Skip to navigationSkip to main contentSkip to right columnADVERTISEMENTMikhail FedorovFri, June 26, 2026 at 9:35 PM GMT+2 6 min readGold bullion rounded by istara via PixabayLooking at the stock market charts, investors are probably wondering why gold has been plummeting so hard recently. With the world turbulent, geopolitics stormy, and inflation not fully defeated, one would think the ultimate "safe-haven asset" should be growing or at least standing still right now. Instead, gold is diving, dragging silver, platinum, and palladium down with it.Many may write this move off as investor panic or a strengthening dollar, but I have been watching this for a long time and have come to some very interesting conclusions. Of course, I could be wrong — financial markets are full of surprises. But dry logic and the timing of events point to an elegant mechanism at work that large banks are in no hurry to advertise. To understand what is happening, we need to look behind the scenes of the global banking system.More News from BarchartDollar Slips on Benign US Inflation NewsDollar Weakens on Strength in Stocks and Lower Bond YieldsDollar Weakens with Crude Oil PricesTired of missing midday reversals? The FREE Barchart Brief newsletter keeps you in the know. Sign up now!www.barchart.comHow Gold Became Bank 'Cash'To understand why gold is being sold so aggressively right now, we need to remember why it was bought so actively over the last few years.Any bank operates by simple rules. It takes money from depositors and issues it as loans. But to ensure the bank doesn't go bankrupt during a crisis, regulators force it to maintain a financial "safety cushion" — a reserve requirement. Roughly speaking, out of every $100, banks are obligated to keep $10 in the safest possible place so that, in the event of a panic, they can simply hand it back to the people.After the 2008 financial crisis, a set of new strict safety rules — the so-called Basel III standard — was implemented for banks. Between 2019 and 2023, a crucial nuance was added: Physical gold was essentially equated to cash and government bonds (Tier 1 assets).For banks, this was a godsend. Imagine: You can keep your "safety cushion" in boring paper dollars that are slowly eaten away by inflation, or you can keep it in gold. Gold protects against inflation, appreciates in value on its own, makes the bank's balance sheet look great, and at the same time regulators are completely satisfied. As a result, banks began to vacuum up the market, buying tons of the metal and inflating its price.The Trap of High Interest RatesFast-forward to the present day. With the U.S. economy facing inflation, the Federal Reserve began fighting it. The Fed's primary weapon against inflation is a high key interest rate. As a result of that, loans become expensive, people spend less, and prices stop rising. At least, that is what they usually tell us.Terms and Privacy PolicyEU DSA contactPrivacy & Cookie SettingsMore Info