In an era of escalating geopolitical tensions and eroding trust in fiat currencies, gold is staging a remarkable resurgence in the global monetary system, reminiscent of its storied role as a bedrock of financial stability. Central banks worldwide, from the People’s Bank of China to the U.S. Federal Reserve, have ramped up gold purchases to unprecedented levels—over 1,000 tonnes annually since 2022—hedging against inflation, currency devaluation, and the weaponization of the U.S. dollar in sanctions. Proponents of a “gold comeback” argue that blockchain-enabled digital gold tokens and proposals for gold-linked stablecoins could modernize the asset, bridging its tangible allure with the speed of cryptocurrencies. While a full return to the gold standard remains a distant dream amid sovereign debt mountains exceeding $300 trillion, this quiet accumulation signals a paradigm shift: gold, long dismissed as a relic, is reclaiming its throne as the ultimate safe haven in an increasingly volatile economic landscape.

BRICS, the economic bloc comprising Brazil, Russia, India, China, South Africa, and expanded members like Egypt, Ethiopia, Iran, UAE, and Indonesia (joined in 2025), has intensified de-dollarization efforts amid geopolitical tensions and U.S. sanctions, aiming to reduce reliance on the U.S. dollar for trade, reserves, and payments.  Key initiatives include promoting local currency settlements, which now cover about 65% of intra-BRICS trade, bypassing the dollar and euro.  Bilateral swaps, such as the $30 billion Brazil-China agreement, facilitate direct exchanges to cut conversion costs and dollar dependency.

A flagship project is BRICS Pay, a blockchain-based, decentralized payment messaging system designed to rival SWIFT, enabling fast local-currency transactions (up to 20,000 messages per second) without dollar involvement; pilot tests began in 2025, with potential operational rollout by 2025-26.  This ties into broader tools like the New Development Bank (NDB) for alternative financing, the Contingent Reserve Arrangement (CRA) for liquidity support, and the mBridge platform for multilateral CBDC settlements.  Discussions on a unified BRICS currency or gold-backed digital asset persist but face hurdles like internal consensus and U.S. threats of 100% tariffs from President Trump, who views the bloc as anti-dollar.  Central banks in BRICS nations are also stockpiling gold as a hedge, with 95% expecting to increase holdings, signalling a shift toward multipolar finance.

While progress is evident—e.g., Russia-China trade over 90% in rubles/yuan—the dollar’s entrenched role in global FX (84%) and reserves persists, making full de-dollarization gradual amid coordination challenges and Western pushback.  BRICS’ 2025 summit under Brazil emphasized these reforms for Global South resilience, potentially fostering regional currency spheres over dollar hegemony.

From 1870 to 1914, the gold standard reigned as the cornerstone of international finance, covering about 70% of the world’s economies. Currencies were directly convertible to gold at fixed rates—e.g., $20.67 per ounce in the U.S.—ensuring price stability, low inflation, and seamless cross-border payments. Central banks like the Bank of England managed reserves meticulously, adjusting interest rates to maintain convertibility. This period saw unprecedented globalization: trade volumes tripled, capital flowed freely, and economic growth averaged 2–3% annually in major powers. However, cracks emerged during crises, like the Panic of 1893, where temporary suspensions highlighted gold’s rigidity. World War I shattered the system in 1914; belligerent nations suspended convertibility to print money for war efforts, leading to inflation and depreciating currencies. Post-war attempts to revive it, such as Britain’s 1925 return at pre-war parity, proved disastrous, fueling the Great Depression through deflationary pressures.  The interwar years (1919–1939) were marked by failed resuscitations. The U.S. clung to gold until 1933, when President Franklin D. Roosevelt devalued the dollar by 40% via the Gold Reserve Act to combat the Depression, then banned private gold ownership. Most countries abandoned the standard by 1936 amid protectionism and competitive devaluations. World War II further eroded faith in gold-backed systems. In 1944, the Bretton Woods Conference established a hybrid: 44 Allied nations pegged currencies to the U.S. dollar, which was convertible to gold at $35 per ounce. This “gold exchange standard” promoted post-war recovery, with the IMF and World Bank as stabilizers. Trade boomed, but U.S. deficits from Vietnam and Great Society spending flooded the world with dollars, eroding confidence. By 1971, foreign central banks demanded gold for dollars, prompting President Nixon to suspend convertibility on August 15—the “Nixon Shock”—ending Bretton Woods and ushering in floating fiat currencies.

The concept of the gold standard traces its roots to ancient civilizations, where gold served as a medium of exchange due to its scarcity, durability, and universal appeal. In the 6th century BCE, the Lydian kingdom (modern-day Turkey) minted the first true gold coins, the electrum staters, blending gold and silver and sparking widespread coinage. By the Roman Empire, gold aurei circulated across Europe and the Mediterranean, underpinning trade and imperial finances. Fast-forward to the medieval era: Islamic caliphates and European monarchies revived gold dinars and florins, but it was the 19th century that formalized the system. Britain pioneered the modern gold standard in 1821, when Parliament passed the Gold Standard Act, pegging the pound sterling to a fixed quantity of gold (about 7.32 grams per sovereign coin). This stabilized Britain’s economy amid the Industrial Revolution, encouraging exports and attracting investment. Other nations followed: the U.S. adopted it de facto in 1834 via the Coinage Act, France in 1854, and Germany after unifying in 1871, creating the “classical” gold standard era (1870–1914) where global trade flourished under fixed exchange rates.

Since 1971, no major economy has operated a full gold standard; instead, gold’s role shifted to a reserve asset and inflation hedge. Central banks hold about 35,000 tonnes (one-fifth of all mined gold), with Russia and China leading recent buying sprees amid de-dollarization efforts. Proposals for a digital gold standard, like gold-backed cryptocurrencies, echo historical debates, but sovereign debt and monetary policy flexibility favor fiat. The gold standard’s legacy is dual: it enabled eras of stability and growth but exposed vulnerabilities to shocks, influencing modern economics’ emphasis on discretionary policy. Today, with global gold reserves valued at over $2 trillion, it remains a symbol of enduring value in an uncertain world.

Central banks have been on a gold-buying spree since 2010, with net purchases exceeding 500 tonnes annually in recent years—peaking at over 1,000 tonnes in 2022 and 2023—marking the strongest sustained demand in five decades. This resurgence, led by emerging market institutions like those in China, India, Russia, Turkey, and Poland, reflects a strategic pivot toward tangible assets amid a volatile global landscape. Gold now constitutes about 20% of global foreign exchange reserves, up from 11% in 2000, as banks seek to fortify balance sheets against systemic risks. he dollar’s dominance in global trade and reserves (around 58% as of 2025) exposes banks to geopolitical weaponization, as seen in sanctions on Russia and Iran. Accumulating gold reduces “dollar risk,” enabling greater autonomy in international settlements. For instance, BRICS nations, which account for nearly 40% of global gold demand, are explicitly using gold to hedge against de-dollarization pressures and foster multipolar finance.

With global inflation lingering above 3% post-COVID and sovereign debt surpassing $300 trillion, gold’s historical role as a store of value shines. Unlike fiat currencies prone to debasement through money printing, gold maintains purchasing power over centuries—its price has risen over 500% since 2000. Central banks in high-inflation economies like Turkey (which bought 148 tonnes in 2023) view it as insurance against local currency erosion. Escalating tensions—U.S.-China rivalry, the Russia-Ukraine war, and Middle East conflicts—have prompted a flight to safety. Gold’s neutrality transcends borders, unlike bonds or equities tied to specific governments. A 2024 World Gold Council survey found 29% of central banks citing “economic uncertainty” as the top reason for buying, with 25% pointing to “geopolitical risks.” Emerging markets, facing capital flight during crises, prioritize gold for its liquidity and non-confiscation appeal.

Demand for Gold remains robust into 2025, with Q1 purchases hitting 290 tonnes despite high prices above $2,500 per ounce. China leads with undisclosed buys estimated at 300+ tonnes yearly, while the IMF notes a shift: developed nations like the U.S. and Germany are holding steady, but emerging ones are aggressively adding. In a low-interest-rate era, gold offers yield-free stability without counterparty risk, unlike U.S. Treasuries vulnerable to Federal Reserve hikes. It also bolsters credibility: countries like Poland and Kazakhstan have increased gold’s share in reserves to over 20% to signal fiscal prudence. Additionally, with interest in central bank digital currencies (CBDCs) growing, gold could underpin hybrid systems, as explored in BRICS’ gold-linked stablecoin proposals.

Galactik Views