- Mar 24
- 4 min read
KUALA LUMPUR, Malaysia, Mar 24 2026 (IPS) - In mid-1971, US President Nixon ended the dollar’s gold peg at $35 per ounce, triggering de-dollarisation. The 2025 gold and silver rush followed private speculators trying to profit from central banks hedging against perceived new risks.
De-dollarisation
Some believed that flexible exchange rates, replacing earlier fixed rates, would resolve the ‘Triffin dilemma’ of the ‘dollar system’, due to its role as world reserve currency.
Many believe OPEC was allowed to raise oil prices from 1972, on condition petroleum purchases would be settled in dollars. ‘Petrodollars’ were thus believed to be the ‘black gold’ underlying the dollar system’s survival after 1971.
Although still the dominant world reserve currency, the dollar’s role has gradually declined over the decades. Trump 2.0’s rhetoric and actions appear to have accelerated de-dollarisation.
Trump’s 2 April 2025 ‘Liberation Day’ tariffs announcement triggered even greater uncertainty and volatility in foreign exchange and other markets worldwide.
Greater policy unpredictability has caused governments and investors to explore new options. Authorities worldwide are considering and developing alternatives to the dollar system.
Besides higher inflation, Trump’s threats and actions, particularly his tariffs, sanctions and wars, have pushed investors to sell dollar assets and seek alternatives.
Various factors have significantly accelerated de-dollarisation. In the first half of 2025, the dollar fell by over 10%, its sharpest fall since the 1973 oil crisis.
Many countries in the Global South have been purchasing gold rather than dollar-denominated assets for reserve accumulation.
Geopolitical economy commentator Ben Norton highlighted an April 2025 note by the Deutsche Bank foreign exchange research head, noting:
“We are witnessing a simultaneous collapse in the price of all US assets [including stocks, foreign exchange, and bonds] … we are entering uncharted territory in the global financial system…
“The market is rapidly de-dollarising. In a typical crisis environment, the market would be hoarding dollar liquidity…The market has lost faith in US assets. They are actively selling down their US assets.
“US administration policy is encouraging a trend toward de-dollarisation to safeguard international investors from a weaponisation of dollar liquidity.”
Western confiscations
The weaponisation of central banks by the US, Europe, and their allies has caused other central banks to seek ‘safety’ by switching from dollar assets to gold.
Increased weaponisation of the dollar and Western confiscation of others’ assets under various pretexts have accelerated this trend.
Billions of dollars’ worth of Venezuelan central bank gold, held at the Bank of England, was confiscated by the UK government during the 2019 Washington-instigated Caracas coup attempt.
After the coup failed, the Bank of England refused to return the gold to Venezuela. Trust in Western governments and central banks thus continued to erode.
Similarly, the US Fed and European Central Bank confiscated over $300 billion worth of Russian dollar-, euro- and sterling-denominated assets after it invaded Ukraine.
European authorities have since pledged to transfer these Russian assets to Ukraine rather than return them to their owners.
Western confiscations of the central bank reserves of Iran, Venezuela, Afghanistan, Russia and others have alarmed authorities and publics worldwide.
Central banks’ reserve managers have increasingly viewed gold as safe despite greater volatility. Besides serving as a hedge, the precious metal also offered lucrative speculative gains.
Mitigating risk
Many monetary authorities have reversed their earlier accumulation of dollar-denominated US Treasury bills and bonds in their official reserves.
While US government debt has continued growing, inflationary pressures have mounted, albeit episodically. Gold and silver holdings are believed to help hedge against inflation and fiat currency debasement.
Gold holdings in central bank reserves increased significantly after the 2008-09 global, actually Western, financial crisis, followed by the Western turn to ‘quantitative easing’.
For the first time in three decades, central banks’ total gold holdings in their international reserves exceeded their US Treasury bond holdings in 2025.
About 36,200 tons, or a fifth of all gold holdings, is now held by central banks, rising rapidly over two years from 15% at the end of 2023!
Meanwhile, rising gold prices drew more speculative investments for profit. But such price spikes are not sustainable indefinitely.
Once gold was seen as overpriced, investors turned to other precious metals, notably silver, and other financial assets.
BRICS’ golden hedge?
After Lord Jim O’Neill identified Brazil, Russia, India and China as significant new financial powers outside the Western sphere of influence, BRICS was formed in 2009 by adding South Africa.
BRICS now has ten members and ten partners. Together, they account for 44% of world income, measured by purchasing power parity, and 56% of its people.
Russia, China, and India have been among the largest recent buyers of gold. Other major purchasers include Uzbekistan and Thailand, both BRICS partners.
Trump 2.0 has generated significant apprehension internationally. Without BRICS’ help, his weaponisation of economic policies and agreements has accelerated de-dollarisation.
Although Trump accuses the BRICS of conspiring to accelerate de-dollarisation, their precious metal purchases make sense as a hedge for their reserves.
Related IPS Articles
Available online at: Central Bank Hedging Triggered Gold Fever
