Shiny Rock
Gold was up 67% in 2025. I've never seen anything like it.
I started watching the price more closely around mid-2025, trying to understand what was happening. I also started following Luke Gromen at FFTT closely—he's been one of the few analysts consistently explaining the structural forces behind this move.
There's something unsettling about watching a shiny rock outperform every major stock market. South Korea is the one exception, but that's its own story for another post. When a metal with no yield, no cash flows, and no technological application outpaces companies actually producing value, markets are trying to tell you something.
The data is stark: central banks purchased over 1,000 tonnes of gold annually from 2022 through 2024. That's more than double the purchases from 2014-2016. In 2022, they bought a record 1,136 tonnes, the highest on record dating back to the 1950s. They followed with 1,050 tonnes in 2023 and 1,045 tonnes in 2024. In 2025, central banks added 863 tonnes, lower than the prior three years but still well above historical averages, showing sustained structural demand.
The standard explanation: diversification away from dollar-denominated reserves. The dollar's share in global FX reserves has been declining, with gold taking its place. The 2022 Russia sanctions crystallized a new reality - US Treasuries are no longer viewed as neutral reserves when they can be weaponized. In a deglobalizing, multipolar world, central banks want reserves with zero counterparty risk. Gold is the only asset that fits.
But the United States maintained dollar hegemony for eighty years. They didn't do this by accident. So why would they allow this shift now?
Because they don't have a choice.
Unsustainable debt levels have backed the US into a corner. The Triffin Dilemma has reached its logical extreme: running persistent trade deficits to supply the world with dollars has hollowed out American industrial capacity. To reshore manufacturing and rebuild industrial capacity, the US needs a weaker dollar to make domestic production competitive again. But you can't just announce dollar devaluation when it's the global reserve currency. Markets would panic, Treasury auctions would fail, the system would destabilize.
There's another way: let gold rise. Higher gold prices signal dollar devaluation without triggering the same market reactions as explicit currency policy changes. It's a pressure release valve for a system under extreme stress.
Central banks have been buying since 2022. The geopolitical shift happened then. So why did the price really surge in 2025?
Because monetary conditions finally aligned with structural demand.
From 2022 through 2024, we had rising real yields which are typically deadly for gold. Even with over 1,000 tonnes of annual central bank buying, the price stayed relatively rangebound. Then 2025 brought the combination gold needed: continued structural demand met falling inflation and three Fed rate cuts. Lower real yields removed the headwind.
Gold didn't surge because of a single catalyst. It moved because multiple structural forces, dedollarization, industrial policy, debt sustainability, converged with favorable monetary conditions.
History has a pattern here. Every reserve currency that faced the Triffin Dilemma eventually declined against rising competition from a new hegemon. The Dutch guilder gave way to the British pound. The pound gave way to the dollar. The mechanism is always the same: the reserve currency country runs deficits to supply the world with liquidity, hollowing out its productive base, until it can no longer maintain both domestic prosperity and global reserve status.
The shiny rock is pricing in what equity markets haven't fully accepted yet: we're watching this pattern play out again. The only question is what comes next.