Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Tuesday.
Today is Tuesday, August 18th.
We have a busy week ahead.
Fed Chairman Warsh speaks at Jackson Hole on Friday, which always makes the gold and bond markets trade a little funny leading up to it.
Walmart, Lowe's, and Target all report earnings tomorrow — and by the way, when Walmart announces earnings, pay close attention to unit volume and average ticket price.
That data is often a better real-world inflation indicator than the Fed's own CPI reading.
But the thing that really has my attention this week is gold.
Pushing Toward Record Territory
Gold is pushing, pushing, pushing toward new highs.
A recent industry survey found that 71% of retail investors expect gold above $5,000 in 2026.
JP Morgan and UBS are projecting similar levels.
Now, I'll be honest with you.
When I was coming up on Wall Street in the early '90s, I used to laugh at the gold bugs.
These old-timers would grab me and say, "Beware inflation! Gold, gold, gold!"
And I'd think to myself — what are you talking about?
Inflation is coming down.
Interest rates are coming down.
The internet boom is happening.
I had no idea what these guys were talking about.
What I didn't know then was that they had survived the 1970s.
They had lived through the inflation.
They understood something I didn't yet.
Funny how you get older and start to appreciate the wisdom of the old-timers.
What's Actually Driving Gold
Here's the thing about the retail investors piling into gold right now.
A lot of them are just chasing action.
Money flows where the momentum is.
That's fine — but it's not the reason I'm paying attention.
The reason I'm paying attention is central banks.
Central banks are buying roughly 70 tons of gold per month.
Pure institutional demand.
Completely unrelated to retail hype.
And the finance ministers running those central banks are, over time and in aggregate, the smartest money on the planet.
They write the rules.
And here's why they're buying.
The 800 Pound Gorilla
The Congressional Budget Office projects that US interest payments will total $892 billion in fiscal 2024.
They rise rapidly from there — reaching a trillion dollars in 2025, and climbing to $1.7 trillion by 2034.
Let that sink in.
We are already paying more in interest on our debt than we spend on national defense.
At $1.7 trillion, we will be paying more in interest than our defense budget and a long list of other major spending priorities combined.
That is what central banks understand.
Gold trades on debt.
More specifically, gold trades on whether investors believe America will credibly address its debt problem.
Every time I look at Washington — both parties — I see no one who is serious about this.
Nobody even talks about it anymore.
But this debt is like an 800 pound gorilla locked in a cage with us.
Right now, the gorilla is sleeping.
But when that gorilla wakes up and wants to dance, you're not done until he says you're done.
That's what's coming.
The only question is when.
One More Thing You Probably Don't Know
Here's a little-known fact that I find remarkable.
Gold ETFs make up just 0.17% of US household financial portfolios.
Less than two-tenths of one percent.
That is well below the allocation levels we typically see during gold bull markets.
Think about what that means.
As this gorilla slowly starts to stir — as professional investors keep moving further into gold — if ordinary American investors nudge their allocation even modestly in that direction, it will add significant fuel to a rally that many people have already assumed peaked.
That is why I think this story has much further to run.
And look, if everything I just said is right — the debt, the central banks, the 0.17% allocation — then the question isn't whether to own gold.
It's how to own it.
That’s why I put together a full presentation on the #1 way to play the gold market right now.
Gold is moving fast, so don’t waste any time.
Check out my #1 gold play today.
Have a wonderful day.
I'll see you tomorrow.
“The Buck Stops Here,”
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Written by Dylan Jovine