The Gold Squeeze Has Begun

From the #1 international best-selling book, It Starts With Gold™

The urgent themes explored in this article are expanded in our #1 international best-selling book, It Starts With Gold™, co-authored by Peter J. Merrick and Adrian C. Spitters. In the book, we reveal how modern monetary institutions, using the illusion of safety and control, have transformed sound assets into unstable derivatives and rigged the global financial system in favour of the few. Visit www.ItStartsWithGold.com.

In March 2025, the European Central Bank (ECB) quietly published one of the most revealing articles in modern financial history. For the first time, a major central bank admitted publicly that the gold derivatives market, long treated as fringe theory, is not only real but dangerously unstable.

The ECB confirmed that a gold squeeze is underway. This is not speculation. This is the ECB warning that the paper gold market is cracking under the pressure of physical demand. The implications are seismic.

At the core of this crisis is the difference between physical gold and paper gold.

Physical gold is a tangible asset with no counterparty risk. When you own it outright, especially in a segregated, fully allocated vault, you are insulated from third-party failures.

In contrast, paper gold includes exchange-traded funds (ETFs), futures contracts, certificates, and unallocated pooled accounts. These are derivative representations, not the asset itself. A single ounce of gold may be sold to dozens or even hundreds of investors on paper. As long as few request delivery, the system holds.

But now, that illusion is collapsing.

According to the ECB, over $1 trillion in gold derivatives exist in the Eurozone alone. These positions are heavily concentrated among a few opaque, highly leveraged institutions. A 58 percent increase in notional exposure occurred between November 2024 and March 2025, just as physical delivery requests began to surge.

If even a small fraction of holders demand their gold at once, the system breaks. The metal is not there. That leads to margin calls, delivery failures, and a cascade of defaults. The damage will not be limited to the metals markets. It will spread throughout the financial system.

This echoes the 2008 financial crisis. But this time, it is not subprime mortgages. It is gold and trust itself at the foundation of modern banking.

Compounding the problem is Basel III. These banking regulations force institutions to treat physical gold as a Tier 1 asset, equivalent to cash or sovereign debt.

That means they must hold the actual metal, not paper claims, on their balance sheets. As the July 2025 implementation deadline approaches, major private banks are joining central banks in a race to acquire real bullion.

Over the past three years, central banks purchased over 1,000 tonnes of gold annually. Now, commercial banks are following suit, adding overwhelming demand to an already strained supply chain.

The ECB’s own data shows a dramatic increase in physical delivery requests in 2025. This is not a seasonal trend. It is a structural shift.

Investors, from retail to institutional, have lost confidence in paper claims. Registered account holders are opting for in-kind gold distributions. Sovereign wealth funds, pension plans, and family offices are reclaiming physical assets. Even central banks are moving reserves from vaulting schemes into sovereign custody.

This is not normal market activity. This is a global migration from derivatives to real assets.

The ECB’s warning is about unallocated paper gold, claims not backed by specific bars of metal. These include futures, options, ETFs, and pooled LBMA accounts.

By contrast, vaulted physical gold stored in segregated, allocated accounts is not part of this derivative bubble. It is not re-hypothecated, cross-collateralized, or exposed to systemic risk. It is owned outright and deliverable on demand.

If the paper system fails, holders of vaulted gold will not be caught in the collapse.

Since 2022, central banks have purchased more than 1,000 tonnes of gold annually. Under Basel III, private banks must follow suit. The ECB’s article confirms: “A preference for gold futures contracts to be settled physically” is increasing and “there could be adverse effects on financial stability.”

The paper market is cracking. The scramble for real gold has begun.

The implications go far beyond gold. These derivatives are embedded within the financial system. As the ECB warns: “Margin calls and the unwinding of leveraged positions could lead to liquidity stress among market participants, potentially propagating the shock through the wider financial system.”

If physical gold becomes scarce while paper claims evaporate, gold becomes more than a hedge. It becomes the final measure of value.

If physical demand rises further and delivery failures become widespread, the global system could face its own Fort Knox moment, where the world realizes the gold is not there.

That realization would shatter confidence in fiat currency, paper assets, and the broader system of fractional reserve finance.

This is what It Starts With Gold™ warned about. The foundations of financial control have been digitized, abstracted, and decoupled from real value. The next collapse will not start with real estate or stocks. It begins with gold.

And now, central banks are admitting it.

Expect more headlines about Basel III. Expect major banks to quietly increase their physical holdings. Expect premiums to rise and availability to shrink.

More importantly, expect the paper system to fail. First slowly. Then all at once.

When that failure becomes public, the price of physical gold will decouple from its paper shadow. Today’s $3,357 gold could become $5,000 overnight. By 2026, it could touch $10,000. In a full-scale breakdown of trust, forecasts of $15,000 to $25,000 per ounce are no longer fantasy. These projections are not based on gold changing. They are based on the collapse of trust in everything else. This is not hyperbole. It is what happens when liquidity disappears, faith dies, and wealth seeks refuge in the last uncorrupted asset left standing.

There is still time to act. The vulnerabilities exposed by this squeeze point to a clear solution. Own real gold.

Not paper. Not pooled accounts. Not ETFs.

Gold. In your hand. In your vault. In your plan.

It Starts With Gold™ provides detailed strategies to protect your wealth, not just through bullion, but through income-generating private real estate, diversified alternative investments, and guaranteed insurance solutions.

This is not about speculation. This is about sovereignty.

To find out more, order your own copy of It Starts With Gold™ on Amazon today. CLICK HERE

1. European Central Bank article on gold and financial risk (March 2025)
2. Interview: “Central Banks Admit the DAMNING Truth About Gold” – Man in America (2025)
3. Basel III implementation schedule and Tier 1 asset classification – Bank for International Settlements (2024)
4. It Starts With Gold™, Merrick & Spitters (2025)
5. Gold Goes Full Reserve Asset as Basel III Elevates It to Tier 1 Status – Forbes
6. US Global Investors – Basel III Gold Impact
7. Goldbroker – Basel Rules and Gold Market Fragility
8. Economic Times – Robert Kiyosaki Predicts $25,000 Gold
9. Palisades Gold Radio – Eric Sprott Interview
10. Kitco Forum – Analyst Projections and Price Scenarios
11. Gold Price – May 23, 2025: $3,357.34