Gold has long stood as a timeless store of value, revered across millennia for its scarcity, durability, and universal appeal. Today, with its price soaring past $3,000 an ounce, it is once again in the spotlight—captivating investors interest. As governments confront mounting debt and geopolitical tensions escalate, gold is reasserting its role as a strategic asset in a world increasingly skeptical of fiat currencies.
Scarcity That Sustains Value
Through history, an estimated 215,000 tonnes of gold have been mined, with two-thirds extracted since 1950. Yet due to its indestructible nature, nearly all of it remains in circulation—stored in vaults, worn as jewellery, or held in investment products.
If consolidated, this entire supply would form a cube just 22 metres per side—roughly half the size of the Arc de Triomphe in Paris, underscoring gold’s rarity. This is a key factor that continues to underpin its enduring value, especially in times of economic and geopolitical uncertainty like the one we live in today.
Demand Dynamics: From Jewellery to Sovereign Holdings
The United States, Germany, and Italy remain the largest holders of gold, but one of the main reasons why its price is soaring, is that nations like China are rapidly expanding their reserves—signaling a strategic shift in global reserve management.
Jewellery continues to be the largest source of demand, but a notable transformation is underway. Central banks in emerging markets, are driving a new wave of strategic accumulation. Their goal: reduce reliance on the U.S. dollar and shield reserves from geopolitical risk. Gold’s immunity to sanctions and political interference makes it a compelling alternative and in just the first quarter of 2025, central banks added over 300 metric tonnes to their holdings—driving the price higher.
Figure 1: Gold Reserves by Country
A Trend Set to Continue
This demand shows no signs of slowing. According to a survey by the World Gold Council and YouGov, 95% of central banks expect their gold reserves to increase over the next year—highlighting gold’s growing importance in sovereign strategy.
This rising demand, coupled with gold’s relatively stable supply, reinforces its upward momentum. As central banks diversify away from fiat currencies and seek geopolitical insulation, gold’s scarcity and resilience could drive prices even higher.
Figure 2: World Gold Council and YouGov Survey
Do you Think the Demand for Gold will Increase in the next 12 months?
Investment Implications: A Hedge Against the Unpredictable
From an investment perspective Gold’s resurgence reflects more than short-term market volatility—it marks a strategic recalibration for long-term investors. Over the past two decades, gold has delivered strong returns, outperforming most commodities, rivaling equities, and importantly offering resilience during recessions and fiscal instability.
It’s true value lies not only in performance but in portfolio diversification. Gold serves as a powerful hedge against inflation, currency debasement, and geopolitical shocks, and stands apart as a strategic portfolio allocation, especially in today’s uncertain macroeconomic landscape.
