WARNING: Flood of Money Headed To Gold & Silver! "Game Theory" Explained

Key Concepts

• Game Theory: The study of strategic decision-making where outcomes depend on the choices of all involved parties.
• Nash Equilibrium: A state in game theory where no player can improve their outcome by unilaterally changing their strategy.
• Central Bank Reserves: Assets held by central banks to back their liabilities, often including foreign currencies and gold.
• Critical Minerals List: A list of minerals deemed essential for economic and national security by a government, often leading to increased government interest and potential stockpiling.
• Feedback Loop: A process where the output of a system is fed back into the input, influencing future outputs.
• Positive Feedback Loop: A feedback loop that amplifies the initial change.
• Negative Feedback Loop: A feedback loop that counteracts the initial change.
• FOMO (Fear Of Missing Out): A psychological phenomenon where individuals feel anxious about missing out on opportunities.
• Price Backwardation: A market condition where the spot price of a commodity is higher than its futures price, indicating strong immediate demand.
• Supply Deficits: A situation where the demand for a commodity exceeds its supply.

Global AI Race and its Economic Impact

In 2025, a significant global race is underway, with approximately 75 countries actively investing in and supporting artificial intelligence (AI). The United States and China are leading this charge, with China making substantial progress in closing the AI performance gap with the US, according to data from February of the current year. This surge in AI investment has led to a massive increase in the valuation of companies involved in this sector. Companies with a market capitalization of $3 trillion or more are now among the top 10 assets, a stark contrast to just a few years ago when such valuations were considered almost unimaginable.

The Contrasting Value of Gold and Silver

Despite the immense growth and hype surrounding AI and its associated companies, the total share of value concentrated in gold and silver within the top 10 assets has shifted significantly. Previously below 50%, gold and silver now hold well above this threshold, with the total value of all gold and silver in the world exceeding the combined value of all other assets on the list. This phenomenon, which might seem counterintuitive, is explained by an equally critical, albeit separate, global competition revolving around resources, particularly gold.

Central Bank Gold Accumulation and Game Theory

Central banks are currently buying gold at record levels, driven by a strategic decision-making process that can be understood through the lens of game theory. After a period of significant central bank gold selling from the 1980s to 2010, which could be seen as a form of game theory where central bankers were influenced by a feedback loop deeming gold a "barbarous relic" and the US dollar the optimal reserve asset, there has been a dramatic shift.

Now, central banks are flocking back to gold. This resurgence is emboldened by early adopters like China, which has reduced its exposure to US treasuries by 45% since 2013 in favor of gold. Furthermore, geopolitical events, such as the 2014 sanctions on Russia following the annexation of Crimea and the subsequent 2022 asset confiscation, have pushed some countries towards gold due to concerns about the neutrality of the US dollar. These factors have created a gold-buying frenzy among central banks, reinforcing a positive feedback loop that encourages further gold accumulation.

As a result, gold has, for the first time in decades, become a larger foreign reserve asset than the US dollar. This trend is gaining momentum, with 100 countries currently holding gold in reserve, surpassing the number of countries participating in the AI race. In 2025 alone, 29 individual countries have purchased gold, with 20 continuing their buying from the previous year, and three new joiners adding to their reserves for the first time. El Salvador, known for its embrace of Bitcoin, has also increased its gold reserves this year, marking its first purchase since 1990. With more central banks, like South Korea (which hasn't bought gold since 2013), expected to follow suit, this behavior is indicative of a new trend driven by game theory and the Nash equilibrium, best described as "central bank gold FOMO." As more central banks increase their gold reserves relative to US dollar reserves, the fear of being left behind or being the last to hold onto the US dollar is compelling them to act.

This buying spree, estimated to potentially last up to 12 years, is still in its early stages and ensures a consistent demand for gold. The speaker views gold as the lowest-risk investment for 2025, especially for long-term positioning and retirement.

Silver's Inclusion on the Critical Minerals List and its Implications

The video then addresses a viewer question regarding silver's inclusion on the United States Geological Survey's (USGS) list of critical minerals. This official designation, along with copper, has significant consequences for silver's supply, demand, and price.

Potential Negative Impacts (Supply Side)

On the negative side, the inclusion of silver on the critical minerals list could make it easier to start new silver mines in the United States. This could potentially increase silver supply, which is generally not favorable for prices. However, the speaker cautions against overestimating this impact. The US possesses less than 4% of the world's underground silver reserves, much of which is deep and costly to extract. Furthermore, the entire US reserve is estimated at only 740 million troy ounces, which is less than the global annual consumption of over 1 billion ounces. Therefore, significant supply increases from this factor are unlikely, especially in the medium term, given the time required to establish new mines.

Positive Impacts (Demand Side and Stockpiling)

The more significant implication is the potential for the US government to stockpile silver. The United States liquidated its silver stockpile in 2000, having deemed it excessive in 1979. Now, starting from scratch, the government will likely need to acquire substantial amounts of silver. With estimated US military silver consumption at around 50 million troy ounces per year, the government will realistically need to stockpile between 250 to 500 million troy ounces to secure a 5 to 10-year supply.

This stockpiling process has likely already begun, contributing to the current tightness in silver supply and driving its price up by over 60% in 2025. This has also led to price backwardation in the silver market, where the spot price has surpassed the futures price, indicating strong immediate demand. This aligns with warnings from Andy Sheckman about military needs for silver.

Christopher McCormack is also credited for alerting Patreon members to potential military-industrial complex silver buying. The speaker suggests that the US government will likely purchase no more than 5% of global supply annually to avoid creating a supply shock. This implies a steady, new physical silver demand for the next five to seven years in a market already experiencing multi-year supply deficits. This sustained demand is expected to continue driving silver prices higher.

Game Theory and Silver

The speaker speculates that a game theory scenario, similar to what is unfolding with gold reserves at central banks, could be triggered with silver. If national governments and other major players enter the silver market due to its critical mineral status, it would further stress supply and push prices even higher. While this is not yet certain, the speaker is positioned and prepared for this eventuality. If this occurs, conservative price targets for silver over the next two to five years would likely be surpassed.

Speaker's Approach to Price Targets and Market Outlook

The speaker reiterates that the purpose of their work is to provide realistic and conservative price targets for financial planning, not to sell unrealistic dreams. They believe their past silver target of $60 per ounce by 2026 has proven reasonable and accurate, acknowledging that prices can go higher but emphasizing that targets are levels to be reached, not ceilings.

The overall outlook for precious metals is described as objectively bullish, and individuals are urged to prepare for this environment today, as fiat currencies and their leaders have "let us all down."

Future Content and Call to Action

The video concludes with a call to action for viewers to like and share the content if they find it valuable, as this helps the channel reach a wider audience. The speaker also announces a special midweek video on November 12th, which will delve deeper into the precious metals market, provide new analysis, and discuss mining stocks. The speaker will explain their rationale for holding 90% of their mining portfolio after taking a 10% profit and will share their outlook for mining stocks and precious metals in light of the discussed trends.