Ever had a $5,000 breakfast? During the California Gold Rush, a plate of eggs and bacon could cost that much in today’s money — not because food was rare, but because everyone wanted to be part of the rush.

Farmers left crops to rot, soldiers deserted posts, and preachers abandoned pulpits to join the frenzy. San Francisco’s harbour turned into a floating graveyard, with over five hundred ships deserted by their crews.

Gold has shaped behaviour, history, and even the world’s monetary system — again and again. And it’s doing it once more, though this time, the rush looks different.

It’s no longer miners digging through rivers — it’s central bankers quietly reshaping global reserves. Behind every gold rally, there’s always a story of fear — not just greed.

Why gold prices keep rising

In the first quarter of this year alone, central banks bought 244 tonnes of gold — roughly one-third of global mine output. Over 90 per cent plan to keep adding. They’re not chasing profit, but they are buying insurance. It’s a signal of mistrust, a way of protecting their wealth in a world they no longer fully control.

Central banks are piling on gold as a way of protecting themselves in a world they no longer fully control

Moreover, US debt has crossed $38 trillion, and deficits are above 6pc of GDP. Trade wars, tariffs, and election spending are piling on. The dollar still dominates, but the shine is wearing thin. Every time confidence in the system shakes, gold takes a leap higher.

Then there’s the fact that mine output is barely growing, up just 1pc this year, with no major new discoveries. Plus, recycling hasn’t picked up despite record prices — people are holding their gold, not selling it. Supply is tight while demand is increasing.

Is there still a bull case?

Yes. Central banks are still buying at a near record pace while mine supply stays stagnant, and real yields remain subdued. Gold has once again become liquidity insurance, not speculation.

Every major gold cycle follows a pattern: a mid-trend correction, followed by a sharper rally. We’ve seen it before — in the 1970s, in the 2000s, and again now.

If we refer to history’s playbook, gold prices rose from $35 to $850 during 1970-80, from $255 to $1,920 during 2001-11, and $1,160 to $4,397 during 2018 to present times.

Each time, the trigger was different — inflation, war, or debt — but the outcome was the same: a reset in trust. A 500pc rise from current levels would take gold near $7,000 per ounce. A repeat of earlier cycles would put it even higher.

What’s driving it this time?

The real shift began after the Russia–Ukraine conflict, when large central banks quietly started diversifying away from the dollar. The pace picked up during the recent tariff wars as more countries sought protection from US-centric volatility.

If these trends continue, gold’s climb could turn into something bigger — not just a rally, but a slow restructuring of the global monetary order.

Outlook for 2026

Global reserves stand near $17 trillion, including foreign exchange and gold. Gold makes up about a quarter of that — around 36,000 tonnes. For the first time in 30 years, central banks hold more gold than US Treasury securities in their reserves.

If they raise their allocation by even 2pc a year for the next five years, that adds about 3,000 tonnes — almost an entire year of mine supply. Production, meanwhile, grows just 1pc annually. Even without new demand, revaluations alone could push prices up another 20pc or more.

The great re-monetisation

This gradual realignment — roughly 2pc per year — could support 7–10pc annualised gains in gold prices, even amid volatility. With global debt above $330tr and US fiscal discipline slipping, real yields are likely to stay capped. That means gold’s relative appeal remains intact.

Gold has moved beyond “safe haven” status. It’s becoming a deliberate allocation in institutional portfolios — a core holding, not a panic buy.

If gold backs a new currency

If a few nations create a gold-backed currency, it won’t replace the dollar. But it could quietly start drawing part of the world’s reserves away from it.

Trust would depend on transparency, convertibility, and governance — the same ingredients that once made the dollar supreme. The new system would take decades to build scale, but the symbolism would be immense.

It would mark the beginning of something different — a slow move from paper promises toward tangible value. Not the end of the dollar era, but perhaps the start of a multipolar world of reserves, where gold, digital units, and fiat coexist.

In every era, gold has meant the same thing — trust. When that slips, gold rises. And right now, trust and gold are both in short supply.

The writer is the CEO of Landmark Investment

Published in Dawn, The Business and Finance Weekly, November 17th, 2025