Is Gold a Good Investment? Paper vs Physical Gold Is at an All-Time Extreme

Gold has been volatile this week, reminding investors that even the world’s oldest safe-haven asset doesn’t move in a straight line. After pushing above $5,000 per ounce, the gold price dipped sharply toward the $4,800 zone, before recovering again.

Today, gold is back trading above $4,900, showing that buyers are still stepping in quickly on weakness.

This pullback has reignited a bigger debate that goes beyond short-term charts: is gold still undervalued in the global system, or is the market already pricing in everything?

Popular financial analyst Alex Mason believes the real story is what’s happening underneath the surface.

And in his view, the disconnect between paper gold and physical gold has reached an all-time extreme.

• The Paper vs Physical Gold Disconnect Is Reaching a Breaking Point
• Why Gold’s Bull Market May Still Be Early
• Gold’s Supply Pressure

The Paper vs Physical Gold Disconnect Is Reaching a Breaking Point

In his latest commentary, Mason argues that the gold market is no longer just about price speculation — it’s about control of real monetary reserves.

His core point is simple: Western markets trade gold mostly through paper exposure, while the East is quietly accumulating the real thing.

Paper gold includes ETFs, futures contracts, and derivatives; instruments that expand demand on paper without requiring physical delivery. Physical gold, on the other hand, is limited, scarce, and increasingly being absorbed by sovereign buyers.

Mason describes this as a “hidden war” between East and West.

He pushes back on the common assumption that China wants gold to explode higher for profit. Instead, he argues China is buying gold for something much deeper: monetary protection.

Gold is being stockpiled as a hedge against:

• sanctions risk
• currency debasement
• reserve weaponization
• global financial instability

In that framework, China doesn’t want gold to spike uncontrollably. A rapid repricing would expose stress in the monetary system too quickly.

That’s why accumulation happens quietly, through official channels, domestic supply absorption, and central bank reserves.

Mason also highlights sustained physical accumulation across emerging markets, with countries like China and Russia steadily pulling supply off the market.

Meanwhile, Western desks continue expanding paper liquidity.

That imbalance matters because paper demand can grow endlessly.

Physical supply cannot.

If delivery pressure rises, paper markets eventually have to resolve the gap, and historically, that resolution comes through higher prices.

Read also: Silver, Gold, and Stock Perps Are Taking Over Hyperliquid as Daily Revenue Hits $10M

Why Gold’s Bull Market May Still Be Early

Mason’s second major argument is that the macro backdrop is becoming too heavy for gold suppression to last much longer.

He points directly at the United States’ balance sheet.

With roughly $38 trillion in debt, the traditional options become limited. Governments can cut spending, raise taxes, inflate away obligations, or reprice assets.

Mason argues gold is the only monetary asset that can be revalued upward without an outright default event.

That’s why discussions around monetary stability are increasingly tied to tolerance of higher gold prices, even if policymakers never say it directly.

At the same time, global incentives are shifting.

Mason notes that there is now little reason for any major sovereign bloc to keep gold capped:

• BRICS nations are rotating away from Treasuries into hard assets
• Europe benefits from asset revaluation to stabilize central bank books
• The U.S. debt burden makes reflation unavoidable over the long run

In this environment, gold becomes less of a trade and more of a structural reset tool.

Gold’s Supply Pressure

Supply pressures also continue tightening.

Mine production is flat, discovery rates are declining, and central banks are absorbing metal directly.

That creates a market where paper exposure can expand indefinitely, but physical availability keeps shrinking.

Mason’s conclusion is blunt: gold cannot be suppressed forever because the system doesn’t allow infinite imbalance.

Eventually, gold reprices to restore confidence.

He also stresses one final point that resonates with many long-term holders: in a world of contracts and counterparty risk, physical ownership matters most.

“If it’s not in your safe,” he explains, “it’s not really yours.” With central banks quietly stockpiling reserves, supply tightening, and the global debt cycle reaching unsustainable levels, gold’s role is changing beyond a simple hedge.

Read also: Gold and Silver Risk Multi-Year Decline as Russia Signals Return to Dollar System