THE IMPENDING DECLINE OF GOLD AMID THE AI BUBBLE BURST

While you may think AI isn't in a bubble, keep in mind that Nvidia is 80% overvalued. This explains why over 500billion USD evaporated in one day. The DeepSeek AI bubble burst has likely triggered a cascade of financial disruptions, ultimately leading to the decline in gold prices. As the AI sector collapses, investors bullish in AI stocks face massive losses, creating a liquidity crunch. They will need to cover margin calls and losses by liquidating assets including gold, to raise cash, mirroring past market crises. This forced selling will pressure gold prices downward, even as central banks increase their holdings as a hedge against uncertainty.

Simultaneously, central banks are dumping U.S. Treasuries, why? This is due to deep economic and geopolitical uncertainties, a tougher global capital requirement by the BIS(Bank for International Settlements), thereby driving up yields. Higher Treasury rates make gold, which offers no yield, less attractive to investors seeking returns in a volatile market. The rising dollar, bolstered by higher rates, will further weigh on gold, as it becomes more expensive for foreign buyers.

Note: Although central banks’ gold purchases provide some support, they are not enough to offset the broader market dynamics. The combination of distressed selling, rising yields, and a stronger dollar will overwhelm gold’s traditional safe-haven appeal. In this environment, gold will fall, demonstrating that even its status as a store of value can be undermined by systemic financial stress.