Transcription
If you've been here before, you already know that we don't do surface-level stuff on this channel. We go deep. We look at the data, then we tell you exactly what it means in plain English.
This video is one that I've been wanting to do for a while because this chart I'm about to show you is honestly one of the most important pieces of financial data I've come across in a long time. It covers 125 years of history. It compares gold, actual physical gold, to the entire global stock market. And that is showing right now, uh, and honestly, most people on Wall Street are not paying close enough attention to it right now. So, let's get into it.
And before we get into it, as I usually say, let's make sure everyone understands how to read it because if you have ever seen something like this before, it can be quite intimidating at first. But I promise you, once I walk you through it, it's going to become crystal clear.
So, the chart is called "Gold Market Cap as a Percentage of the Global Stock Market." Let me break that down piece by piece. So, you've got the market cap, which just means the total value of something. If you own 100 shares of a company and each share is worth $10, the market cap is $1,000. That's it.
Now, gold has a market cap, too. You know, we know roughly how much gold exists above ground in the entire world. And all the gold bars in vaults, the jewelry, the coins, everything that has ever been minted in all of human history. And at any given gold price, we can calculate what all that gold is actually worth together. That's the gold market cap.
The global stock market also has a market cap. That is the combined value of every single publicly traded company on Earth. Apple, Toyota, HSBC, all of them added up into one giant number.
So, what this chart shows is take the gold market cap, divide by the global stock market cap, multiply by 100, and you get a percentage. That is a white line and the blue shaded area that you're looking at that goes up and down. When the line goes up, it means gold is becoming a bigger slice of the world's total financial wealth. Either the gold price is rising, or stocks are falling, or both at the same time. When the line goes down, stocks are growing faster than gold. Gold is shrinking as a percentage of global wealth.
So, it's gold market cap divided by the stock market cap, right? So, if gold goes down in value and this goes up, the ratio drops. If it goes up, that means that gold goes up in value and the stock market drops. The bottom of the chart is basically zero, and the top is 100%. And the x-axis runs from 1901 all the way to today, to 2025 and beyond.
Now, when you look at the full chart, the first thing that jumps out is three enormous peaks, three giant mountains rising up from the baseline, almost like a heartbeat spiking on a monitor. Those peaks don't just look dramatic; they tell you a story, a very, very important story. That means that gold went up a lot compared to the value of the stock market. So, let's take a look at the three peaks and what caused them.
So, World War I. See that first big mountain following around 1914, right all the way to the left with the little first little arrow? That is World War I. And it peaks around 1920. This was World War I. Gold spiked to nearly 85% of the global stock market during that period. Now, think about what's happening. The world was at war. Entire economies were driven and mobilized. Factories were shutting down or converting to weapons production. Trade routes were disrupted. Governments were spending money they didn't have, and nobody trusted paper money. Nobody trusted the banks behind the money. Nobody trusted the government backing the deals. When the world starts to feel like it might fall apart, where do people put their savings? They run to gold. They always have throughout all of recorded history. Gold can't go bankrupt. Gold can't be printed into oblivion. No government can sanction gold out of existence. It is the oldest store of value the human race has ever had. So, during World War I, stocks were being crushed, and gold was a safe haven in the storm. The result was gold's share in the world's financial wealth rose to nearly 85%.
But when the war ended, the Roaring Twenties kicked in. Stock markets started booming. People felt optimistic again. And when people are optimistic and confident, they chase growth. They buy stocks, they take risks, they want returns. Gold gets left behind. So, gold's share of the financial world dropped dramatically through the '20s.
Now, move your eyes to the second mountain, building from 1932 and peaking in 1940 to 1942. This one actually started rising before World War II. And that makes perfect sense because the '30s were the Great Depression: massive unemployment, bank failures, social collapse. Gold again became the trusted refuge. Its share climbed to nearly 90% of the global stock market cap at that peak, the highest it reached in the entire 125 years in history of this chart.
Then the war ends. America enters what becomes an economic golden age. Europe rebuilds with America's help. The global economy begins expanding in ways that haven't been seen in decades. Stock markets start a multi-year run, and gold... the US government actually kept the gold price officially fixed at $35 for years, artificially suppressed. So, in this chart, you can see gold's share absolutely collapsing from nearly 90% all the way down to almost flat.
Now, the third peak. This is the one that I believe is most relevant to what's happening in the world right now. Look at it building from around 1971 and peaking around 1979 to 1980. That was the inflationary decade. Remember that word: inflationary inflation. That is a big topic right now. The reason it's a big topic is because do we have inflation or not? We just hired a new Fed chair, and he's saying we don't have an inflation problem. "I'm going to take care of it." And yet we are growing, and yet you're going to be lowering rates. So, this was the inflationary decade.
In 1971, President Nixon made a historic decision. Do you know what it is? Took the US dollar off the gold standard. Because before that point, every dollar in circulation was supposed to be backed by a certain amount of gold in Fort Knox. And after Nixon, it wasn't. The dollar became what? Fiat currency, backed by nothing except the government's promise and the world's trust. But you have to understand that if you thought that when the current administration decided to let go and impose tariffs on everyone, this was also big, big news. They just didn't say, "Okay, we're removing it." No, because they took a big risk because people were saying, "Well, I'm not going to hold dollars. There's no gold behind it." It was a huge gamble at that time. It was huge uncertainty, but it worked because people said, "You know what? Even if there's no dollar, no gold backing the dollar, I still want dollars. I just want the paper that it is printed on." And that's when the US became the most powerful country at that time. And almost immediately, governments started printing more money. Obviously, more money in circulation chasing the same amount of goods means prices are going up. That's the problem when you have a fiat currency. That's what's good about, technically, Bitcoin and gold and silver because you can't make anymore. That's inflation. Oil prices spiked dramatically. Everyday costs went through the roof. People's savings were being eaten alive by rising prices.
Meanwhile, the gold price, which had been artificially held at $35 an ounce, was finally allowed to float freely. And float it did. Gold went from $35 an ounce all the way to $850 an ounce by 1980. This is a gain of over 2,300%. And on the chart, you can see gold's share of the world's financial wealth spike back up to 85%.
Then Paul Volcker, the Federal Reserve chairman at that time, made a very painful decision to raise interest rates to almost 20%. He replaced, as you might remember, Arthur Burns, who was the worst Fed chair in history because he just wanted to lower rates regardless of what was going on with inflation. So, Paul Volcker came in, and he said, "20%." That crushed inflation. It also caused a brutal recession, but it worked. Inflation came down. Stock markets eventually recovered and started one of the greatest bull runs in history through the 1980s to the 1990s. And gold was destroyed in percentage terms. From the mid-'80s through to around 2000, gold was essentially irrelevant. Its share, its share of the global financial world dropped from 85% all the way down to 3% or 5%, basically nothing.
Now, before I keep going, let me just take a second. I want you to don't forget to subscribe, to give us a like, to become a member, like the one that I actually have on right now. I know everyone says it, but this channel genuinely exists to take complex financial information and make it accessible to regular people. No corporate sponsors telling us what to say. No agenda other than understanding what the data shows. Okay.
And also, don't forget, I am also tagging books for you to read.
Get back to the chart. Look at the far right of the chart. That is today. That is 2025, '26. After hitting that low around 3% to 5% in the year 2000, gold's share has been quietly creeping back upward through the financial crisis of 2008, through the COVID print of 2020, through the inflation of '22. But now there's a dotted line on the chart and the label that reads "Early in the Gold Cycle." "Early in the Gold Cycle." That phase carries a lot of weight. Let's think through why they use that language.
If you look at the three previous cycle peaks in history, they all reached somewhere between 80% and 90%. The current reading is about 20%. If we were generally in the early stage of a new cycle that resembled any of the previous three, I want to be careful here. I'm not promising that. But if the pattern rhymes even partially, then the distance between where we are now and where previous cycles have ended is enormous. The question we have to ask is this: What conditions drove those previous peaks, and do those same conditions exist today?
The chart anticipates that question and answers it directly. On the right side of the image is a list of reasons why the analysts at Azura Capital believe this is early in the gold cycle. Eight specific reasons, actually. Each one of them deserves a proper explanation.
Reason number one: Global debt at record highs. And that is something that I talk to my members every morning. Let's start with the biggest one because this shapes everything else. Governments around the world, not just the US, are carrying levels of debt that are unprecedented in peacetime history. The United States alone has over $34 to $37 trillion national debt. Japan is over 250% of its entire annual economic output. European governments are deeply indebted. Emerging markets are indebted. It's not just a US problem; it's a global one.
So, here's why this matters for gold. When you have a government drowning in debt, you basically have two real options. One, cut spending and raise taxes to pay it down. Try to get elected with that kind of agenda. That's incredibly painful politically. Governments lose elections doing that. Option two, let inflation quietly erode the debt's real value. Right? And here's how this works. Say you borrowed a million dollars 10 years ago. If inflation runs at 5% per year, in 10 years, that million dollars is worth at least less in real terms. So, your debt becomes easier to pay back. The government didn't technically default; they just let inflation do the heavy lifting. Because inflation's eating that money that they borrowed. That is why many economists and analysts believe inflation is essentially the path that heavily indebted governments will choose. Think about that, whether intentionally or through the simple inability to do anything else. Maybe they do want some inflation. And gold, throughout all recorded history, has been the best-performing asset in a high-inflation environment.
Reason number two: Inflation as the path of least resistance. Building directly on what I just said, the chart phrases it as "inflation as the path of least resistance." Meaning the easiest thing for central banks and governments to do is to keep the money printer running, keep interest rates manageable, let inflation chip away at the debt problem over time. We got a preview of exactly that in 2020. To deal with the economic shutdown from the pandemic, governments around the world injected trillions of dollars into the economies. More money was created in 2020 and 2021 than in any decades prior. And we all felt the results: groceries, rent, everything costs more. And that wasn't bad; that was just inflation caused by too much money chasing the same amount of goods. As gold reacted, it climbed because gold can't be printed. There are only so many ounces above ground. When more dollars chase the same infinite amount of gold, the price of gold in dollars goes up. That is the mechanism. And if inflation remains elevated or returns, that mechanism keeps pushing gold higher.
Reason number three: Gold is still less than 30% of central banks' assets. This one surprised a lot of people because most people think central banks already own lots of gold. No. Across the global system, gold as a percentage of central banks' total assets is still relatively low, under 30%. Here's what's changing. Central banks, especially China, Russia, India, Saudi Arabia, have been buying gold aggressively, and they are not hiding it. They are publicly announcing these purchases. The reason is clear: they want to reduce their dependence on the US dollar. Think about what happened in Russia in 2022. When Russia invaded Ukraine, the Western world froze over $300 billion in central bank reserves, dollar-denominated assets, all frozen, gone. You couldn't access them. That is what Biden did in terms of the weaponization of the dollar. Every country in the world watched that happen and thought, "Our dollar reserves could be frozen too if we ever end up on the wrong side of US policy." Especially now, gold doesn't have that vulnerability. Nobody can freeze gold that's sitting in your own vault. It's yours completely. No permission required. So, central banks loading up on gold is a long-term, sustainable demand driver. And we are in the early stages of that shift, not the late stages. Remember, there are few. Take a look at the video from a couple of days ago. There are a few investors buying calls at $15,000 to $20,000 an ounce.
Reason number four: Rising deglobalization favors neutral assets. For the past 30 to 40 years, the world was getting more connected. Supply chains spread across the continent, right? Trade deals were signed. Countries became economically dependent on each other. The US dollar was the shared financial language of this interconnected world. But that era is reversing. We are seeing tariffs and trade wars. We are seeing sanctions used as weapons of geopolitical conflict. This trend is called deglobalization: the pulling apart of what has been knitted together in a more fragmented world. The dollar's role as a universally trusted global currency weakens. Countries that are drifting away from the US sphere of influence don't want to be dependent on anything else but US government control. And gold is a perfect alternative. Nobody controls it. As the world fragments, demand for genuinely neutral assets grows. Gold is the oldest. And don't forget Bitcoin.
And reason number five: 60% portfolio seeking safe alternatives. For most of the past 40 years, financial advisors told investors to do one thing: put 60% of their investment portfolio in stocks, put 40% in bonds. The logic was simple: when the economy is going well, stocks go up. When things get scary, bonds tend to hold their value or go up. They balance each other out. This worked beautifully from 1982 to 2021. Decades of this being the standard advice. Enormous amounts of institutional money, pension funds, deployed the 60/40 logic. But 2022 happened. Inflation surged, and when the Federal Reserve started aggressively raising interest rates to fight inflation, both stocks and bonds fell at the same time, simultaneously. Never happened before. So, the 60/40 strategy had its worst year in decades. The cushion that was supposed to protect people didn't cushion anything. This was a wake-up call for the institutional investing world. If bonds aren't a reliable hedge against stock market declines, then what else is? Gold is the obvious candidate.
You also have another reason, which is structurally unsustainable fiscal deficits. I know a fiscal deficit is a gap between what the government spends and what it collects in taxes. And right now, the major economies of the world are running deficits that are not cyclical. They don't go away when the economy is doing well; they're structural, they're baked in. The United States is spending roughly a trillion dollars more per day than it collects every single year, regardless of whether the economy is growing or shrinking. And with interest rates the highest they've been in 15 years, the cost of servicing that debt is exploding. In 2024, for the first time, the US government spent more money on interest payments than it did on its national defense. Let that sink in for a second. This is not a credible political path to eliminate these deficits. Both major political parties in America, and the equivalents in most Western countries, have shown zero appetite for the combination of spending cuts and tax increases, unless you are Greece, Italy, Portugal, the little guy. But the big guys, they don't want to do it. Which means that debt is growing, which brings us back to reason one and two: inflation and the eventual outcome.
And don't forget another reason: a lack of new gold discovery. That is a final piece of the puzzle, and it's one that doesn't get talked about enough in the mainstream financial media. The great gold discoveries of the 20th century: massive deposits in South Africa, Nevada. Those are mature; they've been mined extensively. The easy, high-grade ore has been extracted. What's left is lower-grade, more expensive to get out. Exploration companies, the companies that go out searching for new gold deposits, are spending more money per year than ever before and finding less gold per dollar spent than at any point in modern history. The metric they use internally is called discovery cost, and that number has been rising consistently. This isn't going to reverse itself quickly. It typically takes decades from the point of discovery to the point of meaningful production. So, even if a major deposit, a new deposit, was found, it would take years to get it out. That's a structural ceiling on supply that most people simply don't factor in when they're thinking about where gold prices might go.
So, in conclusion, with a 125-year chart, one of the longest-running financial data sets available anywhere, it shows us three massive peaks. We have three equally dramatic troughs as well. Right now, we're roughly 20%, coming off the historic bottom of near 3%. So, what do we do with that information is your decision. You know, talk to a financial advisor, obviously. But what I'm saying is this: If you look at where we are on this chart and you understand the conditions that have historically driven gold cycles, the data suggests we are in the early stages of something that has historically been very significant.