Dr. Stephen Leeb: China Has 50,000 Tonnes of Gold. The Dollar's Replacement Is Already Built

David Russell

At the time of writing, gold continues to trade in a narrow range around $4,050/oz as investors await this week's key US economic data, particularly Friday's Nonfarm Payrolls (NFP) report.

Deutsche Bank expects US employment to increase by 65,000 jobs in July, a modest improvement over June's 57,000 gain. The bank forecasts the unemployment rate to remain at 4.2%, though a rise to 4.3% remains a risk if labour force participation improves. Wage growth is expected to hold steady at 0.3% month-on-month, with average hours worked unchanged.

Despite the recent consolidation, Deutsche Bank remains constructive on gold's outlook. Strategist Michael Hsueh believes the recent pullback has likely marked gold's bottom for 2026, arguing the metal remains in the "explosive price behaviour" phase that began in August 2024. That phase has coincided with sustained central-bank gold purchasing, particularly from emerging-market economies seeking to diversify reserves away from dollar-denominated assets.

While long-term commodity comparisons suggest a lower valuation, Deutsche Bank's valuation models point to a fair value of approximately $4,700/oz, underpinning its year-end target of $4,600/oz. The bank also estimates that gold's downside is limited, with a projected floor around $3,700/oz, suggesting the recent weakness may represent a healthy correction rather than the end of the broader bull market.

A Broader Argument for Gold

But why does the argument for gold begin long before the gold price? I recently spoke with renowned economist and author Dr. Stephen Leeb to explore this question and understand why he believes we are witnessing the early stages of a profound shift in the global monetary order.

Dr. Leeb begins with a widely shared concern: it has become increasingly difficult to establish what is true. From there, he traces the consequences through the declining popularity of Western leaders, the disappearance of statesmanship, the erosion of long-term thinking, and the monetary break that followed the end of the gold standard in 1971 — when President Nixon suspended the convertibility of the dollar into gold, ending the Bretton Woods system and ushering in the era of fiat currencies unbacked by a physical commodity.

By the time the conversation turns to gold directly, Dr. Leeb has constructed a much larger argument. He sees gold as part of the answer to a financial system that has lost discipline and a world that is already building alternatives. Those alternatives include cross-border payment initiatives such as the BRICS-led mBridge project and China's Cross-Border Interbank Payment System (CIPS), both of which have gained attention as potential channels for settling trade outside the dollar-centric SWIFT network.

Our discussion covered the creation and possible decline of the petrodollar — the informal arrangement dating to the 1970s in which oil-exporting nations priced crude in dollars and recycled proceeds into US Treasuries — as well as China's expanding gold infrastructure, whether the United States may be closer to reintroducing gold into its monetary thinking, and why gold could provide protection during deflation as well as inflation.

The conversation also offered a fascinating look into Dr. Leeb's thinking on artificial intelligence. He asks what AI cannot reproduce about human beings — including humour, creativity, love, and independent thought — and why those qualities have become increasingly important in a world shaped by algorithms and competing narratives.

Some of his conclusions are provocative. Readers may agree, disagree, or find themselves reconsidering assumptions along the way.

About the Author

David Russell is the CEO of GoldCore. He previously served as Director of Marketing and Communications from Summer 2023, having joined GoldCore in 2008 as Director of Business Development. Prior to his work at GoldCore, David managed his own marketing agency and completed multiple coaching qualifications.