Measure Assets In Gold, Not Dollars

"Despite being the subject of status quo ridicule, gold is still the king of financial assets."

By Peter Schiff, Schiffgold

A new round of tariff announcements from the Trump administration sent markets reeling, with cold coming down from its all-time high over $4,050, only to settle above $4,000, signaling collective doubt in the system itself as investors rush to protect themselves with hard assets.

Collectively, markets are reaffirming gold’s role at the center of sovereignty, monetary stability, and global reserve strategy, even as it has become a favorite target of Keyneseian ridicule as everything from a “barbarous relic” to a waste of physical and financial space in investment portfolios and balance sheets.

Yet, confidence in US debt continues to decline, with the “safe” status of Treasuries increasingly being questioned. That’s why now, for the first time in decades, collective central bank gold holdings have surpassed the value of their Treasuries. Central banks now hold 20% of all gold ever mined, protecting themselves from the effects of currency debasement even as they, ironically, cause it. Instead of earning yield by holding Treasuries, they continue stocking up on gold, which is a powerful statement against the results of their own monetary experiments.

Because gold is very difficult to manipulate compared to other asset classes, and isn’t subject to the whims of central bankers or the ability of an overindebted, over-spending country to pay back what it owes, central banks are rushing to stock more of it. While uncontrolled debt issuance, dollar weakness, and a massive sovereign balance sheet, central banks buy gold to protect themselves from exactly the same problems that were caused by centralized control.

Meanwhile, investors, commentators, and asset managers, love to sing about stock market highs while ignoring the problem: those stocks are being measured in a currency that’s constantly being debased. When you price them in gold, you’re using a true measuring stick that hasn’t been reconfigured by central bank wizards. Suddenly, denominated in real money, most other “booming” assets don’t look nearly as good.

USD vs. Gold, 1-Month

Equity indexes like the S&P 500 are well off their nominal highs when you measure them in gold instead of dollars. Even as equities rise in dollar terms, zoom out, and those gains often fail to beat gold’s rise. That’s because asset booms are being driven by manipulations in the form of money printing, low interest rates, and liquidity instead of real fundamentals.

Bitcoin is no different. Bitcoiners, who love dunking on gold, are celebrating recent latest all-time highs, but love to ignore the fact that real gold is massively outperforming “digital gold.” A spectacular Bitcoin crash after Trump’s recent tariff announcements brought Bitcoin down from its highs of over $125k down to $107k, all while gold held its ground.

As Peter Schiff said on X, formerly Twitter, last week:

“Today is another example of why Bitcoin is not digital gold or even digital silver. Gold closed the week up 3%, above $4,000, and silver rose 4.4%, closing above $50. Both represent record-high weekly closes. In contrast, Bitcoin dropped over 5%, double the decline of the Nasdaq.”

Despite being the subject of status quo ridicule, gold is still the king of financial assets. Wall Street’s reflexive scorn of gold is due to the fact that gold exposes Keynesians as frauds and sometimes thieves, and threatens the premise of the existence of an entire category of academics and professionals, from Ivy League academics to mom-and-pop retail investment advisors. If a 5,000-year old rock performs just as well as a traditional 60/40 stock-bond portfolio, a lot of people are wasting their time and money.

When you measure much of the financial world in gold, many of the supposed winners lose their luster. All you needed was a honest yardstick.

The Underlying Theory Behind Really, Really, Bad Predictions

What do the biggest banks, the most prominent news outlets, and advanced AI models have in common? They were all wrong about the 2025 gold price by over $1000. While there is always a lot of uncertainty in the financial markets, being off by over $1000(over 30% of gold’s 2024 year-end price), is embarrassing. While it wouldn’t be uncommon for predictions to be wrong, it is interesting but not surprising that all of the predictions were wrong in the same direction, to the same extent.

For as widely traded an asset as gold, particularly with how closely it is linked to large macroeconomic trends, there must be a fundamental misunderstanding for everyone to be wrong in the same way. Some theoretical bias must underlie such a predictably wrong group of predictions. While there is always randomness in financial markets, the systemic under-prediction of gold’s price comes from a failure to account for the inherent flaws of fiat money and the American institutional decline of the past few decades.

If you go back to December 2024 and January 2025, almost all gold price predictions for end of year 2025 will be around the $3000 mark or lower. At the time $3000 was seen as a bullish prediction. 4000 was thought to be possible in the next few years, but reaching it as early as early October 2025 was almost unthinkable. Most of the same fundamental factors that drove gold to its current high price were already there, but the instability of Trump’s trade policy may not have been fully accounted for. However, the Fed has not changed significantly, and Trump’s fiscal liberties had already been evidenced in the past.

The decline of the dollar and the move to gold by national banks was a strong trend that was only accelerated by the Trump presidency. Such predictable long-term trends being exacerbated were not factored into gold price because a far too stable view of the status quo and two deadly assumptions blinded people to the future march of gold. Only people who grew out of these inherited assumptions could actually predict gold’s trajectory.

The first unspoken assumption of all of these institutions and media sources is the idea that fiat money is the most effective and only conceivable way that the modern world can exchange goods and services. The public dialogue about the merit of fiat money is closed except for a few critical thinkers who are able to step outside and view the world from a more historical perspective. Its many issues are defended because they cannot even conceptualize a different system. The Dollar itself is always painted as the victim of mismanagement or macroeconomic instability rather than an artificial tool of government control.

While people in general believe that the central bank can make mistakes, they accept it because they cannot advocate for an alternative. They aren’t able to reevaluate their beliefs because without an Austrian framework, they assume that government control is the only means of ordering human action. The fact that fiat currency is an unsustainable and temporary invention must first be challenged before they could possibly understand the recent price rise of gold.

Secondly, these various predictors of gold price all fail to understand the dire state of the US, particularly in the 21st-century. Bureaucracy and the growth of discretion based governance have taken power away from where it can be controlled or understood. More decisions now are made in unaccountable and invisible rooms than ever before. Congress has had its authority whittled away by the presidency continually. Gold is a vote of confidence against the US government, and those who understand its institutional issues can see why gold is performing far above mainstream expectations. All the predictions were made in a theoretical world that did not fully account for the broken trust of the American people and the growing wariness towards the US of almost every other country.

Citizens and foreign central banks are no longer confident in the dollar and see America as a place of upside rather than stability. American equities are still performing well, as the economy is still one of the freest in the world, but the unstable management of the central bank is continuing to drive foreign hedging with dollars down. The great loss of trust in America was already occurring, but the nose dive of the Biden and Trump administrations must be accounted for before any accurate assessments of Gold can be made. Predictions made using a model of a stable institutional environment will not hold. Gold is merely a shining symbol of the great replacement of trust in the US with trust in anything else.

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