It is heavy, it needs to be stored securely, and moving it across borders or between owners is slow and expensive. In a world that increasingly runs on digital speed, gold has remained stubbornly analogue.

Tokenised gold is changing that. It takes the oldest store of value in human history, and gives it a passport into the digital economy. As more of our everyday devices and systems begin talking to each other and to blockchains directly, tokenised gold may end up being just one small piece of a much larger transformation. To understand why this matters, it helps to break the concept down from the ground up.

As David Tait, CEO of the World Gold Council, put it earlier in 2026, “Gold faces a rapid and pervasive digital transformation.” In financial services, the metal must evolve to keep its place in the system.

At its simplest, tokenised gold is a digital token that represents ownership of a specific amount of physical gold. Each token is typically backed by a fixed quantity, often one gram or one troy ounce, of real gold bullion sitting in a vault somewhere in the world. The token itself lives on a blockchain, the same technology that underpins cryptocurrencies like Bitcoin and Ethereum.

Smart Contracts Explained

The link that connects the digital token to the physical metal is something called a smart contract. A smart contract is essentially a self-executing computer programme stored on a blockchain. It automatically carries out an agreement once certain conditions are met, without needing a bank, broker, or middleman to approve each step.

In the case of tokenised gold, smart contracts manage the rules around minting new tokens, transferring ownership, and redeeming tokens for physical gold. When a company issues new tokens, the smart contract typically requires proof that an equivalent amount of gold has been added to the vault.

When someone wants to redeem their tokens for actual gold bars, the smart contract handles the process of burning, or permanently removing, those tokens from circulation while triggering the physical delivery process.

This automation removes a lot of the friction and human error that traditionally came with gold trading. There is no need to physically inspect a vault every time a trade happens. The smart contract and the blockchain record do that verification work continuously.

Trust You Can Verify

Of course, none of this works without trust in the actual gold sitting in storage. This is where audited vaults come in. Companies that issue tokenised gold typically store their physical reserves in secure, professional-grade vaults, often located in established gold trading hubs.

To maintain credibility, these vaults are regularly checked by independent third-party auditors. These auditors verify that the amount of gold physically stored matches the number of tokens issued. If there are one million tokens in circulation, each representing one gram of gold, the audit confirms there really are one million grams, or one thousand kilograms, sitting in the vault.

Many issuers also allow token holders to view detailed information about the specific gold bars backing their holdings, including serial number, weight, and purity. Some go a step further by publishing real-time, or near real-time, proof of reserves, giving people an ongoing window into whether the digital tokens remain fully backed.

This question of trust sits at the heart of how the wider industry is now thinking about the asset class.

Matthias Tauber, managing director and senior partner at Boston Consulting Group, observed, “The question is no longer whether gold will be digital. It’s how it can participate in modern financial systems without compromising physical integrity.”

How Ownership Actually Works

For an everyday investor, the process of getting involved with tokenised gold is surprisingly straightforward. Most platforms allow users to purchase tokens using either traditional currency or cryptocurrency. Once purchased, the tokens sit in a digital wallet, similar to how you might hold Bitcoin or Ethereum.

From there, the tokens can be used in several ways. They can simply be held as a long-term store of value, much like owning physical gold but without the storage headaches. They can be sent to other people anywhere in the world in minutes, regardless of time zones or banking hours. They can also be sold back to the issuer, or traded on cryptocurrency exchanges for other digital assets or cash.

Interestingly, many tokenised gold products allow holders to redeem their tokens for actual physical gold, provided they meet certain minimum quantity requirements. This means the digital token is not just a representation, it carries a real claim that can be converted back into the tangible asset whenever the holder chooses.

Plugging Into Decentralised Finance

One of the most transformative aspects of tokenised gold is how it connects to the broader world of decentralised finance, often shortened to DeFi. DeFi refers to a growing ecosystem of financial services, including lending, borrowing, and trading, that operate without traditional banks or financial institutions acting as middlemen.

Since tokenised gold exists on a blockchain, it can plug directly into these DeFi platforms. Someone holding tokenised gold could use it as collateral to avail a loan in a digital currency, without ever selling their gold.

They could provide it to a lending pool and earn interest from other users who borrow against it. They could swap it instantly for other digital assets on decentralised exchanges, all without needing approval from a bank.

This idea of gold actively working within financial systems, rather than sitting passively in a vault, is exactly what industry leaders are now pushing toward.

Tait has spoken about infrastructure that would let participants ‘pass gold digitally around the gold ecosystem, as collateral, for the first time’, pointing out that gold has traditionally been viewed as a static, unyielding asset with untapped potential.

This is a genuinely new development in financial history. For the first time, an asset that has represented stability and tradition for millennia can now actively participate in fast-moving, programmable financial systems, all while the underlying physical gold remains safely locked away in a vault.

A World Where Everything Is on Chain

To really appreciate where tokenised gold might be heading, it helps to zoom out and look at a much bigger trend reshaping technology, the Internet of Things, or IoT. IoT refers to the growing network of everyday physical objects, from refrigerators and thermostats to shipping containers and factory machines, that are connected to the internet, and capable of collecting and exchanging data automatically.

Right now, most of this data sits in private company databases, isolated from each other and largely invisible to the public. But a powerful idea is gaining momentum. What if these devices could record their data directly onto a blockchain, creating permanent, verifiable, and shared records that anyone could check?
Imagine a vault holding gold reserves equipped with IoT sensors that continuously measure weight, temperature, humidity, and even motion. Instead of relying solely on periodic human audits, these sensors could feed real-time data straight onto the blockchain, automatically confirming, moment by moment, that the gold backing each token is exactly where it should be. A sudden change in weight could trigger an automatic alert, or even pause trading of the related tokens, all without a single human needing to intervene immediately.

This is part of a much larger shift that many technologists believe is coming, a future where blockchain becomes the invisible infrastructure connecting almost everything. Shipping containers could log their location and condition as they cross oceans, with smart contracts automatically releasing payments once goods are confirmed delivered in good condition.

Solar panels and electric vehicle batteries could trade excess energy with neighbours automatically, with payments settling instantly on a blockchain. Supply chains for food, medicine, and electronics could become fully transparent, with every step from factory to shelf permanently recorded and impossible to fake.
In this kind of world, tokenised gold is not an isolated experiment. It is an early example of a much broader pattern, physical things and real-world data being represented, verified, and exchanged through blockchain technology, often with little or no need for human middlemen. Gold just happens to be one of the first and most natural assets to make this leap, given how closely its value has always depended on questions of authenticity, location, and trust.

Why This Matters for Global Financial System

The importance of tokenised gold extends well beyond convenience for individual investors. On a global scale, it represents a meaningful step toward democratising access to an asset that has historically been difficult for ordinary people to own in meaningful quantities, especially in regions with limited banking infrastructure.

In many parts of the world, buying and securely storing physical gold is simply not practical for the average person. Tokenised gold removes that barrier. Someone with just a smartphone and an internet connection can own a fraction of a gold bar, something that would have been unthinkable a generation ago.
It also offers a potential hedge against currency instability. In countries where local currencies are volatile or where access to stable foreign currencies is restricted, tokenised gold provides an alternative way to preserve value, all while remaining liquid and easily transferable.

From a broader financial systems perspective, tokenised gold represents a bridge between two worlds that have often operated separately, traditional commodity markets and the emerging digital asset economy.

As more real-world assets, from real estate to bonds to commodities, follow gold’s lead and become tokenised, and as IoT devices increasingly feed real-world data onto blockchains, we may be witnessing the early stages of a fundamental shift in how value itself is stored, verified, transferred, and used.

Tokenised gold has taken one of humanity’s oldest and most trusted assets and equipped it with the speed, accessibility, and programmability of modern digital finance. It does not ask people to abandon what gold has always represented, security, permanence, and tangible worth. Instead, it simply gives that value a new way to move through the world.

As physical objects become increasingly connected, and as more of the data and assets that matter to our lives find their way onto blockchains, tokenised gold offers an early glimpse of what this future might look like, one where trust is not just promised by institutions, but continuously demonstrated by the technology itself.

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Spot gold was up 1.3% at USD 4,176.29 per ounce after hitting its highest since June 23. Bullion is held above its 21-day moving average and is up over 2% ⁠for the week. US gold futures for August 2026 delivery gained 1.53% to USD 4,188.80/oz.

Data on July 2 showed that US nonfarm payrolls rose by 57,000 last month. As per Han Tan, chief market analyst at Bybit, the yellow metal’s rally was driven by a sharp slowdown in the hiring activities in the United States in June.

Traders ‌now see about a 54% chance of a ⁠rate increase in September, down from 66% before the data, as per the CME FedWatch tool. As per the market practices, lower interest rates reduce the opportunity cost of holding non-yielding assets like gold.

Weak US jobs data is causing the dollar to fall. As the dollar becomes weaker, gold becomes cheaper for people using other currencies, which, as per the analysts, will likely increase demand for the precious metal. As per the World Gold Council (WGC), central banks added a net 41 metric tonnes of gold to their reserves in May 2026.

“Central banks are still expected to remain ‌a demand pillar for spot prices over the longer term, although ⁠some have been selling their holdings recently to defend currencies,” said Tan.

Talking about the decline in the gold price, the ratio was the steepest since October 2008 in June, as expectations of higher US interest rates and a stronger dollar triggered a sharp sell-off in the precious metal, overshadowing its traditional appeal as a safe-haven asset.

The yellow metal, at its spot prices, fell more than 12% during the month, slipping below the psychologically important USD 4,000-an-ounce level and trading around USD 3,975-USD 3,990 per ounce by month-end. In the process, gold also witnessed its first quarterly loss since 2024.

In June, a stronger dollar made gold more expensive for buyers using other currencies, reducing global demand. At the same time, rising bond yields have diminished the appeal of non-yielding assets like the yellow metal, prompting investors to rotate into interest-bearing investments.

The recent sell-off and the fall in prices have also challenged gold’s reputation as a hedge during periods of geopolitical uncertainty. Although conflict involving Iran initially fueled demand for safe-haven assets, the rally proved short-lived as markets shifted their focus toward inflation risks, monetary tightening, and currency strength.

“The combination of high inflation, elevated interest rate expectations, and a stronger dollar is overwhelming the traditional factors that usually support gold,” market analysts said, noting that geopolitical tensions alone have been insufficient to sustain buying interest.

From now onwards, US economic data (including employment figures), as well as interest rate-related comments from Federal Reserve officials, will be scrutinised by the investors. Any indication that inflation remains persistent could reinforce expectations of additional rate increases, extending pressure on bullion.

Strategists believe gold’s near-term outlook will depend largely on whether real yields begin to ease, the dollar weakens, or the Federal Reserve adopts a less hawkish stance. Until then, analysts expect rallies to remain limited, with bullion likely to consolidate below recent highs after suffering one of its sharpest monthly declines in almost two decades.

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However, investors would like to await further details on the deal, apart from observing the post-ceasefire stability in the Middle East in the coming days.

Spot gold was up 0.3% at USD 4,317.43 per ounce and looked set to extend gains to a fourth straight session. US gold futures for August delivery, on the other hand, dipped 0.3% to USD 4,338.70. Among other commodities, spot silver fell 0.9% to USD 69.42 per ounce, platinum lost 0.3% to USD 1,762.34, and palladium was down 1.1% to USD 1,333.13.

While US President Donald Trump announced the signing of the “preliminary agreement” with the Iranian leadership to end the three-month-long Middle East conflict, details have yet to be made public. Also, as per Washington and Tehran, a permanent truce is yet to be negotiated.

“The peace deal announced over the weekend by President Trump has given a broad range of asset markets a welcome lift—including the precious metals complex. Gold has built on last Thursday’s (June 11) rally and appears well-positioned for further gains, though the next leg higher will largely depend on how this week’s FOMC meeting plays out. The Federal Reserve is widely expected to hold interest rates steady, but investors will be paying close attention to the views of new Fed Chair Kevin Warsh—particularly his stance on inflation. Should Warsh signal a willingness to look past current inflation levels, perhaps framing the peace deal as a disinflationary tailwind, rate-sensitive markets could receive a meaningful secondary boost,” said Nick Cawley, contributing analyst for gold and silver supplier Solomon Global, while talking about the yellow metal’s latest price movements.

“On the technical side, gold has a couple of key hurdles to clear. First, the spot price needs to push decisively above the 50-day simple moving average, currently sitting at USD 4,581/oz. Beyond that, the May 12 lower high at USD 4,773/oz. represents the next significant resistance level. A clean break above both would open the door to a more sustained move higher. With the political background improving, attention now shifts squarely to the Federal Reserve,” Cawley remarked.

The US dollar held near 10-day lows, making greenback-priced bullion cheaper for other currency holders. While the new Fed Chair Kevin ⁠Warsh will be holding his first policy decision-related meeting on Wednesday (June 17), investors predict the interest rate will remain the same.

“Markets are expecting no rate decreases this year. If Warsh signals that at least one cut could be on the table later this year, the dollar should decrease further and we could see another rally in gold. However, if he comes across as ⁠more hawkish on rates, gold could come under some pressure,” said Edward Meir, an analyst at Marex, while interacting with Reuters.

According to the ⁠CME FedWatch tool, traders have scaled back expectations for a Fed rate hike in December 2026 to 57% from last week’s 70% after the conclusion of the preliminary Iran peace deal. Gold is known for losing its appeal when rates are high, as it does not yield interest.

However, investors also need to keep a watch over the latest World Gold Council (WGC) survey, which witnessed a record 45% of the reserve bank managers (up 2 percentage points from a year ago) expecting to increase their own institutions’ gold holdings over the next 12 months.

The majority, 54% of 74 central banks that responded to the WGC’s annual survey, conducted between February 5 and May 19, said their holdings would remain unchanged, while 1% anticipated a decline. These responses came immediately after the Iran War’s outbreak, a phenomenon that triggered a rally in oil prices and drove gold ⁠prices down.

“Central banks remain keen on gold, and the recent price fall has not changed their minds,” said Shaokai Fan, head of the central banks sector at the WGC.

As per the consultancy Metals Focus, while gold demand from central banks will slow down by 15% year-on-year in 2026 in tonnage terms, it will remain above pre-2022 levels, a consistently supportive factor for the market.

As per the WGC, 93% of the survey ‌respondents ⁠reported already holding gold, up from 81% a year ago.

“Among the drivers for gold ownership, a record 90% of respondents cited its performance during times of crisis. The top answers also included a long-term store of value and portfolio diversification. Gold’s role as a geopolitical risk hedge was favored among emerging ⁠market and developing economy respondents (85%),” the study noted further.

Amid a section of the central banks continuing the relocation of their gold reserves, 9% of respondents said they had increased domestic storage in the past 12 months, up from 5% in 2025. Some 10% said ⁠they had diversified their overseas storage locations, up from 2%.

“Within 12 months, 7% plan to increase domestic storage, and 9% plan to diversify overseas locations,” said the WGC study, which also showed that the Bank of England (BoE) remained the most popular vaulting location, followed by domestic storage and the Bank for International Settlements (BIS).

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“The month saw a staggering USD 12 billion exit, marking the largest monthly outflow on record. Despite the turbulence, the market managed to secure its seventh consecutive quarter of net inflows, with total assets under management reaching USD 606 billion,” the report stated.

In contrast to North America’s sell-off, Asian markets experienced unprecedented inflows. In Q1 2026, the region witnessed its strongest influx ever, adding USD 14 billion, driven mainly by China’s safe-haven demand amid declining local equities and a weakening currency. Indian investors came second, bringing their quarterly total to USD 3 billion. In March, there was a significant USD 2 billion addition for Asian gold ETFs, making the quarter the most robust one on record.

The World Gold Council report also cites a combination of risk-off conditions in North America, including investors’ tendency to liquidate profitable gold positions, as the reason for the ETF outflows.

“The stronger US dollar and stagnant interest rate projections through September 2027 further impacted demand. Notably, prolonged inflow periods like this were historically only seen during major financial crises, followed by sharp market reversals,” the report remarked.

North America’s monumental USD 13 billion outflow in March was a significant event, ending a nine-month streak of ETF inflows and making it the sole region to witness net outflows in Q1. European funds, on the other hand, experienced modest outflows of USD 154 million, trimming the region’s quarterly inflow to a mere USD 27 million. The continent’s sales, driven by Germany, Italy, and France, closely correlated with price shifts.

While the European Central Bank’s (ECB) hawkish tone and increasing regional yields augmented local investors’ opportunity costs, euro depreciation intensified Swiss losses.

However, the overall global market liquidity remained solid; March’s daily trading volumes averaged USD 525 billion, a 11% rise from February. Over-the-counter transactions soared 13% to USD 272 billion daily, outpacing the 2025 average.

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While spot gold rose 1.1% to USD 4,559.46 per ounce, hitting its highest since March 20, US gold futures for April delivery gained 0.7% to USD 4,588. However, it was still not enough to offset the bullion’s more than 13% decline in March, putting it on track for its steepest ⁠fall since October 2008.

“You could probably describe the recovery we’re seeing in gold as something of a dead cat bounce, which is to say not much of a bounce at all. If indeed (US President) Donald ⁠Trump can exit himself from what could become a very protracted event, then we could see oil and the dollar coming off, which would be gold positive. But we’re ‌not in that position yet,” independent ‌analyst Ross Norman told Reuters.

The dollar, on the other hand, headed for its biggest monthly gain since July 2025, making greenback-priced bullion more expensive. The month-long Middle East war has already sent oil prices surging, raising the risk of global recession, as the global energy trade through the vital Strait of Hormuz remains disrupted, with no conflict resolution on the horizon so far.

Discussing gold, the go-to hedge against inflation and geopolitical risks, it has fallen more than 14% since the war began on February 28, as rising expectations of a hawkish monetary policy outlook weighed on the non-yielding metal.

According to CME Group’s FedWatch Tool, money market participants ‌have completely priced out any chance of a Federal Reserve interest rate cut in 2026 from about two cuts expected before the conflict.

Goldman Sachs, however, expects gold prices to reach USD 5,400 per troy ounce by the end of 2026, as the financial giant still sees two US interest-rate cuts this year.

Meanwhile, spot silver rose 4.2% to USD 72.90 per ounce, while spot platinum ‌gained 0.9% to USD 1,916.70, and palladium went up 2.8% at USD 1,445.71.

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“In recent months, central banks from Guatemala, Indonesia and Malaysia have all bought gold, either following a long hiatus or for the first time ever,” said Shaokai Fan, global head of world banks for the World ‌Gold Council.

“A phenomenon we’ve been seeing in the last few months is new central banks, or ⁠central banks that have been inactive or absent from the gold market for a long time, entering the gold market. I think that might be a trend that will continue into 2026,” the official commented.

“Some central banks are also buying gold from ‌small-scale domestic producers to ⁠support the local ⁠industry and to stop those gold sales going to bad actors,” Fan noted without elaborating on the details.

In March 2026, gold prices had plunged by more than USD 1,000 per troy ‌ounce to last trade around USD 4,340, and talking about this, Fan told Reuters, “Historical trends suggest ⁠it’s partly due to margin call-related selling.”

“The record peak for gold was just shy of USD 5,600 in late January. During a gold selloff in October, central banks stocked up on the metal, but it’s too early to see if the same phenomenon has occurred with this month’s rout. Central bank demand for gold may decline because higher prices not only deter new buying but also ‌increase the weight of existing gold holdings relative to total reserves,” Fan said.

The World ‌Gold Council, as per its January estimates, expects record gold prices to slow purchases by central banks to 850 metric tons in 2026 from 863 tons in 2025, even though their buying remains elevated when compared to the pre-2022 level. The same buying process ⁠accounted for some 17% of total demand in 2025.

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Bitcoin (BTC) saw a brutal sell-off in early 2026 as it plunged from a peak of $126,000 to below $63,000. This has led people to try deciphering the market realities, as the crash exposed the cracks in the mythology of Bitcoin as an ever-booming asset.

Most analysts believe it was a new financial era. The digital asset broke the six-figure threshold in late 2024, and by early 2025, it was seen as the most coveted asset in this new financial landscape. The spot exchange-traded funds (ETFs) brought Wall Street money into the crypto market, and the Trump administration, which was initially hostile to cryptocurrencies, became incredibly friendly.

Of course, there was also the halving cycle. Bitcoin’s four-yearly supply shock was as punctual as always. By October 2025, the price touched $126,000, and the faithful acolytes and crypto billionaires were already mapping $200,000 and beyond.

Then the bottom fell out. Prices have been slashed in half from their October peak, with the price plunging way below the $63,000 mark in February 2026 for a staggering fall of around 50% in just four months. This crash has caused significant panic in the market as billions of dollars disappeared over a handful of sessions, and many leveraged traders were flushed out. Furthermore, the Spot ETF, which was intended to legitimise the cryptocurrency as a stable asset, instead forced sellers to mechanically dump coins in a market that was already collapsing.

Yes, it was a bloody season, even by crypto’s permissive standards, but this article is not about how bad it was, but what it reveals. Is crypto the new digital gold, or is it just a speculative asset with institutional backing?

Modern crypto crash

Bitcoin has come a long way from being one of the riskiest assets in the world. It has slowly garnered a reputation as something that will keep increasing in value.

To understand this sell-off and why it hit so hard, we need to look at how the market was built over the last two years and examine the structures that drove the last rally and its inevitable collapse.

Firstly, let’s examine leverage. The crypto derivatives market is a paradise for aggressive traders, and the latest cycle drew hordes of them. When the digital currency eroded from its $80,000 to $90,000 range in early February, the markets saw almost $279 million in leveraged positions liquidated within a single day. Almost $170 million of that was concentrated in long positions.

Just a few days later, within a single hour, $80 million in liquidations were produced, and $48 million of it was Bitcoin alone.

While the data is not record-breaking or particularly alarming in isolation, it remains significant due to the feedback loops and self-fulfilling prophecies it creates.

Academic research specifically examining Bitcoin futures markets at BitMEX revealed that daily forced liquidations average approximately 3.5% of open interest for long positions, largely because many traders utilise effective leverage levels of 60x or more. In an environment like that, even a moderate price decline leads to those margin calls. Exchanges then dump collateral to cover those calls, and the prices dwindle further, liquidating more positions. This cascade is fast, mechanical, and transforms something that is otherwise manageable into a rout.

But we can’t blame everything on leverage. It was just an amplifier and not what started this domino effect. The foundational reasons for this crash were a structural shift in the behaviour of a new and yet consequential set of players. Namely, the ETF complex.

New buyers become sellers

Experts say that the US spot Bitcoin ETF launch was a watershed moment. It allowed retail and institutional investors to access the digital currency through a regulated, familiar vehicle without managing balances or private keys for the first time.

Within the first two trading days of 2026, $1.2 billion in net inflows were recorded on US ETFs. It is an extraordinary pace, which reassured investors that the historic run of 2024 and 2025 probably might not end anytime soon.

Then the rhythm broke. The shockwaves emerged with ETF flows flipping negative by January 6. Research by Binance reported that, in 2026, demand had turned into a net negative, with year-to-date flows of roughly minus 4,595 BTC. This meant that the funds, on balance, were being sold into the market rather than bought.

A separate analysis claimed US spot Bitcoin ETFs recorded $4.5 billion in net outflows in 2026, which was the longest sustained outflow streak since early 2025.

It’s different this time around because in previous cycles, after every halving, retail enthusiasm fades, and the tourist capital is usually invested in offshore derivatives or speculative altcoins. This is referred to as altseason.

Most traders who make big money during the sell-off re-divert that wealth into up-and-coming coins. But this season, there was no altseason rally. The cryptocurrency kept booming indefinitely. There was even talk that an altcoin season might not happen again.

ETFs have changed the equation. When investors redeem ETF shares, the fund must sell underlying altcoins to meet these demands. It is programmed that way and is non-discretionary. It happens in large blocks and hits a market which, despite its growth, has relatively thin spot liquidity compared to traditional assets.

The ETF paradox is visible. The institutionalisation of BTC was supposed to stabilise the asset and broaden the ownership base. Instead, it created a new system where retail fear can rapidly and efficiently transmit into largescale spot selling. This legitimisation was celebrated by bulls, yet that same mechanism has handed a button for self-annihilation to the market.

The macro context

And to top it all off, the macroeconomy couldn’t be more hostile to Bitcoin. The wars in Europe, Israel and possible geopolitical crises in Taiwan and Iran, along with the tariff wars, have killed the appetite of central banks around the world. Markets have been tightening and de-risking globally.

The same fears that cause volatility in traditional markets are more profound now. Gold has surged above $5,500 per ounce, serving as a safe haven for assets as it has for thousands of years. Meanwhile, the digital asset (which was supposed to be a storehouse of wealth and was dubbed the ‘digital gold’) has fallen roughly 20% year-todate as of early February. It is a development that is impossible to miss.

The whole idea of the blockchain asset was ‘gold but better’ because someone could steal your gold from your house, banks might collapse, and gold is harder to transport from one country to another. It also had all the good properties of gold in the sense that no one could take it from you. It was in a hidden, encrypted wallet that the government had no access to, and the prices always kept booming.

It was considered a reliable and safe asset, but the global crisis has proven that the digital currency might not be as reliable an asset as people thought it was, and is definitely not a dependable replacement for gold.

The policies that have been baked in place by governments around the world are not conducive either. Since COVID-19, near-zero rates, and quantitative easing, banks have made a coordinated retreat from their usual yet extraordinary monetary accommodation.

The US Federal Reserve drained $2.8 trillion from its balance sheet between the pandemic peak and late 2025, only taking a slight U-turn in December. The European Central Bank was no different and shed $3 trillion since mid-2022. Even the Bank of Japan (which was a perennial holdout historically) has embraced inflation and is shrinking its own balance sheets.

It’s not all doom and gloom. Some rate cuts are set to return in 2026. However, there has been a generational shift. Real yields are positive, and even cash offers dependable returns. The dollar is firm despite day-to-day volatility. Bitcoin, which had thrived in the era of free money, unprofitable growth companies, and speculative tech, is a natural casualty of this change in philosophy.

The cryptocurrency is correlated with the Nasdaq and other high-beta risk assets (assets with high volatility relative to the market). It is telling of what the asset has evolved into, which is a macro trading instrument.

It only rallies when there is abundant liquidity and a great appetite for risk, and is dumped the moment traders have cold feet.

The digital gold question

Now let’s get to the heart of the matter. In a world of uncertainty, war, fatigue, plague, and zero-sum games, gold seems like the most reliable asset to hold on to. Everyone wants it, and no culture would deny it.

The digital gold thesis is underpinned by two important claims, the first being that Bitcoin acts as a store of value that builds and retains purchasing power across full cycles despite its inherent volatility. And the second claim suggests that during a crisis, the cryptocurrency behaves like gold, and serves as an effective hedge against both monetary debasement and geopolitical uncertainty.

“Bitcoin is sensitive to liquidity. In phases when capital becomes cautious, BTC often behaves not like a protective shield, but like a real risk asset,” according to the views of analysts on the website of Aequifin, a Germany-based fintech platform for litigation funding.

There are no arguments about the first claim. The digital asset has proven its resilience across years, seeing highs and lows but coming back up every halving cycle. Previously, it had lost 70% to 80% of its value, yet it has soared to new heights every time. Long-term holders have been rewarded in a way that no other asset has rewarded its holders.

Research on post-halving dynamics has confirmed that speculative cycle and supply shock patterns are broadly intact.

It is when it comes to the second claim (the idea of the cryptocurrency as a go-to asset during a crisis) that things get murky.

Research across multiple methodologies, including VAR models, GARCH analysis, and multi-factor frameworks, has concluded that BTC cannot function as a safe haven akin to gold. Studies examining correlations between the digital currency, gold, oil, and equities indicate that Bitcoin is the second riskiest asset in the sample, and significantly more volatile than gold, making it more comparable to crude oil or leveraged growth stocks than to defensive instruments.

Furthermore, Quantile VAR spillover methods reveal that under normal and bullish conditions, BTC acts as a net transmitter of risk to other assets, while in times of crisis, it amplifies shocks rather than absorbing them, such as gold and treasuries.

The crash of 2026 exposes an uncomfortable reality. The conditions that ought to have been quite attractive, like geopolitical risk, currency uncertainty, and distrust of institutional finance, have not made it soar to new heights. Instead, there has been a 50% depreciation. Gold, however, has reached new heights. It’s not that Bitcoin didn’t rally; it crashed.

Nations that bet big

No one has bet bigger on the digital currency than El Salvador and the Central African Republic. Two nations, continents apart, that granted the blockchain asset full legal tender status. Both nations, as a consequence, have struggled considerably.

El Salvador decided to gamble in September 2021, presenting itself as a visionary. It sounded like a small, dollarised economy was going to leapfrog traditional financial infrastructure to reduce remittance costs and attract crypto- tourists, much like Dubai.

It was going to be a financial laboratory, but the experiment went awry. Research has found that BTC was only used for 1.9% of transactions in the first year. A lot of Salvadorans downloaded the government’s Chivo wallet to collect a one-time $30 incentive, but didn’t open it again.

There were many problems, including technical friction, price volatility, and patchy internet access; consequently, many ordinary citizens saw it as absolutely impractical. However, tourism got a boost, with a rise of 22% in 2024. The digital asset was one of the primary attractions for international visitors, but the macro picture was collapsing. The IMF flagged the legal tender arrangement, citing risks to financial stability, consumer risk, and fiscal integrity.

“El Salvador’s Bitcoin experiment has failed. Public distrust, low adoption, technological problems, and volatility are leading to a rollback of the legal tender policy in 2025,” tweeted Ricardo V. Lago, an independent commentator on Latin American economics, on X in November 2025.

In early 2025, El Salvador sought a $1.4 billion loan from the IMF. One of the conditions laid down by the IMF for loan eligibility was the demotion of Bitcoin and the revocation of its legal tender status. El Salvador received the loan and revoked the legal tender status of the crypto asset. Now, merchants aren’t required to accept the digital currency. The government still has its digital currency holdings, but the experiment has failed. El Salvador is now just another crypto-friendly jurisdiction, not a Bitcoin economy.

The Central African Republic had an even worse crypto journey. CAR adopted the digital asset as legal tender in April 2022, despite having a population where only 11%-14% have internet access.

The government launched a partially Bitcoin-backed national cryptocurrency called Sango Coin, and promised foreign investors citizenship, land rights, and access to natural resources in exchange for token purchases. However, the country’s constitutional court pushed back against selling citizenship via crypto, calling it unconstitutional.

Sango Coin made less than €2 million, which is far short of its target, and collapsed. Researchers who investigated the experiment described the programme as opaque, poorly designed, and constructed for the benefit of speculators and politically connected intermediaries rather than ordinary CAR citizens.

Global Initiative Against Transnational Organised Crime (GI-TOC) stated in its report that the opaque nature of the schemes benefited a small circle of insiders and transnational criminal organisations looking for ways to launder money.

“The CAR regime is effectively trading away the country’s sovereignty at the expense of the wider population,” states the report from the Switzerland-based network of some 600 experts tracking international organised crime.

Both these countries were brave, considering that their economies are on the weaker end of the spectrum. Their experiment might have paid dividends if they had sold the assets during historic highs, but these are nations, and not speculating investors or ‘crypto bros’.

For El Salvador, Bitcoin’s volatility created fiscal and reputational risks that brought about a mild U-turn in policy. In CAR, it added more tension and instability to an already fragile economy.

Liquidity shock or structural red flag?

This crash can be seen in two ways, with the simple reading being that it represents the usual cyclical fluctuations of a speculative asset. Bitcoin has encountered this situation many times before, such as the 2018 crash, where prices fell below 80% and caused significant panic, as well as the 2022 crash, which was almost as severe. The pattern remains consistent every time.

“BTC’s well-known four-year cycle may no longer define its long-term behaviour,” Cathie Wood, CEO of ARK Invest, stated in a Fox Business interview in December 2025. Yet, she acknowledged past cycles featured ‘sharp crashes, often 75% to 90%’, now steadied by institutions.

There is euphoria followed by leverage, a macro or idiosyncratic shock, a cascade of forced selling, capitulation, and an eventual recovery to new heights. From this perspective, the recent violent crash is considered routine, and long-term holders who are habituated to these cycles will likely continue to hold while awaiting new horizons.

The second way to look at it is through the structural lens. What has changed since 2018 and 2022?

The major change is that there are new players in the market. First, ETFs now represent a major share of institutional BTC exposure. Additionally, derivative markets are deeper and more interconnected, and leverage in the system is larger in absolute dollar terms, even if the percentage of open interest remains similar.

The digital asset’s price is now heavily conditioned by the same liquidity plumbing that governs equity markets, including ETF flows, repo conditions, and prime brokerage leverage.

It is no longer bound to slow-moving fundamentals like on-chain adoption or long-term holder accumulation. If you look at it like that, the decentralised financial asset is more like a leveraged Nasdaq constituent than a traditional monetary asset that is separate from the financial system. This may not be permanent. Markets can deepen, ownership will broaden, and volatility could decline, which may shift all these correlations in the future. But, as of now, empirically, we understand that BTC isn’t gold.

So the practical takeaway for investors is that the cryptocurrency isn’t a safe haven or a hedge, but a high-beta, liquidity-sensitive position. It’s more like a tech asset than a gold bar.

It still might boom and reach new all-time highs, but it isn’t an asset that’s stable enough to bet on when the world around you is burning down.

For governments and policymakers, the digital currency narrative might be appealing, but lessons from CAR and El Salvador are humbling. The volatility of BTC is treated as a feature of its immaturity, but it is not dependable enough for long-term public policy. Small economies with very limited fiscal space to operate cannot absorb a 50% drawdown. When the banks come knocking, arithmetic prevails over ideology.

It is not to say the digital currency isn’t appealing. It still is, just as it was 10 years ago. There are several factors that remain remarkable, including its supply constraint, an ongoing adoption curve, and a consistent history of full cycles.

But the 2026 crash has an important lesson to teach us. Cryptocurrency as an asset class has not matured like gold. We are, without a doubt, in an early and volatile chapter of the Bitcoin story.

The post Bitcoin crash shatters digital gold myth appeared first on International Finance.

In 2026, the real question is not whether the dollar dominates; it obviously does. The real question is whether governments are preparing for a future where they rely on it, just a bit less. A shift, yes. A revolution? Not really.

According to Bidisha Bhattacharya, economist and columnist at ThePrint, what we are seeing is not some financial revolution. It is much slower than that. Almost cautious.

“De-dollarisation is real, but it is evolutionary rather than revolutionary. The US dollar continues to account for roughly 60% of global foreign exchange reserves, down from over 70% in the early 2000s. That decline reflects diversification at the margins, not displacement at the core,” Bhattacharya told International Finance.

The fundamentals still favour the dollar – deep financial markets, extremely liquid US Treasury bonds, strong institutional trust, and powerful network effects. The more people use the dollar, the harder it becomes to replace.

“Currency hierarchies do not flip suddenly. They evolve, slowly,” she said.

The world is not abandoning the dollar; it is just becoming less dependent on it.

The gold rush — again

If there is one clear signal of this caution, it is gold. Central banks have been buying massive amounts of gold, levels not seen in decades. Annual purchases have exceeded 1,000 tonnes in recent years. This is not about returning to the gold standard or romanticising the past. It is about protection.

“Gold accumulation has become strategically significant. This is less about replacing the dollar, and more about hedging geopolitical and sanctions risk. Gold carries no counterparty risk and functions as a balance-sheet stabiliser in a fragmented global order,” Bhattacharya said.

However, markets play a role too. Mike McGlone of Bloomberg Intelligence argues that central bank demand has been pushing prices higher.

“Central banks purchased about 1,000 tonnes annually in 2022, 2023 and 2024, roughly double the previous decade’s average,” McGlone told International Finance, pointing to geopolitical tensions, including Russia’s invasion of Ukraine, as a key driver.

Yet, McGlone suggests, markets may be overheating. Gold could approach major peaks around 2026, similar to historic highs seen in 1980 and 2011. Some reserve diversification, he says, may reflect in rising gold prices rather than a fundamental move away from the dollar.

He added that most of the statistics on gold outpacing dollar reserves are due to the rapid rise in gold prices.

“Demand is notably driven by geopolitics rather than inflation concerns,” he said, suggesting easing global tensions could weaken momentum. So yes, gold is rising. But it is not replacing the dollar.

Sanctions, control, and financial vulnerability

Politics also plays a big role. Maybe more than markets.

Elnara Omarova, who works on BRICS-related policy issues, says many governments are mainly concerned about control, or the lack of it.

“The key issue is access. When central bank reserves can be frozen, or access to dollar clearing becomes politically contingent, governments start reassessing how much exposure they are comfortable carrying. Diversification then becomes less about ideology and more about insurance,” Omarova told International Finance.

This has taken several forms: larger gold reserves, more holdings in non-dollar currencies, and bilateral trade settled in local currencies. And, it has been especially seen in energy markets. But these changes remain limited. The dollar still wins on liquidity, convertibility, and market depth.

“Diversification is happening, but it is incremental,” Omarova said, describing it as risk management in a more fragmented geopolitical environment rather than an abrupt shift away from the dollar. Omarova calls it a recalibration, not a rupture.

The BRICS Debate: More noise than disruption

Much of the public discussion focuses on BRICS, and whether the group could reshape global finance. Analysts urge caution.

The influence of BRICS comes mostly from coordination, encouraging trade in national currencies, experimenting with alternative financing mechanisms, and building regional frameworks. It signals exploration, not replacement.

Lawrence Ngorand of Busara Advisors sees BRICS as pushing the world toward a more multi-polar financial system.

“The BRICS play a catalytic role, accelerating the transition toward a more multi-polar financial architecture,” Ngorand told International Finance.

Their role lies in building alternative infrastructure and gradually shifting expectations. But structural problems remain. There is no widely trusted BRICS reserve currency. Institutional cohesion varies. Therefore, the shift is evolutionary. It is slow, uneven, and incomplete.

Global trade moves beyond the dollar

This may be the toughest question. Commodity markets still revolve around dollar pricing, largely because the liquidity, benchmarks, and risk-management systems behind them are already deeply built around it.

Omarova suggests bilateral trade settlement could diversify, especially among politically aligned countries. But changing global pricing norms would require deep financial markets, credible alternatives, and global participation. That is a very high barrier.

Ngorand agrees that the dollar’s dominance is not just about politics; it is structural power: capital markets, institutional trust, and global network effects.

Regional diversification is happening, particularly in energy trade and infrastructure financing. But full displacement? Unlikely.

“The most likely outcome is not the replacement of the dollar, but the emergence of a more fragmented system where multiple currencies co-exist,” Ngorand said.

When gold stops being a safe haven

Yet the gold story is also becoming more complicated. For years, gold has been treated almost instinctively as the ultimate reserve hedge. No counterparty risk, no dependence on another country’s financial system, and no sanctions exposure. In a fragmented geopolitical world, that logic sounds almost irresistible. But, not everyone is convinced the current gold surge reflects long-term stability.

According to Mike McGlone, gold’s behaviour in markets has started looking less like a traditional store of value and more like a volatile financial asset.

“Gold has shifted toward a speculative asset from a store of value,” McGlone told International Finance, noting that its 180-day volatility has surged to about 2.4 times that of the S&P 500, the highest relative level in two decades. That is not what investors typically expect from a stability anchor.

In fact, McGlone suggests that in many financial stress scenarios, gold might not behave the way policymakers hope. Instead of rising as a stabiliser, it could actually fall when measured in dollar terms.

“In most scenarios, gold declines in USD terms,” he said.

That observation complicates the narrative that central banks are simply replacing dollar reserves with bullion. In reality, gold still trades in a dollar-dominated financial ecosystem. Its pricing, liquidity, and global trading infrastructure remain deeply tied to the very system some countries are trying to hedge against.

So, the question becomes less about whether gold can hedge geopolitical risk and more about whether it can truly function as a substitute for dollar liquidity during a crisis. So far, the answer remains uncertain.

The signalling game of ‘central bank gold’

There is another dimension to the gold story: signalling. Central banks do not build reserves only for their own balance sheets. Sometimes, what they hold also sends a signal outward to markets, to investors, to anyone watching closely.

For emerging economies in particular, the mix of reserves can quietly influence how strong or stable a country looks from the outside.

Some analysts say the recent gold buying could partly be about that, projecting resilience in a world where capital can move very quickly.

Still, McGlone is not entirely convinced that signalling explains everything.

When asked whether emerging economies might be building gold reserves partly to reassure international investors, his answer was simple: it is not entirely clear.

“I don’t know,” he said.

However, what he does emphasise is the geopolitical context that triggered the surge in demand.

Russia’s invasion of Ukraine and the subsequent freezing of foreign reserves forced policymakers everywhere to rethink financial vulnerability. The episode highlighted how even large sovereign reserves could suddenly become inaccessible under sanctions. That shock pushed many countries toward alternative assets, including gold.

But geopolitical dynamics are constantly evolving. And in McGlone’s view, the political drivers behind the gold rally may already be fading.

“The geopolitical bid is diminishing,” he said, pointing to shifting political developments in countries often aligned against US influence, including changes in Syria and evolving political pressures in Venezuela, Iran, and Cuba.

If the geopolitical momentum behind gold weakens, the rally could slow as well. Which raises an uncomfortable possibility for central banks: they may have increased their gold exposure precisely when the market was reaching peak enthusiasm.

When reserve diversification goes too far

Gold accumulation has been dramatic. In some ways, it is historically dramatic. But there is also a point where diversification strategies begin to face diminishing returns. For McGlone, that point may already have been reached.

He argues that gold prices have stretched far beyond their historical norms, reaching the largest premium relative to their 60-month moving average ever recorded, and also hitting unprecedented levels relative to the broader Bloomberg Commodity Spot Index.

In other words, markets may have already priced in much of the geopolitical risk. Gold has seen this kind of moment before.

The last time prices became this detached from historical norms was around 1980. That peak held for nearly three decades before being surpassed again during the 2000s commodity boom.

History, McGlone suggests, does not rule out a similar pattern repeating itself. Gold may simply have gone up too much.

“It faces the curse of going up too much,” he said, suggesting the market could be approaching a long-term peak like earlier historical cycles.

If that happens, central banks could find themselves holding larger gold positions at precisely the moment when prices begin stabilising or retreating. This would not invalidate diversification strategies, but it might reduce their immediate financial benefits.

What could push gold even further?

History shows that major geopolitical events can dramatically reshape reserve strategies. Russia’s invasion of Ukraine already triggered one such shift.

That event accelerated discussions about sanctions exposure, financial sovereignty, and alternative reserve assets. But what could push gold even further into the centre of global reserve strategy?

McGlone believes the catalyst would have to be similarly dramatic.

Russia’s invasion created the current surge. Replicating that shock would require a comparable geopolitical rupture. And, for now, he believes the gold momentum may already be reaching its limit.

“The risk is that the bid for gold has reached its apex,” he said.

Inside BRICS: Between unity and rivalry

If gold represents one hedge against the dollar system, BRICS represents another kind of experiment altogether. But even within the BRICS grouping, the financial dynamics are more complicated than they appear from the outside.

According to Lawrence Ngorand, China plays an unmistakably central role in shaping many of the bloc’s financial initiatives.

“China is the central gravitational force within BRICS financial initiatives,” Ngorand told International Finance. That influence stems from simple economics.

China is the largest economy in the group, the biggest trading partner for most other members, and the only one with a fully developed cross-border payments infrastructure capable of supporting large-scale alternative settlement systems.

As a result, efforts to expand local-currency trade often gravitate naturally toward the Chinese renminbi. But that influence comes with political limits.

India, Brazil, and several other BRICS members remain cautious about allowing any single currency to dominate the bloc’s financial architecture. Concerns about dependency and geopolitical balance remain strong, which is why many BRICS initiatives are carefully framed as multi-polar rather than renminbi-centric.

China brings the scale and liquidity, but the set-up of the system still tries to make sure each member keeps the sense that its own financial sovereignty remains intact.

Is a unified ‘BRICS currency’ difficult?

Even setting politics aside, BRICS financial integration runs into a simpler reality. The member economies are very different from each other.

China maintains a tightly managed capital account. India operates with partial controls. Brazil and South Africa run fairly open financial systems compared with some of the others. Russia’s financial system has been reshaped by sanctions and partial isolation. These differences complicate coordination.

Exchange-rate regimes vary. Inflation dynamics differ. Fiscal policy frameworks are not aligned. Even trade structures diverge significantly.

China’s economy is manufacturing-driven. Several other BRICS members depend heavily on commodities. Others rely more on services. These asymmetries make deeper monetary integration extremely difficult.

According to Ngorand, meaningful integration would require convergence across multiple dimensions: inflation targeting frameworks, exchange-rate policy co-ordination, reserve pooling mechanisms, and credible lender-of-last-resort structures. None of those currently exist.

“The bloc lacks the institutional cohesion that underpinned the euro project,” Ngorand said.

Commodity and currency power

Still, one area where BRICS expansion could make a difference is commodities. The inclusion of major commodity exporters within the group has strengthened the theoretical foundation for alternative trade settlement systems.

Countries like Saudi Arabia, Brazil, and Russia sit at the centre of global energy and resource flows. And commodities anchor a significant portion of global trade. If even a small share of these transactions began shifting toward non-dollar settlement, new liquidity corridors could gradually emerge. That possibility matters.

“If even a modest share of oil or critical mineral trade shifts to local currencies, it creates liquidity pools and hedging demand outside the dollar system,” Ngorand said.

However, commodity power alone does not automatically translate into monetary dominance. Even if some commodities start trading in other currencies, the money does not always stay there. In many cases, it quietly circles back to dollar assets anyway.

Take oil revenues. No matter what currency the trade begins with, a large share often ends up parked in United States Treasuries. So, commodities might open alternative payment routes, but that alone does not really dismantle the dollar system. For that, a deeper financial infrastructure would be required.

The shock that could change everything

Ultimately, the speed of any monetary transition depends on shocks. Gradual diversification can go on for years, even decades, without shaking the foundations of global finance. Systems like this rarely change overnight. But, history shows that faster shifts usually come after disruption.

Ngorand suggests that a real acceleration in de-dollarisation would likely require confidence to crack across several pillars of the current financial system at the same time. That could include large-scale sanctions affecting multiple mid-sized economies, a major disruption to global payment networks, such as SWIFT, or a severe dollar liquidity crisis.

Another possibility would be sustained fiscal instability in the United States that undermines confidence in Treasury markets, the backbone of global reserve management. In the absence of such shocks, inertia favours continuity.

“Reserve currency transitions historically occur over decades, not years,” Ngorand said. Which means the dollar system may evolve, diversify, and fragment at the edges without collapsing at the centre, at least for now.

Not the end, just an adjustment

What emerges from all this is not a collapse. It is an adjustment. Central banks are hedging. Governments are managing risk. The world feels more uncertain, thanks to geopolitical, economic, financial, and reserve strategies that reflect that anxiety. The system is becoming more hedged, more political, and slightly more multipolar.

Bhattacharya summed it up thus: “We are not witnessing the end of dollar dominance, but rather the end of unquestioned dollar comfort.”

The dollar remains at the centre. Just no longer alone in commanding unquestioned trust.

The post Sanctions or war, the dollar always wins appeared first on International Finance.

The report provides an exhaustive analysis of the drivers behind this “sovereign pivot.” It argues that the return to gold is a rational response to a converging trifecta of systemic pressures. Fiscal Dominance in the United States, where unmanageable debt loads have constrained monetary policy and eroded the dollar’s store-of-value proposition. Geopolitical Fragmentation, exemplified by the weaponisation of the financial system and acute crises such as the 2026 Greenland diplomatic standoff. And Technological Bifurcation, where new payment rails like Project mBridge are enabling a post-dollar trade architecture that increasingly utilises gold as a neutral settlement asset.

Drawing on data from 2025, the analysis details the specific strategies employed by key institutional actors, ranging from the “stealth accumulation” of the People’s Bank of China and the logistical feats of the Reserve Bank of India’s repatriation programme, to the defensive posturing of European central banks, such as the National Bank of Poland. The evidence suggests that we are witnessing the end of the “return on capital” era for reserve managers and the beginning of the “return of capital” era, where the primary objective is immunity from seizure, sanctions, and debasement.

The age of fiscal dominance

To understand why central banks are shifting to gold with such urgency, one must first dissect the deterioration of the fiscal landscape in the United States. The traditional inverse correlation between gold and real interest rates has broken down, replaced by a correlation with US fiscal instability. We have entered the age of “fiscal dominance,” a regime where the central bank’s primary function shifts from inflation targeting to sovereign solvency assurance.

By late 2025, the United States’ gross national debt surpassed $38 trillion, a milestone that carries grave implications for the global reserve system. For the first time since the demobilisation following World War II, debt held by the public has reached approximately 100% of Gross Domestic Product (GDP).

However, unlike the 1940s, this accumulation is not the result of a temporary existential conflict but the product of structural deficits that show no sign of abating.

The most critical metric driving central bank anxiety is the cost of servicing this debt. In fiscal year 2025, net interest payments on the federal debt exploded to $970 billion, nearly tripling the $345 billion paid just five years prior in 2020. By early 2026, the annualised run rate for interest payments breached $1.1 trillion, surpassing the entire US national defence budget.

The inversion where a superpower spends more on past consumption than on future security signals a potential “Minsky Moment” for US Treasury securities. Nearly one-fourth of these interest payments flow to foreign investors, including strategic rivals like China, effectively transferring wealth abroad to service domestic profligacy. Central bank reserve managers, tasked with preserving national wealth, are increasingly viewing US Treasuries not as risk-free assets, but as certificates of confiscation via inflation.

The concept of fiscal dominance posits that when government debt reaches unsustainable levels, the central bank loses the agency to set interest rates based on economic cooling needs. If the Federal Reserve were to raise rates to combat persistent inflation, which remained sticky throughout 2025, it would cause interest service costs to spiral further, potentially triggering a sovereign default or necessitating draconian austerity.

Consequently, the market has concluded that the Fed is “trapped.” It must keep interest rates artificially low relative to inflation to alleviate the government’s debt burden, a process known as financial repression. This realisation drives the “debasement trade.” Investors and central banks understand that the only political path of least resistance for the US government is to inflate away the real value of the debt. In this environment, gold serves as the only asset with no counterparty liability and an infinite duration, immune to the printing press.

Compounding the fiscal arithmetic is the overt politicisation of the Federal Reserve. The period from 2025 to 2026 has seen an unprecedented attack on the independence of the US central bank. President Donald Trump, in his second term, has repeatedly criticised Federal Reserve Chairman Jerome Powell, going so far as to suggest his termination for failing to lower rates rapidly enough to support administration policies.

Rumours of Powell’s forced resignation circulated intensely throughout 2025, creating volatility in global markets. While legal scholars debate the President’s authority to fire the Fed Chair “for cause,” the mere existence of the threat undermines the dollar’s credibility. For foreign central banks, the Fed’s independence was the guarantor of the dollar’s value. If the Fed is perceived as “captured” by the executive branch, forced to monetise debt or fund tariffs, the risk premium on holding dollars rises exponentially.

The political friction has led to a decoupling of gold prices from traditional drivers. Historically, high nominal interest rates like the 4.25%-4.5% range seen in 2025 would dampen gold demand. However, in 2025 and 2026, gold surged alongside yields, indicating that the market is pricing in institutional risk rather than opportunity cost. As Gold Policy Advisor Ugo Yatsliach notes, central banks are preparing for a world where “dollar assets can be sanctioned, seized or devalued” by political fiat.

For decades, the standard central bank reserve portfolio mirrored the 60/40 investment strategy. Almost 60% in risk assets (equities) and 40% in defensive assets (sovereign bonds). US Treasuries were the bedrock of the defensive allocation. However, the correlation between equities and bonds turned positive in the high-inflation environment of the mid-2020s, meaning both asset classes fell together.

With US Treasuries suffering consecutive years of real losses, and facing the prospect of further issuance to fund the deficit, reserve managers are actively seeking a replacement for the “40%” defensive slice of their portfolios. Gold has emerged as the superior alternative. It offers the safety profile of a bond (no default risk) with the upside of an equity (inflation protection), without the political baggage of the US Treasury market.

Geopolitical fragmentation

While fiscal dominance provided the combustible material for the gold rally, geopolitical fragmentation acted as the spark. The era of the “Great Moderation” and global integration has given way to a chaotic multipolarity, where economic warfare has become a standard tool of statecraft.

In January 2026, a bizarre yet dangerous diplomatic crisis exemplified the volatility of the new order. President Trump renewed his administration’s interest in acquiring Greenland from Denmark, citing critical national security interests and the island’s vast mineral wealth. Unlike his previous attempts, this initiative was accompanied by coercive economic threats.

When European leaders, including the Danish Prime Minister, rejected the proposal, the US administration escalated tensions by threatening a 10% tariff on eight NATO allies, including the UK, Germany, France, and the Netherlands, unless they facilitated the transfer. The crisis intensified when rumours of a US military “reconnaissance mission” Operation Arctic Endurance surfaced, raising the spectre of an armed standoff between NATO members.

The market reaction was immediate and violent. The “Greenland Tax” was priced into every ounce of gold, pushing spot prices past $5,100. Investors and central banks fled US assets, fearing that if the US could threaten its closest military allies with economic devastation over a territorial dispute, no jurisdiction was safe. Although President Trump eventually de-escalated the military rhetoric at the Davos World Economic Forum, the damage to trust was permanent. The incident proved that the “political risk” usually associated with Emerging Markets had arrived in the G7.

The Greenland Crisis was merely the latest chapter in a narrative that began with the G7’s freezing of Russia’s foreign exchange reserves in 2022. This event remains the primary psychological driver for emerging market central banks. It demonstrated that FX reserves are not “money” in the bank, but credit claims extended to foreign powers, claims that can be cancelled at will.

The realisation birthed two distinct groups of gold buyers. The Axis of Evasion, countries like China, Russia, and Iran that are actively preparing for or currently under sanctions, for whom gold is an operational necessity to bypass the US dollar system, and The Strategic Hedgers, countries like Saudi Arabia, Brazil, and India that are technically US partners but wish to maintain strategic autonomy, diversifying not to attack the dollar, but to insulate themselves from becoming collateral damage in US foreign policy disputes.

The US administration’s willingness to use the dollar as a cudgel, imposing tariffs on allies and sanctions on rivals, has accelerated “de-dollarisation” from a theoretical concept to a practical urgency. Central banks are responding by reducing their holdings of US Treasuries and recycling trade surpluses into gold.

China, for instance, has reduced its US Treasury holdings from $1.3 trillion in 2011 to roughly $765 billion by 2025, utilising the proceeds to fund its massive gold accumulation programme. Similarly, Saudi Arabia and other petrostates are increasingly settling trade in non-dollar currencies and storing the surplus in neutral assets. Gold serves as the only asset that is “politically neutral” as it carries no visa, requires no SWIFT code, and recognises no sanctions.

The great accumulation

The theoretical shift in reserve management doctrine has translated into massive physical flows. Central banks have transitioned from being net sellers of gold, a trend that persisted until 2010, to becoming the dominant “whales” of the market. In 2025, central bank purchases accounted for nearly 25% of annual global gold demand, a historic high.

Central bankers, despite their technocratic veneer, are susceptible to herd behaviour. Hugh Morris of Z/Yen Group identifies a powerful “groupthink” dynamic driving the current rush. As early movers like Poland and China publicised their gold buying, it created a “fear of missing out” (FOMO) among peers. Reserve managers faced a new reputational risk. If a crisis occurred and they held only depreciating dollars while their neighbours held appreciating gold, they would be viewed as incompetent.

This herd behaviour is creating a self-reinforcing price loop. As central banks buy, the price rises, as the price rises, the value of gold reserves increases, validating the strategy and encouraging further buying to maintain target allocation percentages.

China is the gravitational centre of the gold market. The PBoC officially reported gold purchases for 14 consecutive months through the end of 2025, adding approximately 27 tonnes per month. By December 2025, official reserves stood at 2,306 tonnes.

However, market analysts widely believe these figures understate the reality. Goldman Sachs and other forensic accountants estimate that China’s true accumulation is likely significantly higher, potentially exceeding 5,000 tonnes. The “stealth accumulation” is executed through state-owned banks and sovereign wealth funds such as the CIC to avoid spiking the market price too rapidly and to mask the full extent of China’s preparation for a post-dollar order.

The accumulation is linked to the internationalisation of the Renminbi (RMB). By backing the RMB with a “gold wall,” China aims to increase the currency’s attractiveness as a trade settlement unit. The fact that gold now constitutes 8.5% of China’s official reserves up from 3% a decade ago signals a determined strategic shift.

India’s strategy in 2025 was defined by repatriation. In a logistical operation shrouded in secrecy, the RBI moved over 100 tonnes of gold from the Bank of England’s vaults in London back to domestic storage in India. By September 2025, the RBI held over 65% of its 880-tonne reserve domestically, up from just 38% in 2022.

The decision was clearly motivated by the lessons learnt from the sanctions imposed on Russia. The assets held abroad are assets at risk. The RBI’s governor and analysts cited the need to “insulate” India’s wealth from geopolitical freezing risks. Furthermore, despite high prices, the RBI continued to accumulate gold, aiming to raise the metal’s share of forex reserves to 20%. This demand was price-inelastic. The strategic imperative of sovereignty outweighed the tactical consideration of buying at all-time highs.

The most aggressive buyers relative to GDP have been the Eastern European nations on the frontline of the NATO-Russia tension. The National Bank of Poland (NBP) aggressively bought gold throughout 2025, surpassing the holdings of the European Central Bank (ECB) and reaching over 550 tonnes. NBP Governor Adam Glapiński has explicitly linked this buying to national security, stating that gold ensures Poland’s creditworthiness even if it were cut off from the global financial system during a war.

Similarly, the Czech National Bank (CNB) has engaged in 33 consecutive months of buying, targeting 100 tonnes by 2028. These nations are buying for existential hedging. They are preparing for a scenario where the Euro or Dollar payment systems might fail them in a moment of supreme crisis.

The Central Bank of Turkey remains a relentless buyer, adding to reserves for 28 consecutive months, using gold as a tool to manage the Lira’s volatility and as ultimate collateral for the banking system. The Monetary Authority of Singapore has accumulated significant gold to balance its massive equity portfolio, highlighting in 2025 gold’s role as a stabiliser in a “high-risk” global environment. Switzerland’s Swiss National Bank, while not actively buying new tonnage in the same volume, reaped a windfall of CHF 36 billion in 2025 solely from the revaluation of its massive 1,040-tonne holding, a success story that has served as a potent advertisement for gold’s utility to other central banks.

Architecture of post-dollar trade

The gold rush is not taking place in a technological vacuum. It is intimately linked to the development of new cross-border payment systems designed to bypass the US dollar and SWIFT. In these architectures, gold is evolving from a passive asset sitting in a vault to an active settlement token.

Project mBridge is arguably the most significant development in global finance that the general public ignores. Originally a collaboration between the BIS and the central banks of China, Hong Kong, Thailand, and the UAE, it allows for direct peer-to-peer exchange of Central Bank Digital Currencies (CBDCs).

In late 2024, the BIS withdrew from the project, leaving it under the operational control of China and its partners. It’s a move that signalled the platform’s transition from “pilot” to “geopolitical tool”. By late 2025, mBridge had processed over $55 billion in transaction volume, a staggering 2,500-fold increase since its inception.

The platform allows, for example, a Thai company to pay a UAE supplier in Digital Yuan (e-CNY), which the UAE firm can immediately convert to Digital Dirham or hold. Crucially, the system supports “payment versus payment” (PvP) settlement without using a US correspondent bank. This eliminates the risk of US sanctions blocking the trade.

Where does gold fit in? In a multi-CBDC arrangement, trade imbalances inevitably arise. If the UAE accumulates too much e-CNY, it may want to swap it for a neutral asset. mBridge’s architecture is being designed to integrate tokenised gold as a bridge asset. Gold becomes the “reference unit” that clears the ledger, effectively remonetising the metal for the digital age.

The expanded BRICS bloc has explicitly called for a non-dollar payment system, dubbed “BRICS Pay”. While skeptics dismiss the idea of a single “BRICS currency” due to the economic disparities between members, the bloc is coalescing around a “Unit of Account” model backed by a basket of commodities, primarily gold (40%) and oil.

Russia and China have already operationalised the digital rouble and digital yuan for bilateral energy trade. BRICS Pay aims to link these domestic payment systems. The threat of 100% tariffs from the US administration on countries abandoning the dollar has only accelerated this development. Member nations realise that to survive such economic warfare, they need a settlement medium that the US cannot touch. Physical gold, stored domestically and tokenised on a permissioned ledger, provides exactly that capability.

The private sector is also anticipating this shift. Tether, the issuer of the world’s largest stablecoin (USDT), accumulated approximately 27 tonnes of gold in Q4 2025, valued at $12.9 billion. The move aligns with Hong Kong’s strategic initiative to establish a 2,000-tonne gold storage facility to support digital asset backing.

The convergence of stablecoins and gold reserves hints at a future where private digital currencies are backed not by US Treasury bills (as is currently the case) but by gold. This would further drain liquidity from the US bond market and channel it into the bullion market, creating a “digital gold standard” running parallel to the fiat system.

The new gold standard

The synchronised pivot to gold by the world’s central banks is a structural realignment of the global monetary order. It represents a vote of “no confidence” in the current fiat-based financial architecture, specifically the dominance of the US dollar.

The events of 2025 and 2026 have redefined what constitutes a “safe asset.” For fifty years, “safety” was synonymous with US Treasuries, liquid, interest-bearing, and backed by the hegemon. Today, “safety” is defined by sovereignty. An asset is only safe if it cannot be frozen, sanctioned, or debased by a foreign power. Gold is the only asset that meets this criterion. US Treasuries, subject to fiscal dominance and geopolitical weaponisation, do not.

As the US debt spiral continues, $1.1 trillion in interest and growing, and geopolitical fragmentation deepens (Greenland, Ukraine, Taiwan), the demand for gold will likely intensify. The emergence of digital rails like mBridge will operationalise this gold, moving it from the vault to the settlement ledger.

We are witnessing the birth of a de facto Gold Standard. Central banks are building a “gold wall” to protect their economies from the storms of the 21st century. In this new era, gold is the ultimate currency of freedom.

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The plan, announced two years ago, will see the African country’s top financial body boosting its reserves, apart from cushioning the domestic economy from risks in international financial markets.

“If all goes as planned, we should be able to purchase at least 100 kg of gold between March and June 2026. We are finalising with gold refineries that have been contracted to carry out fire assaying and ‌refining of gold to required purity levels,” Adam Mugume, executive director for research and economic analysis at the bank, told Reuters.

Spot gold jumped more than 2% on March 2 to USD 5,395.99 an ounce, amid concerns about the impact of US-Israel strikes on Iran, and most importantly, its fallout on the Middle East region, driving an investor ‌rush into safer assets. Adam Mugume did not say whether or how the price move would impact the plan.

On the other hand, on 3rd March, the US dollar rose to ⁠a ‌more than one-month high, which will likely make dollar-denominated commodities such as gold more expensive for buyers with other currencies.

Bullion has hit record highs in 2026 amid heightened geopolitical and economic uncertainties. Against this backdrop, central bankers in Kenya and the Democratic Republic of Congo have also announced moves to diversify their reserves by buying gold.

Uganda exported USD 5.8 billion worth of gold in 2025, a 76% increase from 2024. The African country has already commissioned its first large-scale gold mine. The Chinese-owned facility is projected ‌to process 5,000 metric tons of gold ore per day and produce about 1.2 tons of refined gold a year.

“The central bank will purchase from artisanal miners as well as medium-scale and large-scale producers,” Mugume said.

Uganda set up its first bullion processor, “Africa Gold Refinery,” in 2017, and several others ‌have since been established, processing both locally produced gold and shipments from neighbouring Democratic Republic of Congo.

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