Well, it looks like we may not have escaped it after all.

Now, I’ve already written to you this week about the diesel problem, and why President Trump’s recent deal with Russia isn’t going to do anything to solve it.

But today I want to step back and look at the big picture, because it has changed significantly since I last covered it in depth. The oil market is now being squeezed from three directions at once.

The first comes from the Iran war, where the fighting has spread from the oil fields to the things that carry the oil: pipelines, ships, and sea lanes. The second comes from Saudi Arabia’s war against a bunch of guys in sandals, who have been threatening shipping routes on the other side of the Arabian Peninsula. And then there’s China. The country that canceled the oil apocalypse in the spring has started buying again.

You don’t need me to tell you that things have been, to put it mildly, volatile across the board.

But I think we’re looking at something more than that now. Oil is getting harder to move just as the world’s biggest buyer starts competing for it again. Those pressures are starting to feed one another, and the result could be a much bigger oil shock than most people expect.

Which is why I think this whole situation warrants a closer look.

Note: This is a long one. I’ll get to a way to profit from all of this at the end, but even if you never buy a share, I think understanding how these pieces fit together will be worth your time.

So grab a coffee. Let’s dig in.

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How China Bought the World Time

First, a quick recap, because it will make everything that follows easier to understand.

In February 2026, Benjamin Netanyahu convinces Donald Trump to launch a war against Iran. We get plenty of conflicting explanations along the way: preventing attacks on U.S. bases, protecting Israel from an imminent strike, stopping a bomb, regime change.

But the regime doesn’t just survive. It does the one thing everyone said it would never dare to do: it shuts the Strait of Hormuz, cutting the world off from roughly 15 million barrels of crude a day.

Now, oil trades in one global market. The world consumes roughly 100 million barrels of oil a day, and there is very little slack in the system. Take away the 15 million barrels of crude that used to come through Hormuz, and the whole world has a problem.

There were workarounds, though.

First, Saudi Arabia cranked up the mother of all oil pipelines: the East-West Pipeline. It runs, as the name suggests, from the oil fields in the east to the port of Yanbu on the Red Sea, crossing 750 miles of mostly desert along the way. It can carry about 5 million barrels a day (since expanded to 7 million). From Yanbu, the oil goes north toward Suez and Europe, or south down the Red Sea and out to Asia.

Then the UAE’s Habshan-Fujairah line added another 1.5 million barrels a day. It pops out on the Gulf of Oman, beyond Iran’s blockade. The map below shows how the two routes work.

That gave us about 6.5 million barrels a day of bypass capacity.

Then came the IEA’s emergency release of 400 million barrels from strategic reserves, the biggest in history. Spread over months, that worked out to roughly 2 million barrels a day actually reaching the market. Add perhaps another million from shadow-fleet tankers willing to run Hormuz with their transponders off, for a fat premium, and the total came to about 9.5 million.

Against the 15 million that used to flow through Hormuz, that still left the world 5.5 million barrels short. Every day.

Which is where China came in.

The world’s biggest oil importer quietly cut its purchases by 4.9 million barrels a day. Coal, fewer fuel exports, and a decade of EV subsidies helped it get by on less imported crude. But the real backstop was its immense oil reserves. Here’s the chart I showed you then.

China’s cut covered almost the entire shortfall. The oil apocalypse was postponed.

Sure, it wasn’t pleasant. You probably noticed it in canceled flights, your energy bills, or at the pump. But it was bearable.

That was the picture in July. It is not the picture now.

The Guys in Sandals

A lot of what changed comes down to the guys in sandals. They call themselves Ansar Allah, or “Helpers of God,” but they’re better known as the Houthis, after the family that leads them.

Here’s how they fit into this story.

Yemen, Saudi Arabia’s southern neighbor, has been in a civil war for over a decade. Saudi Arabia intervened on one side back in 2015; the Houthis, allied with its archenemy Iran, fight on the other. For years, it was the same tit for tat: the Houthis lobbed missiles and drones at Saudi cities and oil facilities, the Saudis bombed Yemen, and the front lines barely moved.

Then, this summer, the war began to change. In July, the Houthis declared a blockade on any ship linked to Saudi Arabia. By late August, they had attacked ten commercial vessels, most of them tankers, hit six, and sunk one, killing four crew members.

September brought the real breakthrough. In the space of a week, the Houthis pushed 150 kilometers down the coast, took the port of Mocha, and overran Perim Island. By September 13, they held Yemen’s entire Red Sea coastline.

Including the spot you can see on the map below: Bab al-Mandab. Like Hormuz, it’s a strait and one of the world’s important oil chokepoints. This one is the southern door of the Red Sea, about twenty miles wide. At its narrowest point, the Houthis now sit just twelve miles from Africa.

Keep that geography in mind. We’ll come back to what it means for getting oil to Asia.

Meanwhile, the pipeline itself came under attack.

On September 11, drones launched from Iraq hit the East-West Pipeline’s pumping stations, the structures that push oil across those 750 miles of desert. By the time they were done, the stations were rubble.

The line went out of commission for eleven days.

How big a hit was that to the pipeline?

Well, before the drones, Kpler, the Paris firm that tracks tanker movements by satellite, had the line running at about 5.5 million barrels a day. Afterward, nothing loaded at Yanbu for days, and Kpler didn’t expect it to get back to even half that within a month. So, with the line dark for a third of the month and limping for the rest, September’s flow can’t have come to much more than 2 million barrels a day. Less than half the 5 million we used in our earlier arithmetic.

Not great. But it gets worse.

The Beast Is Eating Again

OK, let’s get back to China.

Ever since putting together those first two essays, I’ve kept a close eye on China’s crude imports. I noticed them picking up in July and August. Now September’s numbers are out, and we have three consecutive monthly increases. The change in direction is clear. Take a look.

As you can see, imports climbed from roughly 7.1 million barrels a day in June to 8.45 million in July, 8.93 million in August, and 9.03 million in September.

Granted, that’s still about 21% below a year earlier. But remember our July arithmetic: by buying less, China was freeing up 4.9 million barrels a day for the rest of the world. Today, that cushion is down to about 2.5 million.

The point is, after a few months of holding back on purchases to keep the world supplied, the beast is eating again. More than that, it seems to want those barrels now, whatever they cost.

Here’s what I mean. The chart below compares Brent crude futures, the global benchmark, in green, with Shanghai crude futures in red. The Shanghai contract is priced in yuan; here it’s converted to dollars so we can compare the two.

For most of the summer, the Chinese price tracked Brent and generally traded below it. That’s the green shading. The world’s biggest buyer was holding back, and barrels delivered into China were cheaper than the global benchmark.

On September 1, the lines crossed. China began paying a premium, shown in red.

By mid-September, Shanghai crude had reached $135 a barrel while Brent was at $106. Quite a gap. The premium has narrowed since, but it hasn’t disappeared.

Why is China doing this? As usual, they’re not saying. My guess is that Beijing sees a lot of trouble coming down the pipe and would rather stock up while it still can.

That would also explain what China just did with its fuel exports.

As I told you earlier this week, on October 1, less than a week after Trump asked Xi Jinping for help with fuel supplies, China halted all fuel exports. Gasoline, diesel, jet fuel. Every destination except Hong Kong and Macau. It has since let some shipments go out again, but at a reduced level, and only with Beijing’s sign-off, month by month.

That is exactly what you’d do if you expected the war to drag on and oil to get harder to find.

Follow the Ships

There’s another part of this story I’ve only touched on in passing. To understand why the shortage is getting harder to manage, you have to follow the ships.

Every day, the oceans are crisscrossed by some of the largest machines human beings have ever built: supertankers over a thousand feet long, each carrying two million barrels, moving at roughly the speed of a bicycle.

The world’s oil runs on them. Keeping enough of them in the right places is a small miracle of logistics most of us never think about.

And until recently, it was remarkably cheap. On many routes, moving a barrel cost only a few dollars. The Persian Gulf-to-China run, for example, took about 20 days each way, or 40 to 45 days round trip. Before the war, hiring a supertanker cost about $30,000 a day.

Multiply that by 45 days and you get roughly $1.3 million in ship hire. Spread it over two million barrels, and the hire cost alone comes to about 65 cents a barrel. You still have fuel, insurance, and other costs, but you get the idea.

All of that depends on being able to sail the usual routes. Close a strait, or make the passage uninsurable, and a round trip that took four to six weeks can suddenly take two to three months. The same number of ships can now move a lot less oil.

That’s what happened when Hormuz closed.

But the people running the tankers aren’t dummies. They’re savvy businessmen, and they’ve figured out how to get more oil through a closed strait.

The supertankers are too big, too slow, and too expensive to risk running the strait. So they wait in the Gulf of Oman, outside the blockade. Smaller tankers load inside the Gulf, hug Oman’s coast on the way out with their transponders off, then pump their cargo into the waiting supertankers at sea. After a few deliveries, a supertanker is full and sails off to Asia.

Traders began working this out around July. By August, the shuttle was moving just under a million barrels a day. In September, it reached 3.6 million.

The problem is that it’s now close to its limit. Each transfer takes days, the area off Oman can only accommodate so many ships, and there are only so many owners willing to make the dangerous run.

The backlog alone tells the story. Tankers International, which runs the world’s largest supertanker pool, estimates that waiting adds about ten vessel-days to each cargo, tying up the equivalent of fifteen supertankers.

But consider where those barrels were going.

Four out of every five that passed through Hormuz were headed for Asia. So Asia, and China in particular, has the biggest problem finding replacements.

Which brings us back to our friends in sandals.

Until recently, the alternative route for Saudi oil was straightforward: pump it across the desert to Yanbu, the Red Sea port, load it onto tankers, then sail south through Bab al-Mandab, the strait at the bottom of the Red Sea, and east toward Asia.

It looks like a detour on the map, west across Arabia and then back around it. But the voyage from Yanbu to China still took about 20 days, roughly the same as the old run out through Hormuz.

Not anymore.

That red X at the bottom of the map is Bab al-Mandab. The Houthis hold the coast beside it and still attack Saudi-linked tankers, despite an offensive launched earlier this month by Saudi-backed Yemeni forces to push them back. For Saudi oil, the southern exit is effectively closed.

That leaves the northern exit: the Suez Canal. Fine if the oil is headed for Europe. But to reach Asia, you now have to send it on a voyage the old spice traders would recognize: across the Mediterranean, past Gibraltar, down the coast of Africa, around the Cape of Good Hope, and back across the Indian Ocean.

Here’s what that looks like.

Again, the old route, shown by the dotted line, took about 20 days. The new one takes about 50. An extra month, each way.

This also means a ship now takes two and a half times as long to complete a round trip. On that route, it’s effectively as though more than half the tanker fleet disappeared.

Now look at what all this has done to the daily cost of hiring a supertanker.

Again, before the Iran war, it was about $30,000 a day. On one of the worst days of the pandemic, it spiked to around $250,000, which people at the time thought was Armageddon.

Today, the global average is around $800,000 a day. Ships loading in the Gulf are fetching $1.4 million.

And remember, a longer voyage means paying those rates for more days.

But the impact doesn’t stop with the ships taking the detour. Every tanker tied up on a longer trip is one less available for another cargo. That puts pressure on shipping costs elsewhere, too.

Take the U.S. Gulf-to-China route. It doesn’t pass through Hormuz, but it still depends on finding an available tanker. Freight on that route has risen from about $8.60 a barrel before the war to $37.50 today. That’s an extra $29 a barrel just to move the stuff.

That’s a lot. Remember, Brent was around $65 a year ago and is around $100 now. In other words, the increase in freight on that route is almost as large as the price shock from the Iran war itself.

Bottom Line

Take everything we’ve covered so far, add the diesel and refinery problems I wrote about earlier this week, and I think we could be at the start of a major oil shock whose full impact has yet to be felt.

To recap. In September, the bypass pipelines moved about 3.5 million barrels a day, with the East-West line dark for a third of the month and limping for the rest. The IEA’s stock release is down to about half a million barrels a day, from roughly two million in the spring. Yes, the shadow fleet shuttle off Oman is up to 3.6 million, but most of that gain is canceled out by China, which is now holding back 2.5 million barrels a day instead of 4.9.

Add it all up, subtract it from the 15 million that used to come through Hormuz, and September’s shortfall comes to about 4.9 million barrels a day. That’s up from about 0.6 million back in July, when China was still covering most of the gap.

Here’s a visual to put those numbers in perspective.

And how is that hole getting filled?

Stockpiles.

Again, oil is a global commodity, so when supply falls short, the barrels have to come from somewhere. And now they’re coming out of storage. Governments are drawing down strategic reserves, and companies are tapping commercial inventories. The price pushes everyone to use the cushion they have.

The problem is, most countries don’t have anything like China’s. And in September alone, the world pulled 113 million barrels out of storage, the most in any month since the war began.

We also recently learned that oil inventories across the OECD, the 38-country club of rich economies, have reached their lowest level since 1990.

And it’s even worse in the U.S. Take a look at this chart of the Strategic Petroleum Reserve.

At 283 million barrels, the U.S. reserve is at its lowest since 1982. And the last of the war release hasn’t even been delivered. Once it is, that figure will be down around 243 million.

Keep in mind that all of this is happening while the fighting around the world’s most important oil chokepoint shows no sign of ending. Quite the contrary. Look at how it has spread: the U.S. and Israel are fighting Iran, and Saudi Arabia is fighting the Houthis. Even the pipeline bypassing Hormuz has been hit by drones.

The war keeps widening, not winding down.

My bet is that if it isn’t resolved before the November 3 midterms, a prompt resolution becomes less likely afterward. (And I doubt Iran has much interest in handing Trump a pre-election win it can withhold.)

Think about it. Before the election, every cent at the pump is a vote. A deal is worth a lot to Trump. Afterward, with two years until the next election, much of that urgency disappears. The deal becomes a legacy question, and legacy questions have a way of dragging on.

But even an end to hostilities tomorrow and a reopened strait wouldn’t refill the reserves, rebuild the refineries, send the Houthis home, or undo the dozen other problems this war has created.

And nowhere are those problems more acute than in the oil-starved countries of Asia. Remember, they used to take most of the 15 million barrels a day that flowed through Hormuz. Their replacement barrels now come the long way around.

As I write this, buyers in India, Japan, Korea, and, of course, China are scrambling to diversify away from the Gulf. They’re paying premiums to do it. And I expect them to keep paying after a ceasefire, because they’ve just learned what dependence on Gulf oil means when the shooting starts.

That’s a huge challenge for those countries. It’s also a big opportunity for the countries and companies that can sell them oil from a coast where no one is shooting, without depending on Hormuz or the Red Sea.

Which brings us to this month’s recommendation. There’s a place, and a company, that started doing exactly that this year.

And the stock has barely noticed.

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A word before we start. This is the second of the SNAFU Investing monthly issues, which come at the end of each month. This one carries a new recommendation, below the paywall.

“China and the United States must hold the line of no conflict and no confrontation between us. The Thucydides Trap can be overcome.”

Xi Jinping said that earlier this week, on the South Lawn of the White House, at the welcome ceremony for his state visit, with Trump beside him and a military band behind them. Most of the coverage gave the line a sentence and moved on to the trade numbers. I think it was the most important thing anyone said all week. I’ll explain why in a moment.

But first, some background, in case you’ve been living under a rock for the past eight years. The United States and China have been locked in an on-again, off-again trade war since 2018: tariffs, counter-tariffs, export bans, a truce, the collapse of the truce, another truce. The latest of those came last November, when the two sides agreed to put their newest round of tariffs and export controls on ice for a year and talk instead.

This week’s state visit was the latest round of that talking. Xi came to Washington, stayed three days, and the two sides agreed to extend the November truce by another two months, to January 10, and to meet twice more before then, in Shenzhen and in Miami.

If you followed the coverage, especially in the more president-friendly outlets, you probably came away with the impression that a deal is just around the corner, and that once it’s signed, everything goes back to business as usual.

I don’t think so. The trade war between the U.S. and China was always a sideshow of a much bigger issue: who will be the world’s dominant power?

It will either be China, or it will be the United States. It can’t be both.

China’s economy is already larger than America’s on a purchasing-power basis. Its navy has more ships. And it controls about 90% of the world’s rare earths, which, as it happens, is what this issue is about.

Meanwhile, the U.S. finds itself in the same position previous established powers did when a rising one came up behind them: more than US$40 trillion in debt, running wartime deficits in peacetime, paying more in interest than it spends on its military, and stretched across commitments on three continents it can no longer comfortably afford.

This dynamic has a name, and it’s the one Xi reached for on the South Lawn: Thucydides’ Trap, after the ancient Greek historian who wrote the history of the Peloponnesian War between Athens and Sparta. Sparta was the established power. Athens was the one rising fast. And the trap, as Thucydides described it, was that the rise of one and the fear it produced in the other made war inevitable.

Now, I’m not saying war between the U.S. and China is inevitable. But if history is any guide, the odds are not comforting.

A guy called Graham Allison, a professor at Harvard, has studied sixteen cases of Thucydides’ Trap over the past five hundred years. In twelve of them, 75% of the time, the result was war. Not a trade dispute. War.

The clearest modern example is the one everyone learns in school: World War I. Britain was in decline. Germany was rising fast. War became inevitable. But it’s not the only one from living memory. Japan was the rising power in the Pacific in the 1930s, the United States the established one, and we all know how that ended. Go back further and you get England and the Dutch in the 1600s, Britain and France in the 1700s, and the same story each time.

Now, it’s true that China might be fine with being number two globally as long as it’s number one in its own neighborhood. It might even be fine with the dollar staying the world’s reserve currency, given what that job costs the country that holds it (economists call it the Triffin dilemma: to supply the world with dollars, America has to run the trade deficits that hollow out its industrial base), as long as the yuan is what its neighbors and its oil suppliers settle in.

My fear is that the U.S. couldn’t swallow even that. Losing Asia and watching the yuan gradually take over its own backyard would be challenge enough, and a power that feels itself being cornered tends to do what any cornered animal does. It lashes out.

I may well be wrong. But I remember enough physics to know that objects in motion tend to stay in motion, and U.S.-China relations have been moving in one direction (not a good one) for eight years. Nothing about this week reversed that, by the way.

That’s why I think that even if some sort of deal gets worked out, in Shenzhen or in Miami or wherever the next handshake happens, it will do nothing to resolve the larger problem.

Trump understands that. So does Xi. Which is why, standing on the South Lawn, he reached for Thucydides.

Now, before I get to this month’s pick, which I think is the best way to profit from all of this right now, and which has the kind of multi-bagger potential I look for, let me lay out the case for it. It starts with those rare earths I mentioned, and why China’s grip on them is a much bigger problem for America than most people realize.

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A word before we start. This is the first of the SNAFU Investing monthly issues, and they’ll come at the end of each month. This one carries a new gold recommendation, below the paywall.

You may not have noticed it amid the ongoing Iran war and everything else happening right now, but gold has been on quite a run lately. Last week alone, it jumped more than 5%, reaching its highest level since May. Take a look at the chart below.

So what happened?

Well, several things actually.

If you look closer at the chart you’ll see the move started on Wednesday the 19th. But it didn’t start in the gold market.

What happened was that that afternoon the Treasury announced it would at least double the size of its long-end buyback operations, from $2 billion apiece to $4 billion, running from September 9 through November 4.

Now, a buyback here means exactly what it sounds like. The government goes into the market and buys back bonds it has already sold. This is not new borrowing. It’s the Treasury taking its own paper off dealers’ hands with cash.

In case you’re wondering why the Treasury would do such a thing, look at the position it’s in.

It has to sell $739 billion of new debt this quarter. It also has close to $10 trillion of old debt to roll over this year.

Meanwhile, the people who used to buy that paper without blinking are backing away. In June, foreign investors were net sellers of U.S. government debt. And as I showed you on Wednesday, that wasn’t a one-month blip. Their share of the market has been sliding for fifteen years, from close to half back in 2011 to about 30% today, the lowest in two decades.

The problem is that when fewer buyers show up for your debt, the yield goes up. And when the yield goes up, every dollar you borrow costs more, which means you borrow more.

Unless of course you buy the bonds yourself.

That’s the reason a program like this exists at all.

This isn’t a new idea, by the way. The Fed spent the first half of this year doing its own version of it, buying short-term Treasury bills by the tens of billions and calling it reserve management. I called it what it was back in December. Money printing in anything but name.

Now, you may be thinking, but wait Lau, $4 billion isn’t all that impressive. After all, against the $739 billion the Treasury has to borrow this quarter, $4 billion an operation barely registers.

So why did gold care at all?

The reason is simple, actually. The market wasn’t pricing the amount of money. It was pricing the precedent, and the willingness to go further. In fact, the day after the announcement, Treasury Secretary Bessent signaled the operations could run bigger than $4 billion if needed.

Remember, this is the same Bessent who, earlier this month, publicly asked the Federal Reserve to “upsize” an emergency lending facility (currently capped at $60 billion per country) so Japan could get the dollars it needs without dumping a single Treasury on the market.

Those dollars, of course, wouldn't come out of a drawer. The Fed would create them. Print them, if you will. I wrote about it last week.

Put it all together, and it seems the Treasury is working around the clock to hold the bond market up.

Which is why gold is where it is even after Fed Chairman Kevin Warsh got up at Jackson Hole yesterday, called inflation at 3.7% concerning, and hinted that rates may have to go up rather than down.

And my guess is that’s how it trades from here. Higher, and not especially bothered by talk of rate hikes. (Which is why this month’s issue adds a gold position to the portfolio.)

The Only Way Out

None of this is happening in isolation, of course. The U.S. national debt crossed $40 trillion this month, which I wrote to you about earlier this week.

And as I mentioned there, the headline number is bad enough on its own. But the bigger problem is the acceleration, which is to say how quickly it keeps getting worse. Take a look at the chart below if you missed it.

I ended that piece by saying there’s only one realistic way out of this, and that’s devaluing the dollar. So let’s talk about that, because this is the big picture that really matters.

The easiest way to see why this is the obvious way out is with a simple illustration that hits closer to home.

Say your family has a fixed $500,000 mortgage. Then high inflation hits and prices across the economy rise dramatically. Over time, your salary and your partner’s salary double or triple along with most prices, while that $500,000 mortgage stays exactly where it is. Suddenly, the debt feels a whole lot lighter. Your mortgage payments haven’t changed, but they now eat up a much smaller portion of your income.

Just as importantly, the politically connected elites (the only people who really matter) tend to do just fine out of it too. During inflation, asset prices rise. Stocks, real estate, private equity, all of it goes up in nominal terms. Which is precisely why devaluation is such a convenient path of least resistance for those in power. For the majority of Americans watching their savings and purchasing power disappear, not so much.

Now, you might reasonably ask why they don’t simply cut spending instead.

Well, aside from the fact that we recently watched Musk’s DOGE try (and fail) to make a meaningful dent in federal spending, balancing the budget today would require roughly $2 trillion in cuts every single year. For context, the entire Social Security program costs about $1.5 trillion annually, while the military budget is roughly $900 billion. Even eliminating either one completely wouldn’t be enough.

Put yourself in a politician’s shoes. Imagine stepping up to the microphone: “My fellow Americans, we need to slash government spending by $2 trillion a year. We’ll start by cutting Social Security payments…” You wouldn’t finish that sentence before being booed off stage, assuming you made it past your campaign donors.

History shows that when governments face choices like these, they almost always take the path of least resistance. Cutting spending is politically toxic. Default is off the table. But gradual devaluation? That’s always the preferred stealth option.

But don’t let the word “gradual” fool you. America’s own history shows that devaluation can happen a lot faster than those in power would have you believe.

Consider this. When Nixon took the dollar off gold in 1971, it took less than ten years for the dollar to lose more than half its purchasing power. Think about that. More than half, gone inside a decade. And it didn’t stop there. Today, that same dollar buys roughly 90% less than it did in the early 1970s.

And before anyone tells me this couldn’t happen in America, it already has in a country very much like America. In 1976, the United Kingdom, then one of the world’s leading economies, went hat in hand to the IMF for the largest loan package the fund had ever arranged. The pound had collapsed, inflation had hit 27% the year before, and the government was struggling to finance itself. Being a rich, developed nation didn’t protect it.

And guess what. None of this is lost on the people sitting on trillions of those dollars.

Follow the Money

I’m talking about central banks, of course. And judging by their actions, they answered the devaluation question a long time ago. Take a look at the chart below. It shows central bank gold buying over the past eight years, with the last four set against the four before them.

As you can see, since 2022 central banks as a group have bought roughly 1,000 tons of gold a year. That’s about double what they averaged over the previous decade. And it’s probably the most underappreciated reason gold has done what it’s done.

Now, in case you’re wondering why 2022 was the turning point, that was the year the West froze roughly $300 billion of Russia’s foreign reserves following the invasion of Ukraine. The U.S. also effectively cut Russia’s central bank and some of its biggest banks off from the dollar system. As the rest of the world watched, every reserve manager on earth suddenly had to reckon with the fact that the world’s dominant reserve currency could be weaponized against them.

Now, if you take another look at the chart, you’ll notice central banks bought less gold in 2025 than in the previous three years. In tons, that’s true. But not in dollars. Gold cost 44% more that year, so they actually spent about $95 billion, compared with roughly $84 billion the year before.

Now, before someone in the comments section points out that gold buying was tepid in the first quarter this year, yes, according to revised World Gold Council (WGC) figures, buying dropped to double digits as gold spiked toward $5,600.

But here’s the thing. We also know it came back with a vengeance, jumping to 289 tons in the second quarter after the price had fallen about 30%.

Which tells you central banks are more than willing to buy the dip, because they still want the ounces. Badly.

Recent surveys of the people actually making these decisions confirm it.

Earlier this year, OMFIF, a London-based think tank, published its annual survey of some of the world’s largest public investors, collectively managing more than $10 trillion. Among the central banks surveyed, a net 30% said they intend to add more gold to their holdings over the next year or two.

Interestingly, they’re not expecting to get it cheaply, either. Some 61% expect gold to be trading between $5,000 and $6,000 an ounce by June 2027. And only 28% said the current price was discouraging them from buying.

Note: A separate WGC survey found much the same thing, with a record 45% of central banks planning to increase their gold holdings over the next twelve months.

Which leaves one obvious question.

Where’s the Gold?

Now, before I get to this month’s pick, there’s one more piece of this story we need to talk about. It’s the part few people seem to mention. And it’s also the reason this month’s recommendation is what it is.

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