The Elevated Value of Gold: Core Anchor in the Reshaping of the International Reserve Landscape | International

By / Shanghai Gold Exchange former expert Liu Hang, General Manager of Private Banking Department, Industrial Bank Shenzhen Branch Liu Lirong, General Manager of Private Banking Department, Everbright Bank Shenzhen Branch Liu Ninghui **********

This article discusses the paradigm shift in gold investment in the context of international reserve transformation, and studies the allocation value and trends of gold under reserve diversification, arguing that we should move from trading game strategies to strategic allocation and embrace the gold dividend from the restructuring of the monetary system.****

In 2025, the global gold market saw an explosive rally. London spot gold rose 65% for the year, closing at the end of the year at 4,300 USD per ounce, marking the largest annual increase since 1979. This has brought investors rich and diverse investment opportunities: global gold investment demand reached a milestone level of 2,175 tons, with gold ETFs adding a net 801 tons over the year. In China, the total size of gold ETFs reached RMB 241.8 billion, up 242% year over year. Demand for bars and coins reached 1,374 tons. Even though demand for gold jewelry fell 18% year over year due to high prices, total consumption spending still rose 18% year over year to 172 billion USD. Behind this investment surge are the safe-haven demand driven by global central banks’ high-level gold purchases of 863 tons, along with geopolitical and economic uncertainties, as well as incremental capital resulting from the diversification of gold pricing logic. However, after gold prices surged to 5,600 USD per ounce at the beginning of 2026, they then experienced a deep 21% pullback. Since February, prices have continued to trade in a wide-ranging volatility band of 4,800–5,300 USD, with fierce battles between bulls and bears. Daily volatility often exceeds 100 USD. Investors who chased into positions at high levels commonly face unrealized losses and tests of their holdings, highlighting the characteristics of the gold market where opportunities and risks coexist amid high volatility.

Compared with gold rallies in history, this round of gold price appreciation has a very different backdrop. On one hand, the U.S. debt crisis fully erupted. By the end of 2025, the scale of U.S. federal government debt exceeded 3.85 trillion USD. Interest spending on Treasury bonds exceeded the defense budget for the first time in history, triggering deep market concerns about the United States’ long-term debt-servicing credibility and currency-value stability. On the other hand, the Russia-Ukraine conflict has made geopolitical risks the norm. The U.S. “weaponized” the dollar and used it as a core tool for financial sanctions, forcing more countries to accelerate the search for alternatives to dollar assets, causing the dollar’s share in global foreign exchange reserves to keep falling. As of the end of 2025, the total market value of global above-ground gold was around 3.82 trillion USD, historically matching against the U.S.’s stock of Treasury bonds of about 3.85 trillion USD. This marks a sign that the market has performed a profound credit reappraisal of the modern credit-money system centered on the dollar. Gold has thus completed its transformation from a safe-haven tool at the edge of the dollar system into a breakthrough player that breaks the dominance of a unipolar currency structure, ultimately becoming a cross-over into the core monetary anchor of the multipolar currency era.

Logic Reconstruction: Paradigm Shifts in Gold Investment Analysis Frameworks During International Reserve Transformation

The current super bull market in gold is the result of a resonance among multiple factors, including the deterioration of dollar credit, central banks’ rigid gold buying, the substitution of U.S. Treasuries credit, and imbalances in global balance sheets. These factors all point to a core: the reconstruction of the global monetary system requires an ultimate monetary anchor that does not depend on any sovereign credit. Thanks to gold’s unique physical and value attributes, it becomes the only answer. Against this backdrop, the investment logic of gold assets has undergone a fundamental change. Their investment value has shifted from being an “asset priced by the dollar” to a “benchmark for valuing dollar credit,” which has also led to profound changes in the gold investment analysis framework.

Gold as a debt-free anchor, helping repair global balance-sheet imbalances in the credit-money system

The core flaw of a credit-money system is that “all assets correspond to a liability of some entity,” forming a “liability-based system” in the global balance sheets: the U.S. dollar is a liability of the U.S. government; U.S. Treasuries are liabilities of the U.S. Treasury; the euro is a liability of countries in the eurozone; and even residents’ bank deposits are liabilities of commercial banks. Under this setup, the balance of the global balance sheets depends heavily on the stability of sovereign credit. Once sovereign credit deteriorates, it triggers a comprehensive imbalance and collapse in global balance sheets. Gold, however, is the only asset in the current human financial system that does not constitute any entity’s liability. Its value comes from its own physical attributes and the millennium-spanning consensus on its value among humankind, rather than from any country’s or institution’s credit promise. Therefore, it becomes the core debt-free anchor for repairing global balance-sheet imbalances.

After the 2008 global financial crisis, money was over-issued and debt expanded, worsening balance-sheet imbalances: U.S. government debt exceeded 3.85 trillion USD, and the debt-to-GDP ratio reached 119%, with the asset side far smaller than the liability side. Central banks in various countries mainly held foreign reserves in dollar assets; the deterioration of dollar credit caused a significant depreciation. On the asset side, enterprises and residents held financial assets priced in credit money; on the liability side, various types of credit and leverage overlapped, with both bubble pressures and debt pressures compounding each other. By including gold in the balance sheets of various economic entities, it is possible to achieve “debt-free status on the asset side,” effectively hedging credit risk of sovereign liability assets. In that case, central banks replace dollar assets with gold to optimize the reserve structure; enterprises and residents allocate gold to hedge the risks of financial-asset bubbles and depreciation. Gold then becomes the “ballast stone” in global balance sheets, mitigating the intrinsic flaws of the credit-money system.

Physical gold’s super sovereign value storage—becoming the core scarce asset in the current pattern of financial sanctions becoming normalized

In an era when the dollar is weaponized and financial sanctions become a core tool of geopolitics, the super-sovereign value storage attribute of physical gold has been rediscovered and taken to an extreme. This attribute makes physical gold an irreplaceable ultimate risk-hedging tool, which is also the core reason why “paper gold” cannot replace physical gold. The value of physical gold does not depend on any country’s sovereign system. It has no legal attachment, no reliance on any financial system, and no risk of being frozen by sanctions. It is widely recognized in any country or region worldwide, can be circulated without relying on financial infrastructure such as banks or exchanges, and is currently the only asset capable of achieving “value-free transfers” under comprehensive financial sanctions.

In 2022, when Russia faced comprehensive financial sanctions from the West, more than 385k USD of its dollar and euro foreign-exchange reserves were frozen. Its overseas financial assets could not be utilized. Yet its roughly 2,300 tons of physical gold became the only official reserve asset that Russia could freely control. Russia used physical gold trading to settle cross-border trade on a non-dollar basis. This case became the best empirical proof of the value of physical gold’s “super-sovereign value storage.” Therefore, central banks’ strategic gold purchases have always been mainly in physical gold, and physical gold therefore continues to carry a notable credit-risk premium.

The credit substitution closed loop between gold and U.S. Treasuries—replacing Treasuries as the world’s new risk-free asset anchor

After the collapse of the Bretton Woods system, U.S. Treasuries were long regarded as the world’s “risk-free asset anchor.” The core logic was “dollar hegemony + the United States’ unlimited ability to repay.” But since 2019, U.S. debt has spiraled out of control, the dollar has been weaponized, and the spreads on U.S. Treasury swaps have continued to widen, causing the risk-free attribute of Treasuries to be fundamentally shaken. Gold and U.S. Treasuries have formed an irreversible credit-substitution loop. Gold has gradually replaced Treasuries and become the world’s new risk-free asset anchor.

In 2024–2025, the share of U.S. Treasuries held by foreign official institutions fell from 28% to 25.3%. The de-leveraging scale was about 480 billion USD. Meanwhile, during the same period, global central banks’ net purchases of gold increased significantly, forming a clear trend of capital substitution. In 2019–2026, the 10-year U.S. Treasury swap spread and the London gold spot price showed a high positive correlation. Fundamentally, the “risk-free” of Treasuries is based on the relative lack of risk of U.S. sovereign credit, while the “risk-free” of gold is based on absolute risk-free attributes derived from physical characteristics and a millennium-value consensus. In an era when the overall sovereign credit system is deteriorating, absolute risk-free assets replacing relative risk-free assets follows the underlying operating law of global financial markets.

The market often treats gold’s “non-interest-bearing” feature as a shortcoming, even questioning its long-term investment value because of it. But the reality behind it has changed profoundly. In a credit-money system, the yield of any “income-producing asset” is, in essence, the price paid for credit risk: bond interest compensates for the issuer’s default risk; stock dividends and price spreads compensate for corporate operating risk; and even deposit interest compensates for bank credit risk and inflation erosion. Gold’s “no yield,” however, means that it comes with no credit liabilities and generates no counterparty risk. It is not anyone’s liability, and it does not require any institution’s backing to realize its value. Since March 2024, central banks have continued to increase their allocations to gold. Fundamentally, this reflects an active decision to give up the returns from income-producing assets, in exchange for an absolute avoidance of sovereign credit risk. When U.S. debt exceeded 3.8 trillion USD, when the eurozone fell into sovereign debt困境, and when Japan maintained extremely loose monetary policy, the credit flaws of mainstream income-producing assets were continuously amplified. Gold’s “no yield” then became the most scarce attribute. In this bull market, gold’s “no-interest advantage” has been systematically repriced. In essence, it is the scarcity premium that the market assigns to “absolute safe assets” in the credit-money era.

Structural contradictions between the total pool and the trading pool—marginal pricing amplifies short-term volatility

Gold’s extreme short-term volatility stems from a structural contradiction: the “total pool is large, while the trading pool is small.” This contradiction creates a significant marginal pricing effect. When local funds enter or exit the trading pool, it can trigger a revaluation of the value of the massive total pool. According to data from the World Gold Council, humans have mined about 382k tons of above-ground gold, forming the “total pool.” Most of it is held by central banks as strategic reserves or stored away long-term in forms such as jewelry and cultural relics, with little entering circulation. In major markets such as London, New York, and Shanghai, the “trading pool” gold that determines the daily gold price accounts for only a tiny fraction of global stock. It mainly consists of gold ETF holdings, futures registered delivery warrants, and spot gold that is tradable in London.

The gold price is determined by the marginal supply and demand in the trading pool. When a small amount of capital concentrates in and out, it causes sharp price swings. In 2025, central banks’ modest net gold purchases became the core driver of the rally. The deep pullback in early 2026 was also only due to concentrated withdrawal of futures leverage capital, without changing the underlying structure of the total pool. Therefore, gold prices can stabilize quickly. This marginal pricing effect is a natural attribute of gold’s high volatility and also easily leads to a temporary divergence between gold’s short-term price and its long-term intrinsic value.

For reserve allocation by central banks, short-term gold price volatility does not affect its long-term reserve value. Central banks’ strategic gold purchases are even more a core force stabilizing the market. This “short-term volatility, long-term firmness” characteristic makes gold an optimal choice for balancing reserve asset liquidity and safety.

Major volatility in early 2026: the essence of volatility from a reserve perspective and configuration opportunities

On January 29, 2026, after gold prices surged to a historical high of 5,600 USD per ounce, they plunged 21% within three trading days, setting the largest one-day decline in 40 years. China’s A-share gold sector and gold ETFs also saw sharp volatility at the same time. This epic price shock has led the market to question the logic of gold’s long-term bull market. But in essence, this is not the end of gold’s long-term bull market. It is a forced cleanup of sentiment and a leverage squeeze in the futures market—a necessary pain from the structural contradictions in the gold market and the transition period of the global monetary system. The underlying logic supporting gold’s long-term bull market has not undergone a substantive reversal.

The core reasons for the plunge: counterparty imbalance leading to a cascade of liquidations— a stampede

The immediate trigger of this plunge was that the Trump administration nominated a hawkish figure, Kevin Warsh, to be the new chairman of the Federal Reserve. This overturned the market’s expectation of continued monetary easing from the Fed. The U.S. dollar index strengthened in the short term, raising concerns in the market about higher costs of holding gold. But the fundamental cause of the plunge was crowded positioning and counterparty imbalance in the gold futures market—together with a multi-factor resonance from high leverage, algorithmic trading, and increased margin requirements—forming a “mass liquidation” stampede. In short periods, it was a self “implosion” of a financial leverage market catalyzed by sentiment.

Before the plunge, the share of long positions in the gold futures market was as high as 85%, making it the “most crowded trade” in global financial markets. Retail investors and quantitative funds rushed in through leveraged ETFs and gold futures contracts, leaving the overall market leverage ratio at 10–20x. The nomination news for Kevin Warsh triggered profit-taking by sharp speculative capital. After the gold price broke below the key technical support level of 5,200 USD per ounce, within 28 minutes it triggered approximately 38 billion USD of programmed stop-loss sell orders. At the same time, the Chicago Mercantile Exchange urgently raised the margin requirements for gold futures trading. As a result, leveraged traders who could not top up margin in time were forced to liquidate. The forced-liquidation sell orders further pressured the gold price. As the price fell, more stop-loss orders were triggered, creating a vicious cycle of “falling → stop-loss liquidations → accelerated declines.” Market liquidity rapidly dried up amid panic. Bargain-hunting funds did not dare to step in due to risk-hedging sentiment. Ultimately, the magnitude of the gold selloff far exceeded the actual changes in fundamentals.

Bull-market logic unchanged: central bank gold buying builds the policy floor, and core support is more resilient

Although gold’s price has seen a deep pullback in the short term, the core logic supporting gold’s long-term bull market remains solid. Central banks’ ongoing strategic gold purchases are building a very high policy floor for gold prices, effectively limiting how far prices can drop. This plunge also once again highlighted a structural divergence between the physical gold market and the market for financial derivatives: the plunge occurred only in the futures market dominated by speculative capital, while the physical gold market dominated by central banks and long-term institutional investors remained stable.

First, the rigidity of central bank gold buying has not changed. During the period of the gold price plunge, China’s central bank increased its gold holdings for multiple consecutive months. Emerging market and Middle East oil-producing country central banks such as Poland, Brazil, and Saudi Arabia were also making large purchases of physical gold. The price pullback in the physical gold market was far smaller than in the futures market. Gold ultimately stabilized quickly at key levels. Second, the trend of de-dollarization is irreversible. By early 2026, the dollar’s share in global foreign exchange reserves has fallen below 60%. Countries’ dependence on dollar assets continues to decline. The structural demand for replacing dollar assets with gold has not changed due to short-term price volatility. Third, geopolitical politics and dollar credit risk still remain. Conditions in the Middle East remain tense. The global geopolitical risk premium has not disappeared. The United States’ massive debt has no effective solution path yet. The decline in dollar credit is an irreversible long-term trend. This extreme divergence between short-term market prices and long-term intrinsic value not only cannot undermine gold’s underlying support, but instead provides an excellent window for long-term value investors.

Outlook: gold’s allocation value and trends under reserve diversification

From the current time horizon, considering gold’s underlying support, market structure, and global macro trends, the future trajectory of the gold market will move forward amid a complex interplay of long-term certainty trends and short-term high-volatility risks. Overall, it may show characteristics of “short-term oscillation absorbing pressure, medium-term oscillation moving upward, and long-term trend staying higher,” and high volatility will also become a normal component of the market. The long-term direction of gold will mainly depend on relative changes in the dollar system, the pace of advancing de-dollarization, and the evolution of the global monetary and financial system. Meanwhile, its unique risk-return profile is expected to give it a more important strategic position in global capital allocation. It should be noted that the following long-term outlook is built on a set of current macro trend assumptions; any major structural change could reshape gold’s pricing path.

Short-term outlook: wide-range oscillation, absorbing pressure

After the dramatic pullback at the beginning of the year, gold prices are expected to enter a phase of wide-range oscillation. The core task is to digest multiple layers of pressure accumulated from the previous rapid rise: first, it needs time to repair extreme technical overbought indicators and to clean out high-leverage speculative positions in the market; second, it needs to observe and adapt to potential changes in the monetary policy paths of major central banks (especially the Federal Reserve), since their policy signals will become the core catalyst for short-term price volatility; third, it needs to deal with selling pressure brought by the realization of profits from a large number of prior winners. In this stage, market sentiment may repeatedly swing, with no strong trend. Strategically, investors should not blindly chase upward or cut sharply in one direction. Patience is needed—wait until market sentiment and structure stabilize before making deployments, or choose a more prudent approach.

Medium-term outlook: oscillation higher, trend continuation

The core driving force supporting gold’s upward move has not undergone any fundamental reversal in the medium term. After absorbing short-term pressure, gold prices are expected to return to the channel of oscillation higher. Research from multiple authoritative institutions indicates that, under assumptions of the continuation of existing trends, gold’s medium-term outlook remains widely viewed as favorable.

The core logic driving the medium-term path remains clear: first, the monetary policy cycle of major global economies may turn toward easing or remain loose, with the real interest rate environment providing support to gold; second, central banks’ gold-buying behavior driven by strategic allocation needs is expected to continue providing structural demand support, strengthening the long-term floor; third, the continued complexity of the geopolitical landscape makes gold’s safe-haven and hedging functions indispensable; fourth, long-term doubts about the credit foundation of the dollar are difficult to dispel, providing a continuous macro backdrop for gold’s monetary attribute value. These factors together form potential foundations for gold’s medium-term uptrend.

Long-term outlook: trend higher; upside depends on the pace and progress of system reconstruction

Gold’s long-term outlook is, in essence, deeply tied to the progress of the global monetary and financial system’s reconstruction. Its long-term value potential cannot be bounded solely by traditional commodity supply-and-demand models; it depends more on the role it will play in the future international monetary system. Mainstream analysis holds that, based on the grand narratives of “de-dollarization” and “diversification,” the valuation logic of gold’s long-term outlook has changed profoundly.

The core reasons are as follows: first, the evolution of the global monetary system from unipolarity to multipolarity is a long process. As a long-standing carry of super-sovereign value, gold’s strategic importance may continue to stand out throughout that process; second, gold’s pricing anchor has shifted from traditional short-term interest-rate and exchange-rate factors to more macro variables such as long-term confidence in the sovereign credit system; third, its “asymmetric” risk-return profile (i.e., downside supported by structural demand such as central bank gold buying, while upside benefits from the narrative of credit-money depreciation) is highly attractive in the current environment; finally, from a relative-pricing effect among global financial assets, given the enormous scale of sovereign credit assets, the story of gold revaluation is far from finished. Therefore, over the long run, gold has the potential to break out of historical frameworks and open up a completely new valuation space. Its upside boundary will mainly depend on the depth and breadth of the evolution of the global monetary system.

Core risk warning: short-term disturbances under multiple uncertainties

The logic of gold’s long-term bull market still holds, but in the short term it faces multiple potential risks. While these risks cannot change gold’s long-term upward trend, they may trigger periodic price adjustments. Investors should be alert to:

Monetary policy turning unexpectedly. If U.S. inflation is suppressed quickly and the Fed restarts a rate-hiking cycle, it will push up the U.S. dollar index and real interest rates, short-term weighing on gold prices.

Dramatic easing of geopolitical situations: if major geopolitical conflicts are unexpectedly resolved quickly, it may lead to a large-scale withdrawal of global safe-haven funds, causing gold’s safe-haven premium to fall rapidly.

Market-structure self-reinforcing risk: if gold ETF holdings become overly concentrated and the share of algorithmic trading becomes too high, it may again trigger liquidity crises and trading stampedes under certain market conditions, amplifying short-term price volatility.

Uncertainty in U.S. policy—this is the biggest external variable affecting gold’s short-term direction. If the Trump administration successfully “tames” the Fed, launching large-scale rate cuts and money printing, it could further weaken dollar credit and may once again stimulate a surge in gold prices in the short term. Conversely, if the Fed insists on policy independence and Warsh’s hawkish policy continues to be implemented, gold may experience a longer period of consolidation.

A slowdown in gold buying pace among emerging economies: if some emerging market countries slow their gold purchases due to their own economic downturn and tight foreign exchange reserves, it could create some impact on short-term demand for gold.

Investment takeaways: from trading games to strategic allocation—embracing the gold dividend from monetary system reconstruction

In recent years, the evolution of gold market conditions, as well as the epic price shock at the beginning of 2026, have provided clear investment takeaways for global investors: in an era when gold’s regime breaks through and value rises to a new level, the essence of gold as an asset has changed fundamentally. Its core value is no longer short-term speculative gains from price spreads, but its strategic value in hedging systemic risks and countering sovereign currency credit depreciation. As a result, the core logic of investing in gold has shifted from short-term trading games to embracing the historical dividend of global monetary system reconstruction. Investors should give up short-term timing trading, stick to long-term allocation thinking, and take advantage of extreme market volatility to add exposure at low cost—so that gold becomes the core ballast stone in an investment portfolio that can weather changes in the monetary system.

Core principles: reallocate heavily, speculate lightly; risk control outweighs returns

The high-volatility normality of the gold market means that ordinary investors must adhere to the core principles of “reallocating more, speculating less; controlling leverage; and avoiding chasing highs.” The fundamental purpose of gold investing should be shifted from “seeking short-term price spread gains” to “hedging systemic risks and currency credit depreciation.” The gold price crash at the beginning of 2026 served as a warning to high-leverage speculators. Many investors who increased leverage in gold positions were forced into liquidation and suffered losses due to insufficient margin. Meanwhile, long-term allocators who held physical gold or low-leverage gold ETFs only experienced unrealized losses on paper, without realizing actual principal loss.

Ordinary investors should not blindly chase prices at the stage when gold reaches new historical highs, to avoid becoming a “bag holder” for speculative capital. Risk control should be the first priority in gold investing.

Implicit risk awareness: understanding the new market normal under “physical shortages”

Investors need to fully recognize that the current gold market is operating in an entirely new structural environment. Its core characteristics are: limited global physical gold supply, and ongoing tension between that and the large scale of derivatives trading.

This physical-level tightness is reflected especially concretely in data from trading hubs. As the New York Mercantile Exchange (COMEX), the international pricing benchmark, its total gold inventory has continued to fall from about 1,124.21 tons at the end of January 2026 to around 1,041.58 tons by late February. More importantly, the decline in inventory is accompanied by a large amount of gold moving from a “registered warrant” status to a “non-registered” status, which directly reflects the general sentiment among large holders: they tend to hold physical gold rather than use it for market delivery. Physical gold is sinking out of the trading system, leaving it and converting into a strategic reserve that cannot be readily accessed.

In stark contrast to the contraction in the physical base is the COMEX gold futures market’s open interest scale, which is several times larger. The huge “paper gold” promises represented by these contracts, together with continuously consumed deliverable physical inventories, form a potential foundation for delivery risk. At the same time, the Shanghai Gold Exchange (SGE), which reflects gold real-fund flows in China—the largest consumption market—still recorded gold outflow of as much as 126 tons in January 2026, roughly comparable to the same period last year, and up 11% month over month. Both Eastern and Western markets point to a clear fact: spot liquidity available for immediate use by the market is tightening.

The structural contradiction of “physical gold drains away, while paper gold thrives” is likely to trigger conflicts between leverage positions in the derivatives market and delivery preparations for physical commodities when macro sentiment or policy expectations fluctuate. This then amplifies short-term price volatility. The sharp plunge of gold prices at high levels in early 2026 was the concentrated release of this contradiction. This context also greatly increases the risk of short-term price games—especially leverage speculation. Rational investment strategies should return to the essence of gold as a “stabilizer” of long-term wealth. By allocating through physical gold bars, coins, or ETFs anchored to physical holdings, investors can dilute timing risks. While embracing long-term value, they can calmly deal with price volatility.

Capital and allocation strategy: match cycles, keep within proportions, and position inversely

Gold’s extreme volatility is essentially a mismatch in the game among funds from different cycles: central banks’ ultra-long-term funds and institutions’ mid-to-long-term funds are the ballast of the market, while retail investors’ short-term trading funds are the main manufacturers of market volatility. Investors must use scientific capital and allocation strategies to avoid risks from cycle mismatches and to build value through market volatility:

Match the capital cycle. Invest in gold using long-term funds, matching your own capital cycle with gold’s long-term value cycle. Avoid using short-term trading funds to participate in gold investment, so as to prevent being forced to cut losses due to short-term price swings. For long-term allocation funds, you can use a “splitting orders method”: divide the planned allocation funds into 12 equal monthly fixed purchases, using the full-year average price to smooth short-term price volatility, balancing liquidity needs and investment mindset.

Stick to allocation proportions. Research in modern portfolio theory confirms that allocating 5%–10% of gold in a traditional asset portfolio can reduce the portfolio’s overall volatility by 15%–20%, reduce downside risk by 22.3%, and increase the Sharpe ratio from 0.85 to 1.20. Gold has very low correlation with traditional financial assets such as stocks and bonds. It can deliver upside during stock market crashes, bond defaults, and currency depreciation, becoming the portfolio’s “extreme volatility insurance.” Investors do not need to overemphasize gold’s allocation proportion. A 5%–10% share is enough to hedge systemic risks while avoiding long-term compounding returns being dragged down by gold’s non-yielding attribute.

Practice inverse positioning. Give up forecasting gold’s short-term price trend, and instead use extreme market volatility for inverse value allocation. When gold’s speculative trading attribute is maximized and gold prices rise sharply and market sentiment becomes extremely overheated, you may take some profits to preserve core allocation positions without needing to sell at the highest price point. When the market experiences irrational deep selloffs, and the long-term core logic that resists credit-money assets has not changed, buy gold in batches to reduce average cost per holding. For long-term allocators, they should ignore gold’s short-term price volatility and treat it as “real estate for household wealth,” not as a trading instrument for short-term speculation.

For investors, the key to understanding gold lies in stepping out of the old framework of treating it as an ordinary commodity or a speculative tool. View its value from the high historical standpoint of the reconstruction of the global credit system. Holding gold is no longer just a simple asset allocation choice; it is also a strategic arrangement to hedge sovereign-credit currency risk. Its value rises in step with changes in the dollar system’s credit expectations and with the progress of the global monetary system’s reconstruction. In today’s environment where the dollar unipolar order is loosening, geopolitical risks are intensifying, and global debt remains high, the gold market still has high volatility. But as the ultimate monetary anchor that does not depend on any sovereign credit, its core value in protecting wealth has never changed. The core wisdom in investing in gold is not about predicting short-term ups and downs. Instead, it is about recognizing long-term trends, discarding speculative impatience, and using the patience of long-term allocation so that gold becomes the ballast stone in the wealth map that can traverse changes in the monetary system—holding the wealth floor amid uncertainty.

Source | Published with authorization from the author

Edited by | Wang Mao

Reviewed by丨Qin Ting

Responsible editor | Lan Yinfan