Freud said that people's obsession with gold stems from dreams in their childhood. From the natural currency of ancient civilizations, to the cornerstone of fiat currency in the gold standard era, and to the 'golden supporting role' of the dollar in the Bretton Woods system, up to today's era of credit currency, gold has long transformed into an alternative asset that combines strategic reserves, inflation resistance, and risk hedging. This hardcore status in the financial market is entirely supported by its dual attributes of 'currency + commodity.'
Currency attribute: the 'risk insurance' of the mainstream currency system
Marx pointed out long ago: gold and silver are not naturally currencies, but currencies are naturally gold and silver. The physical properties of gold, which does not rust and is easily divisible, have made it hard currency since ancient times and institutionalized it as the core of the gold standard in modern times.
Even though the Bretton Woods system collapsed in the 1970s and the dollar decoupled from gold, gold's monetary attributes have not disappeared. After all, it and the dollar are natural 'enemies'—when the dollar rises, gold prices fall; when the dollar falls, gold prices rise, and this pattern has not broken to this day.
For individuals and institutions, buying gold is like insuring assets: fearing bank defaults and currency devaluation, stockpiling some gold provides peace of mind. For countries, the less they trust the current international monetary system, the more they love to increase their gold reserves. Over the past twenty years, Russia, China, Turkey, and India have been the 'top buyers' of gold reserves.
Commodity attributes: the 'king of hedging' in times of turmoil.
The commodity attribute of gold is primarily to help assets 'diversify risk.' Its correlation with mainstream assets like stocks and bonds is extremely low, and it can even move in the opposite direction; furthermore, as a physical asset, it has no default risk.
However, the pricing logic of gold differs from that of major commodities like oil and iron ore. Ordinary commodities rely on current supply and demand, while gold’s supply depends not only on new mining but also on reserves sold by central banks and jewelry recycling in Asia, making the supply-demand landscape much more complex.
Investment value: a game about 'consensus'
Gold does not yield interest and lacks a unified pricing formula; investing in it means profiting from 'price increases.' Behind this is actually a 'faith game'—those who buy gold not only believe it is valuable but also believe others do too.
Warren Buffett once sharply remarked: if all the gold mined by humanity were piled into a cube measuring 20 meters on each side, its value could buy 16 ExxonMobils and all the farmland in the United States. However, gold cannot produce food or oil, and its absolute value has always been a subject of controversy compared to productive assets that can generate profits.
Gold pricing 'detached': it’s not a restoration of the gold standard, but a change in the monetary system.
In the past, gold prices were closely tied to the actual interest rates of US bonds—when interest rates rise, the opportunity cost of holding gold increases, leading to a drop in gold prices; conversely, gold prices rise when interest rates fall. However, after 2022, this pattern completely broke down: the Federal Reserve's aggressive rate hikes led to soaring real interest rates, yet gold prices repeatedly reached new highs against the trend.
This situation cannot simply be attributed to the collapse of the dollar's credit or geopolitical hedging. After all, the dollar still leads in global payments and foreign exchange reserves, and US stocks continue to hit new highs, showing no signs of extreme risk.
The truth is that gold and interest rates have decoupled; essentially, it reflects the division of the international monetary system. After the pandemic and the Russia-Ukraine conflict, economic nationalism has risen, dividing the world into two camps: one continues to embrace the dollar, while the other rushes to 'de-dollarize,' willing to pay high 'opportunity cost premiums' to stockpile gold. This has formed a new pattern of 'one gold, two worlds.'
Interestingly, Bitcoin has also joined the fray. Like gold, it is scarce and decentralized. After 2022, its correlation with gold has significantly increased, with some investors treating it as 'digital gold.' However, Bitcoin's speculative nature is too strong, and many countries have restricted its trading, lacking global consensus; it currently cannot compare to gold's 'status in the market.'
Conclusion: Gold cannot become a new 'monetary center,' but it is the 'ballast' of a multi-polar era.
The surge in gold prices does not mean that the gold standard will make a comeback. The current global economic and political landscape is already different, and the inherent flaws of the gold standard are apparent; we can no longer return to an era where currency was based on precious metals.
Gold cannot replace the interest rate adjustment and liquidity supply functions of fiat currencies, failing to meet the structural demands of modern finance. However, in this fragmented multi-polar era of monetary systems, gold remains a 'hard currency' in the hands of central banks and investors—it may not be the main character, but it is the key 'ballast' for stabilizing assets.
