Gold Is Rising – But It's Not What You Think

Editor's note: Every Friday, we showcase a featured topic from our YouTube show, Altimetry Authority.

This week, we tackle themes from our upcoming episode, including gold's recent rally... global instability... and the strength of the U.S. dollar.

Read on below...

Gold is soaring... and the usual voices are already declaring the end of the U.S. dollar...

Businessmen like Robert Kiyosaki, Mohamed El-Erian, and plenty of others say the rally reflects a broader shift.

They're calling for a global flight from dollar dominance. They insist gold's rise is a signal that the American economy is on the verge of crisis.

But from where we're standing, that couldn't be further from the truth...

The U.S. Dollar Index has barely moved in 18 months. And according to data from Swift, the global banking communication network, more than 50% of global trade is being settled in dollars... the first time that has happened since the data has been tracked.

If the world were abandoning the dollar, we'd see it in cross-border transactions, interest rates, or currency reserves.

What we're seeing instead is very different... The global system is breaking down around the dollar, not away from it.

Emerging economies are under pressure – and they're turning to gold...

Look closely at where the instability is coming from. The BRICS nations – long pitched as a dollar-alternative bloc – are struggling.

The Brazilian real has been under sustained pressure. Russia's ruble is in freefall, even after emergency hikes brought interest rates above 20%.

India's rupee continues to weaken. China is grappling with deflation and capital flight. South Africa faces fiscal and inflationary strain.

These currencies are all losing ground to the dollar.

When that happens, both central banks and citizens start looking for alternatives. In politically volatile or economically fragile states, that often means turning to hard assets... especially gold.

Gold supply typically grows by just 1.8% per year. Meanwhile, demand is rising across regions exposed to war, sanctions, or financial repression. That demand is showing up in central bank balance sheets.

According to the World Gold Council, countries like Poland, Turkey, Uzbekistan, Azerbaijan, and Georgia were among the top official buyers in 2024. These nations sit near geopolitical flashpoints.

And they're adding gold for a reason.

Gold is rising because trust is breaking elsewhere...

This is not the gold rally of a typical inflation cycle. It's a rally built on the fragility of currencies, regimes, and institutions.

Ordinary citizens in unstable economies are buying gold as a store of value. Central banks are buying it as an insurance policy. And both are doing so while continuing to rely on the dollar for trade, reserves, and legal clarity.

The myth of de-dollarization doesn't hold up under scrutiny. Even the biggest gold accumulators continue to settle deals in dollars. They're still holding U.S. Treasurys.

And they're keeping gold offshore – in the U.S. and the U.K. – because that's where institutional trust remains strongest.

In short, gold is doing what it always does in times of stress...

It's rising as a backstop when local systems weaken. But this rally isn't about the dollar losing power. It's about every other system showing cracks.

As long as the U.S. continues to offer the deepest capital markets... the most reliable legal system... and the world's reserve currency... investors and governments will keep coming back.

Gold's ascent isn't a sign that the dollar is being replaced. It's a sign that everything else looks worse.

That's not a threat to U.S. financial dominance – it's a subtle endorsement of it.

Regards,

Joel Litman
April 4, 2025

P.S. We dive deeper into gold and the U.S. dollar in the upcoming episode of Altimetry Authority, which airs at 11 a.m. Eastern time today. Check it out on our YouTube channel right here... and be sure to click the "Subscribe" button.