The Federal Reserve is losing its grip on long term interest rates, according to senior Goldman Sachs traders who describe the central bank as more passenger than driver. Felix Nikolas Prehn walks through the mechanism: technology companies building AI infrastructure are on track to issue more debt than the US government next year, with borrowing approaching 1.3 trillion dollars. That wave is absorbing global savings, pushing bond yields higher and creating inflation before any productivity gains arrive. Meanwhile, central banks have doubled annual gold purchases to over 1,000 tonnes, absorbing roughly a third of new mine supply and thinning the market available to other buyers. Goldman's metals desk calls the recent gold pullback an elongated pause rather than a top, viewing 4,000 dollars an ounce as a floor. Silver offers larger potential moves in both directions owing to its far thinner investment market. The episode concludes that inaction carries its own considerable risk.

In this episode:
00:00 Goldman traders say the Fed is now a passenger
01:33 Gold desk calls the dip an elongated pause
04:38 AI borrowing set to dwarf US government debt
06:10 The global savings glut era is declared over
08:41 AI spending is inflationary before productivity arrives
09:42 Government bond buybacks called a firecracker in a hurricane
16:48 Central banks doubled gold purchases to over 1000 tonnes
20:24 Silver offers bigger upside but violent drops

Sources mentioned:
Goldman Sachs cross-asset trading desk, https://www.goldmansachs.com
Tony Kim, Goldman Sachs global metals trading
Mark Wilson, Goldman Sachs equity franchise sales

Felix Nikolas Prehn is an economist and former investment banker. He co-founded TradeVision.io and founded Winston Daily and The Prehn Institute. The Prehn Institute gives no financial advice, and neither does this podcast.

Newsletter: Winston Daily, https://winstondaily.com
Research: https://prehninstitute.com
Author site: https://felixprehn.com

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