De-Fiatization: Why Gold Surges While Dollar Dominance Persists

Have you ever stopped to wonder why gold keeps climbing to dizzying new heights while people endlessly debate the so-called death of the dollar? I mean, headlines scream about de-dollarisation every other day, yet the greenback still dominates international payments and trade. Lately, I’ve been digging into this puzzle, and it struck me—maybe we’re all looking at the wrong trend.

What we’re really seeing isn’t a straightforward shift away from the US dollar. It’s something broader and perhaps more profound: a quiet but steady move away from fiat currencies altogether. Call it de-fiatization. People, institutions, and even central banks are seeking refuge in tangible assets that can’t be printed at will. And honestly, when you look at the numbers, it’s hard to argue against the logic.

The Illusion of De-Dollarisation

For years now, analysts have pointed to every dip in the dollar’s reserve share as proof that its reign is ending. Emerging markets are trading in their own currencies, some countries are settling oil deals in yuan or rupees, and sanctions have pushed a few nations to explore alternatives. It sounds dramatic. It feels like a seismic shift. But when you zoom out, the picture looks different.

The US dollar still accounts for the lion’s share of global payments—over half, by most measures. Even as other currencies nibble at the edges, the dollar’s role in trade finance and invoicing remains rock solid. Why? Because alternatives simply aren’t scaling fast enough. The yuan’s share, for instance, has ticked up modestly but remains tiny in comparison. And let’s be real—many of those “yuan transactions” are just between mainland China and Hong Kong. Hardly a global revolution.

I’ve followed these developments closely, and in my view, the dollar’s staying power comes down to simple math. The US runs massive trade deficits, which means dollars flow out to the rest of the world. Those dollars don’t just disappear; they come back as investments in US assets, especially Treasuries. It’s the classic Triffin dilemma in action: the reserve currency issuer has to run deficits to supply the world with liquidity. Without that, global trade would grind to a halt.

In a world of imbalances, the dollar remains the only currency that can absorb them at scale.

– Echoing insights from seasoned market observers

So no, the dollar isn’t going anywhere soon. But that doesn’t mean everything’s fine with fiat money in general.

Enter De-Fiatization: The Real Flight to Safety

Here’s where things get interesting. While the dollar holds its ground in transactional use, trust in fiat currencies as a whole is eroding. Why hold piles of government debt or bank deposits when inflation, deficits, and money printing are constant threats? Enter gold and silver—assets with no counterparty risk, no debasement potential, and centuries of history as stores of value.

Central banks, once net sellers of gold in the late 1990s and early 2000s, have flipped completely. They’ve become massive buyers in recent years. The momentum carried strongly into late 2025 and shows no signs of stopping in 2026. Emerging market banks in particular are stacking up the yellow metal, diversifying away from dollar-centric reserves.

• Record purchases continued through November 2025, with net additions pushing hundreds of tonnes year-to-date.
• Major players like Poland and others added significant amounts, boosting gold’s share in their reserves.
• Even traditionally conservative institutions are viewing gold as insurance against geopolitical and financial uncertainty.

This isn’t just central banks. Investors are piling in too. Gold prices have surged past previous records, reflecting genuine demand for something real. Commodities broadly are rallying—oil, natural gas, industrial metals—signaling a scarcity mindset. Financial assets feel increasingly abstract when governments keep spending and central banks accommodate.

In conversations with market veterans, one theme keeps emerging: in times of tension, whether trade wars or outright conflicts, people prefer assets they can touch. No sanction risk, no freeze risk. Just intrinsic value.

Looking Back: From Financialization to Material Reality

Cast your mind back to the 1980s and 1990s. That was peak financialization. Movies glamorized Wall Street traders, leveraged buyouts were all the rage, and housing turned into an investment vehicle rather than just a place to live. Gold? It was dismissed as a barbarous relic. Central banks sold it off cheaply, convinced that fiat and floating rates had made it obsolete.

Then came the dotcom bust, followed by the 2008 crisis. Those events exposed the fragility of over-financialized systems. Faith in endless leverage and debt took a hit. Meanwhile, non-Western powers started questioning the sustainability of the US-led model. The stage was set for a slow reversal.

Fast forward, and the narrative has flipped. Gold’s share in reserves bottomed around 2000; now it’s climbing again. The material world—commodities, real assets—is regaining prominence over pure financial claims. Perhaps the most intriguing aspect is how this shift feels almost inevitable once you spot the pattern.

Gold is money; everything else is credit.

– Classic wisdom from a legendary financier

That old saying never really went away. It just waited for the right conditions to resurface.

Geopolitical Tensions Fuel the Shift

Trade barriers are rising everywhere. Tariffs, sanctions, export controls—the whole toolkit is in play. Nations no longer want to hold each other’s debt when relationships can sour overnight. Russia served as a stark reminder: assets can be frozen with the stroke of a pen.

In this environment, holding neutral money makes sense. Gold fits the bill perfectly. It doesn’t rely on any government’s promise. No one can “sanction” a gold bar sitting in a vault. And with capital controls always a lurking possibility in stressed times, physical assets offer an escape hatch.

Recent threats of broad tariffs on trading partners highlight how quickly things escalate. Integrated supply chains mean one country’s policy can ripple through entire regions. The response? More diversification, more hedging, more gold.

1. Geopolitical risk rises → demand for neutral assets increases.
2. Fiat debasement fears grow → investors seek scarcity.
3. Central banks buy → prices rise, attracting more buyers.
4. The cycle reinforces itself.

It’s a feedback loop that’s hard to break once it starts.

The Dollar’s Paradoxical Strength

Despite all this, the dollar refuses to collapse. Treasury auctions still see strong demand. SWIFT data shows dollar usage actually increasing in some areas, often at the euro’s expense. Why the disconnect?

Simple: the dollar excels as a medium of exchange, not necessarily as a store of value. People need dollars to trade oil, settle invoices, pay for imports. But when it comes to preserving wealth over decades, doubts creep in. Massive deficits, political gridlock, endless QE—these things erode confidence.

So we end up with a split personality for the dollar: indispensable for transactions, questionable for long-term holding. Gold bridges that gap. It isn’t practical for daily trade (yet), but it’s unbeatable as a wealth preserver.

What This Means for Investors and Economies

If de-fiatization is the trend, portfolios need rethinking. Bonds and cash lose appeal when yields can’t keep pace with inflation or debasement. Equities might hold up in growth phases, but volatility spikes during uncertainty.

Precious metals offer ballast. Not as a get-rich-quick play, but as insurance. I’ve seen portfolios that added even modest gold allocations weather storms better than pure stock or bond mixes. It’s not exciting in bull markets, but it shines when others falter.

For economies, the implications are bigger. Governments hooked on deficit spending face a reckoning if fiat faith wanes. Higher borrowing costs, forced austerity, or more inflation—none are pleasant. Returning to a gold standard? Unlikely. Politicians love flexibility too much.

The table above captures the trade-offs. No asset is perfect, but diversification across them makes sense.

Final Thoughts: Preparing for What’s Next

We’re not witnessing the end of the dollar so much as the reassertion of material value over paper promises. De-fiatization doesn’t mean chaos tomorrow—it means gradual, structural change. Central banks buying gold, commodities rallying, yields staying stubborn—those are symptoms of the same underlying shift.

Perhaps the smartest move is to stop obsessing over currency wars and start asking: where is value actually residing? Right now, it seems to be drifting toward things that can’t be inflated away. And that realization changes how we think about money, wealth, and security.

I’ve spent countless hours poring over these trends, and while predictions are tricky, one thing feels clear: ignoring this shift could prove costly. The old playbook—load up on fiat assets and hope for the best—is looking increasingly outdated. Time to adapt.

What do you think—is de-fiatization overhyped, or are we truly at an inflection point? I’d love to hear your take.