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The surge in gold prices is not just about gold. In their latest note, Stephen Jen and Joana Freire argue that the rally reflects structural forces: a global divestment from fiat monies driven by years of QE, fiscal imprudence, and eroding trust in central banks.

“The rally in gold prices has most likely been fuelled by persistent poor monetary and fiscal policies in the reserve-issuing countries since 2009, not 2025. If the official sector continues to divest from fiat monies, which we believe is likely, further upside to gold (and Bitcoin) could be substantial.”Stephen Jen and Joana Freire, September 22, 2025

The note highlights three key observations: (1) the rally is less about gold itself and more about diminishing faith in fiat currencies; (2) the freezing of Russia’s official reserves in 2022 accelerated central banks’ pivot to gold; and (3) gold has overtaken the euro to become the second-largest reserve asset, after the dollar.

The authors estimate that if central banks were to raise their gold holdings to match those of the dollar, gold could, in theory, reach USD8,500 per ounce. While not a forecast, the scenario underscores how structural demand may continue to reshape the gold market.

Table of Contents

  • Summary
  • Observation 1. The rally in gold is less about gold itself and more about fiat monies
  • Observation 2. Freezing of Russia’s official reserves has scared other central banks
  • Observation 3. Gold is now the second-largest reserve asset
  • We have a few thoughts
  • Bottom line

 

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