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This article first appeared in Forum, The Edge Malaysia Weekly on March 30, 2026 – April 5, 2026<\/p>\n
In mid-1971, US President Richard Nixon ended the dollar\u2019s gold peg at US$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.<\/p>\n
De-dollarisation<\/p>\n
Some believed that flexible exchange rates, replacing earlier fixed rates, would resolve the \u201cTriffin dilemma\u201d of the \u201cdollar system\u201d, due to its role as world reserve currency. (The Triffin dilemma is a fundamental conflict of interest that arises when a single national currency also serves as the world\u2019s primary reserve currency.)<\/p>\n
Many believe the Organization of the Petroleum Exporting Countries (Opec) was allowed to raise oil prices from 1972, on condition petroleum purchases would be settled in dollars. \u201cPetrodollars\u201d were thus believed to be the \u201cblack gold\u201d underlying the dollar system\u2019s survival after 1971.<\/p>\n
Although still the dominant world reserve currency, the dollar\u2019s role has gradually declined over the decades. Trump 2.0\u2019s rhetoric and actions appear to have accelerated de-dollarisation.<\/p>\n
US President Donald Trump\u2019s April 2, 2025 \u201cLiberation Day\u201d tariffs announcement triggered even greater uncertainty and volatility in foreign exchange and other markets worldwide.<\/p>\n
Greater policy unpredictability has caused governments and investors to explore new options. Authorities worldwide are considering and developing alternatives to the dollar system.<\/p>\n
Besides higher inflation, Trump\u2019s threats and actions, particularly his tariffs, sanctions and wars, have pushed investors to sell dollar assets and seek alternatives.<\/p>\n
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.<\/p>\n
Many countries in the Global South have been purchasing gold rather than dollar-denominated assets for reserve accumulation.<\/p>\n
Geopolitical economy commentator Ben Norton highlighted an April 2025 note by the Deutsche Bank foreign exchange research head, noting:<\/p>\n
\u201cWe 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 …<\/p>\n
\u201cThe market is rapidly de-dollarising. In a typical crisis environment, the market would be hoarding dollar liquidity \u2026 The market has lost faith in US assets. They are actively selling down their US assets.<\/p>\n
\u201cUS administration policy is encouraging a trend towards de-dollarisation to safeguard international investors from a weaponisation of dollar liquidity.\u201d<\/p>\n
Western confiscations<\/p>\n
The weaponisation of central banks by the US, Europe and their allies has caused other central banks to seek \u201csafety\u201d by switching from dollar assets to gold.<\/p>\n
Increased weaponisation of the dollar and Western confiscation of others\u2019 assets under various pretexts have accelerated this trend.<\/p>\n
Billions of dollars\u2019 worth of Venezuelan central bank gold, held at the Bank of England (BoE), was confiscated by the UK government during the 2019 Washington-instigated Caracas coup attempt.<\/p>\n
After the coup failed, the BoE refused to return the gold to Venezuela. Trust in Western governments and central banks thus continued to erode.<\/p>\n
Similarly, the US Federal Reserve and European Central Bank confiscated more than US$300 billion worth of Russian dollar-, euro- and sterling-denominated assets after it invaded Ukraine.<\/p>\n
European authorities have since pledged to transfer these Russian assets to Ukraine rather than return them to their owners.<\/p>\n
Western confiscations of the central bank reserves of Iran, Venezuela, Afghanistan, Russia and others have alarmed authorities and publics worldwide.<\/p>\n
Central banks\u2019 reserve managers have increasingly viewed gold as safe despite greater volatility. Besides serving as a hedge, the precious metal also offered lucrative speculative gains.<\/p>\n
Mitigating risk<\/p>\n
Many monetary authorities have reversed their earlier accumulation of dollar-denominated US Treasury bills and bonds in their official reserves.<\/p>\n
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.<\/p>\n
Gold holdings in central bank reserves increased significantly after the 2008\/09 global, actually Western, financial crisis, followed by the Western turn to \u201cquantitative easing\u201d.<\/p>\n
For the first time in three decades, central banks\u2019 total gold holdings in their international reserves exceeded their US Treasury bond holdings in 2025.<\/p>\n
About 36,200 tonnes, or a fifth of all gold holdings, are now held by central banks, rising rapidly over two years from 15% at the end of 2023!<\/p>\n
Meanwhile, rising gold prices drew more speculative investments for profit. But such price spikes are not sustainable indefinitely.<\/p>\n
Once gold was seen as overpriced, investors turned to other precious metals, notably silver, and other financial assets.<\/p>\n
BRICS\u2019 golden hedge?<\/p>\n
After Lord Jim O\u2019Neill identified Brazil,\u00a0Russia, India and China as significant new financial powers outside the Western sphere of influence, BRICS was formed in 2009 by adding South Africa.<\/p>\n
BRICS now has 10 members and 10 partners. Together, they account for 44% of world income, measured by purchasing power parity, and 56% of its people.<\/p>\n
Russia, China and India have been among the largest recent buyers of gold. Other major purchasers include Uzbekistan and Thailand, both BRICS partners.<\/p>\n
Trump 2.0 has generated significant apprehension internationally. Without BRICS\u2019 help, his weaponisation of economic policies and agreements has accelerated de-dollarisation.<\/p>\n
Although Trump accuses the BRICS of conspiring to accelerate de-dollarisation, their precious metal purchases make sense as a hedge for their reserves.<\/p>\n
Jomo Kwame Sundaram is currently senior adviser at Khazanah Research Institute (KRI). A former economics professor, he was United Nations assistant secretary-general for economic development. He is a recipient of the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought. K Kuhaneetha Bai studied at the University of Malaya and does policy research at KRI.<\/p>\n
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