of gold. These light blue bars, you know, above the zero line, these are purchases, obviously, and the dark one you know, they are sales. It's kind of obvious. But here's the thing, the individual bars only tell you half the story. What really matters is the dark navy line running across the chart. That line represent the net position, total purchases minus total sales. When that line is above zero, the world central banks are as, you know, collective accumulating gold. When it drops below zero, they're releasing it. Now, look at the right side of the chart. You see that red box? That's April, May 2026 after dramatic sell-off in early 2026, where you can see the huge purple bar almost go to negative 70 ton, you know, that's what you saw gold going down the way did. The net line had bounced back positive. Central banks are buying again. The key inside here is not any single one-month number, it's the pattern over the entire period. Think of it like this. Imagine you're watching someone fill a swimming pool. Some days tap is wide open, lots of water flowing in, and some days the tap slows down. Once or twice, they briefly drain a little water out, but if you step back and look at the water level after 2 years, it keeps rising. And this matters enormously because central banks are not impulsive traders. They don't buy gold because they saw it on YouTube video. They buy gold for strategic long-term geopolitical political reasons. When they buy consistently over a multi- year period, they're telling you something with their actions, even if they're not telling you with their words. The fact is, they're buying gold as April because the data is as of end of May 2026. Takes a while for the data to be shown to you, obviously. But the point is that they're back, slowly but surely. The question is why. The question is for how long, and the question is for how much. Let's take a look at this chart. So, let's Let's Let's Let's zoom way out. Let's zoom way out because to truly understand what's happening right now, you need to go back, way back. In 1944, at the end of World War II, the world's nation gathered in Bretton Woods and essentially decided that the dollar would be the world reserve currency. Every other currency would be pegged to the dollar, and the dollar would be backed by gold at a fixed price of $35 per ounce. Simple, clean, and elegant. That system held for about 25 years. But by the late 1960s, the United States was spending massively on the Vietnam War, the social program, and other countries started to notice that there was more paper money in circulation than there was gold to back it. France in particular famously started demanding that the US exchange their dollars for actual gold. And the US was running out. In August 1971, President Nixon made one of the most consequential financial decision in modern history. He closed the gold window. The dollar was no longer backed by gold and the The years that followed central banks freed from the obligation of holding gold started selling it. The price of gold was volatile. Gold didn't earn interest. Why hold it when you could hold US Treasury bonds that paid you a return. So, from 1970 to 2008, global central bank gold reserves fell. You can see it clearly in that downward slope on our chart, decades of institutional selling. Gold was considered a relic and now dated throwback to an era gone by. And then, 2008, the global financial crisis, GFC. Suddenly, people remember why gold existed in the first place. 2008 was a wake-up call. The financial system nearly collapsed. But even that pivot in 2008 was modest compared to what happened in 2022. That year, the United States and its allies froze approximately $300 billion of Russian central bank reserves in response to the invasion of Ukraine. $300 billion gone, frozen, inaccessible. Now, think about this from the perspective of every other central bank in the world. If Russia's dollar could be frozen, so could yours. If your government ever found itself on the wrong side of the US foreign policy, your entire foreign exchange reserve could be wiped out at the stroke of a pen. Suddenly, gold, which no one can freeze, no one can sanction, and no government can confiscate, remotely looks very, very attractive. The sanction shock of 2022 didn't just accelerate central bank gold buying. It fundamentally changed the calculation. This is no longer about diversification. This is about survival. And that's why the 2022 to 2026 period on our chart looks steeper than anything we've seen before. That is what you called the weaponization of the dollar. It's been going on for a while now. Would it be a bit of a mistake? Yes, you wanted to put pressure on Russia. Did it work? Did it stop them? Did it prevent them to keep going this war? Not really. But what you did is you unleash the gold bug. You unleash countries saying, "Hmm, maybe I need something else besides the dollar." And this is what you call the dedollarization. More on this after. The dedollarization engine. Take a look at this chart. Right? This chart tells a story that the mainstream financial media hasn't fully connected yet. And once you see it, you cannot unsee it. From the year 2000, roughly 71% of every dollar held in central bank foreign reserve was in US dollars. But today, that number is close to 55 cents. That might not sound dramatic. It's only 16 percentage point. But when you are talking about the world's roughly 12 trillion-dollar pool of foreign exchange reserves, 16% point represents nearly 2 trillion dollars that the US has shifted out of the US dollar assets. 2 trillion dollars searching for new home and a significant chunk of it found that home in gold. Now, here's what makes this really interesting. The shift has accelerated. Look at the slope of the gold colored other. Then, you know, the one on top. It's steeper than any other previous point and the matter for very practical reason the marginal buyer of gold is now price insensitive. When you're a retail investor buying gold, you're constantly asking is now the right time? Is it Is the price too high? Should I wait for a pullback? But when you are the central bank of a nation that just watched 300 billion dollars of a peer nation's reserve get frozen overnight, you're not asking any of those questions. You're buying gold at any price because the alternative, holding frozen dollar assets, is worse. Look at this chart. Look at the game theory. Why this trend cannot stop. Game theory is the study of how rational players make decision when the outcome for each player depends on what the other players do. The most famous example is a prisoner's dilemma. Two prisoners who would be both better off cooperating, but each individually has incentive to defect. Central bank gold buying has exactly this structure. Here's why. Imagine you're the central bank governor of a medium-size emerging market economy. You've been watching the news. You've seen China buy gold for 18 consecutive months. You've seen Russia reserves frozen. You've seen Poland buy record amounts. You've seen Turkey, India, Singapore all adding to their gold reserves. Now, you ask yourself, what happened if there is a dollar crisis in the next 5 years? If you have diversified into gold, your country reserves hold their value. If you stayed in dollars and the dollar weakens dramatically, your reserves shrink in real time. The expected value calculation is obvious. You need to own gold. But, here's a game theory kicker. It doesn't matter what you personally believe about gold. Even if you thought gold was overvalued, the fact that everyone else is buying means the price will go up regardless. And if you don't buy now while it's only $4,000, you'll be forced to buy later at $5,000. You're better off buying early. This is what economists call the Nash equilibrium, a situation where no player can improve their outcome by changing their strategy given that everyone else is doing. Now, look at our demand versus price chart. You can see exactly this dynamic playing out. Sustained central bank demand in the 250 to 350 ton per quarter range consistently pulls prices higher over the following two quarters. The lag is important. It means the price has not fully priced in the current buying pace. There is still room to run. The only way this Nash equilibrium breaks is if something fundamentally changed the calculus, like a you know, a sudden dramatic shift back to a gold-based monetary system that actually disciplines dollar printing. Right? This would induce the need to hold physical gold as an alternative reserve. But, given current global dynamic, that's an issue seems extraordinarily unlikely. So, what we're saying here is that they are buying it, and therefore you should not focus so much on what the price of gold is because what is the value of it, right? The intrinsic value. You need to take a look at the relative value. And if central bank are buying, do you think the dollar is going to get stronger or weaker? You know, the dollar as a reserve currency, it is still strong, you know, more than a half of transaction in the world in dollar, but it is on the way down, and this war that you just saw might just precipitate everything. So, let's take a look at chaos theory pertaining to our current situation. But, take a look at this chart. I'm going to get into some deep conceptual territory, yeah, so trying to keep it simple, but bear with me. So, chaos theory is a science of how small changes in initial conditions can lead to widely different outcomes. You've probably heard it as a butterfly effect, right? So and here's what makes a gold market particularly fascinating from a chaos theory's perspective. It is a system that alternates between ordered and disordered states. In ordered states, which we are in gold, the accumulation phase, price moves are gradual, predictable, driven by steady institutional buying. In disordered state, breakout phase, price can move dramatically and rapidly, driven by feedback loops, FOMO, currency crisis, geopolitical shocks, as we've seen recently. So the the the the chaos maps is a visualization right? of exactly this. Think of it like a weather map, but instead of temperature and pressure, we're mapping price momentum and volatility. When those dots are tightly clustered, the market is in a calm, orderly regime. But when they spiral outward, the system is becoming increasingly unstable. So, right now, based on the widening of recent market orbits, we appear to be transitioning from a calm accumulation phase into a more volatile, potentially explosive phase. This is not a signal to panic, it's a signal to pay attention and position yourself thoughtfully before the volatility arrives. Now, look at the fractals. A fractal is a pattern that represents that repeats itself at different scales. In nature, you see it in coastlines, snowflakes, tree branches, right? In financial markets, you see it in price patterns. Look at the fractal comparison chart. We have overlaid three gold bull markets, the 2001 to 2000 cycle, where the gold went from $2.50 to $730, the 2018 to 2023, when gold went from $1,175 to $2,000, and of course, the current cycle, late 2023, where um we've already taken gold from roughly $1,800 to $3,380. All three cycles, despite happening in completely different microenvironments with completely different Fed cycles and geopolitical contexts, show remarkable similar shape. A rapid initial run, a mid-cycle consolidation, and of course, a pause around months 28 to 38, and then the steepest and fastest gain after that part. Scenario probability, let's take a look at what probably could be happening. Stock probability, this is a section that separates analysis from opinion. And I want to be very clear about what these numbers represent. These are probability-weighted scenario based on the macro inputs we've discussed today, the structural buying, the dedollarization trend, the fractal analysis, and the Black Swan framework. The analytical estimates don't guarantee. So, gold is trading in approximately $4,000, you know, in June 2026. That's our baseline. Scenario one, the bull case. Probability 35%. In this scenario, central bank buying accelerate further. The Federal Reserve pivots to easier monetary policy. Geopolitical stress keeps safe haven demand elevated, and the fractal acceleration phase kicks in. Price target in the next 12 months, $4,000, $5,000. Gain of roughly 25%. This scenario plays out if we see continued large central bank purchases. Scenario two, the base case. Probability 45%. Most likely outcome, central bank buying continues. Price target you know, around where it is now. So, in terms of the investors' playbook, what can we do? Well, this is a part that is interesting because all the analysis in the world is worthless if you can't translate it into action. So, let's build an actual framework we can use. So, the strategy we're going to discuss is called the barbell strategy, and it was populated, you know, within the Black Swan network. The idea is simple. In an uncertain world, you put the majority of your portfolio in very safe, liquid, boring assets, cash, whatever. And then, of course, you put the other one in more volatile one. The two ends together give you both protection and the potential for outsize gains. Now, how do you size the second end of the barbell, right? This is where the Kelly criterion comes in. The Kelly criterion is a mathematical formula originally developed by for betting, but widely in portfolio management. It says size your portfolio proportionally to your hedge. How much better your expected return is than that the risk-free rate divided by the variance of the expected returns. In plain English, bet bigger when your odds are clearly in your favor. Bet smaller when you're uncertain. Never bet so much in a single loss can take you out of the game. So, let's look at the numbers for gold specifically. Using the scenario framework we just built, if we assume a 45% chance, 35% chance, and 15% chance, and 5% chance, the Kelly criterion suggests a gold allocation of roughly 20 to 30% of a risk portfolio. Here's a practical three-tiered approach based on your risk tolerance. For conservative investors, you know, closer to retirement and you're just starting your gold investing journey, consider something like 45% of your portfolio in cash, 10% in gold mining, 5% in gold call options. All depends where you are, you're aggressive, base, and conservative. So, let's put it together. Essentially, I've shown you lots of data, lots of information, but the point is this. Since 2022, the de-dollarization, the the the weaponization of the dollar is real. And the world has started to see this is and and especially, I mean, 2022 was under Democrats, but under the Republicans, I mean, they've said it a few bunch of people say hey these guys are serious. Forget the de-dollarization. Forget the weaponization. They do not want to help us out, quote unquote. That's what they think. So that pushed them more on the camp of those that believe we need an alternative to the dollar. Okay? So therefore what do we use it? Do we use the RMB? The the the the Chinese currency? Uh you know, the the political instability the the political not instability but the political not democracies doesn't make it really feel comfortable. The euro, unfortunately, the euro is a bunch of of of of of um merchants put together. It's not a country, technically. So what are you left? You're still left with the dollar. And then what else? Well, then it's gold. Right? You could buy it. You could store it. You could use it. Because you know, if it comes the situation where the dollar is unavailable or you can't access to it, then then what are you going to do? The dollar the gold is still recognized and that's the reason why gold is very important. So don't forget to subscribe to this channel. Not saying go and buy all the gold in the world right now, but be aware of the situation. There's a tight central currency buying gold. Why? And the weaponization of the dollar.