Central Banks Now Hold More Gold Than Treasuries for First Time Since 1996

Dear Reader,

Here's a tale of two markets.

On Wall Street, stocks rallied for a third straight day. The Dow jumped 664 points. Traders cheered rising odds of another Fed rate cut.

In central bank vaults around the world, a quieter story unfolded: 634 tonnes of gold accumulated this year alone. More gold than Treasuries held for the first time since Bill Clinton was in the White House.

One of these stories made headlines. The other one matters.

Wall Street's Daily Drama

Market Snapshot

Source: Yahoo Finance, Polygon, and CNBC.

Top Headlines In 60 Seconds

Consumer Confidence Crashes: The Conference Board Consumer Confidence Index declined by 6.8 points in November to 88.7, from 95.5 in October. The Expectations Index has tracked below 80 for ten consecutive months—the threshold under which the gauge signals recession ahead.

Fed's Waller Pushes for December Cut: Federal Reserve Governor Christopher Waller said he's advocating an interest-rate cut in December, saying he's grown concerned over the labor market and the sharp slowdown in hiring.

Nvidia Tumbles on Google-Meta Chip Deal: Shares of Nvidia fell as much as 7% before recovering to trade down 4.3% after The Information reported that Meta is considering using Google's tensor processing units, or TPUs, in its data centers in 2027.

The News Behind The News

The Consumer Cracks While Wall Street Celebrates

We find ourselves in one of those delicious moments where the headlines and the reality seem to be written in entirely different languages.

On one side of the ledger, Wall Street threw itself a three-day rally party, with the Dow adding 664 points on Tuesday alone.

The S&P 500 gained 0.91% to settle at 6,765.88, while the Nasdaq Composite climbed 0.67% to finish at 23,025.59.

The chattering classes pointed to rising hopes for yet another rate cut from our friends at the Federal Reserve.

On the other side?

Consumers soured on the current economy and their prospects for the future, with worries growing over the ability to find a job.

The Conference Board's consumer confidence reading didn't just slip, it cratered to its lowest level since April.

Respondents reported feeling less confident about their jobs, incomes and financial situations currently and in the future.

And here's the part the financial media seems determined to bury in the fine print…

The share of consumers who believe the economy is already in a recession rose for the fourth month in a row.

Meanwhile, consumers' average inflation expectations for the year ahead were elevated in the survey, with the median rate increasing to 4.8%.

So let us understand the situation clearly: The American consumer, that mythical creature upon whose spending habits 70% of the economy supposedly depends, is growing gloomier by the month.

Yet stocks rally on the hope that the monetary mountebanks at the Fed will paper over the problem with cheaper credit.

The Fed's Latest Tap Dance

Speaking of the Fed, Governor Christopher Waller made quite a splash on Monday. "I am not worried about inflation accelerating or inflation expectations rising significantly," Waller said in prepared remarks delivered to a group of economists in London.

One might be forgiven for wondering if the Governor has spoken with any actual consumers lately.

Consumers specifically cited prices, inflation, tariffs, trade and politics as affecting their attitudes about the economy.

Waller, it should be noted, is currently under consideration by the Trump administration as a candidate to succeed Jerome Powell as Fed chair next year.

Whether his dovish positioning represents genuine economic analysis or something more strategically self-interested, we leave to your imagination.

As UBS chief economist Paul Donovan observed: "If Waller is right, the U.S. economy is at quite significant risk, and this should be a major concern for financial markets.

If, however, this call is merely a subtly disguised cry of 'Pick me! Pick me!' aimed at Trump, then markets will focus on the benefits of monetary accommodation and not the mooted risks it is purportedly offsetting."

Markets are now pricing in roughly an 83% chance of a December rate cut.

Should the Fed deliver, it would be their third consecutive cut of the year, bringing the benchmark rate down to 3.5-3.75%.

Meanwhile, The Yellow Metal Speaks

While consumers fret and Fed officials audition for promotions, gold continues its quiet but relentless march higher.

At $4,133.50 per ounce, the barbarous relic has gained 57% over the past twelve months, a rather impressive performance for an asset that supposedly has no yield and sits there doing nothing.

But gold's price performance isn't the only story.

Central banks bought 220 tonnes of gold in the third quarter of 2025, that’s 28% higher than the 172 tonnes purchased in the previous quarter.

In the first nine months of 2025, central banks together added 634 tonnes of gold to their reserves.

Poland, Kazakhstan, and Brazil have been leading the charge.

And perhaps most telling: Central banks now hold more gold than U.S. Treasuries for the first time since 1996.

Read that again.

The world's central banks, the very institutions responsible for managing fiat currency systems, have now accumulated more gold than U.S. government debt in their reserves.

This hasn't happened since before most Millennials were born.

One might call this a vote of no confidence in the paper promises of the world's reserve currency.

But what do we know?

The AI Trade Hits Turbulence

The Magnificent Seven showed a few cracks on Tuesday.

Nvidia shares fell as much as 7% before recovering on news that Meta might start buying AI chips from Google instead.

Companies building AI infrastructure have been searching for a more diversified supply of chips.

While Nvidia recovered some losses by the close, the episode illustrates a broader point: when a single company's stock can move billions of dollars on rumors about chip contracts, perhaps we're not dealing with a fundamentally sound market valuation.

Google has developed its own Tensor Processing Units in-house.

Until recently, the company reportedly only used the chips internally. If Big Tech is now competing with Nvidia rather than just buying from it, the AI chip trade may be more fragile than the true believers would have you think.

The Bottom Line

As you gather with family and friends for Thanksgiving this week consider the curious state of affairs…

Consumer confidence is flashing recession warnings for the tenth consecutive month.

The Fed is divided but leaning toward more cuts.

Central banks worldwide are dumping Treasuries and hoarding gold at a pace not seen in decades.

Yet stock markets rally on hopes that cheaper money will somehow fix the structural problems that cheaper money helped create in the first place.

Gold doesn't yield dividends.

It doesn't generate earnings.

It just sits there, as it has for five thousand years, silently measuring the purchasing power of whatever paper currency happens to be fashionable at the moment.

At 57% returns over the past year, it seems the measurement hasn't been flattering to the dollar.

This Thanksgiving, we're grateful for honest money in a world of paper promises.

May your turkey be golden and your portfolio well-hedged.

The Wealth Protection Research Team