Gold: Debasement Trade And The Era of Uncertainty

If you missed the best recent articles:

• The Wolf of Wall Street: Where Does Real Money Come From?

• What Factors Affect Mortgage Rate?

• Anduril: America's 2nd Most Important Private Company

• Argentina And Dollarization

• Why Does China Dominate the Shipbuilding Industry?

CHINA RETREATS, CALLS FOR NEGOTIATIONS - HOW TO IDENTIFY AND MANAGE RISK?

“Gold is money. Everything else is credit.”
— J.P. Morgan, testimony before the Pujo Committee, 1912

There are moments when prices speak truer than any speech. Gold surpassing $4,000/oz last week was such a moment: not the cheers of the gold bugs, but the hollow echo of eroding institutional trust. On the other side, Nasdaq still shines when measured in USD, but strangely weakens when converted to gold. The market sends a short but profound message: we are living in an era optimistic enough to buy GPUs for the future, yet anxious enough to hold non-coupon metal.

Most want to call this a “paradox”. For myself, I call it the new balance of the era of uncertainty. Expanding fiscal policy, debates on Fed independence no longer backstage whispers, and the US–China trade war shifting from “tariff-oriented” to “power infrastructure” (supply chains, technology, logistics, rare earths). At the deep level, the yield curve and term premium signal that long-term capital costs have entered the post-Covid regime; on the surface, deliberate dollar weakness turns USD from “bedrock” to political variable. In such a matrix, smart investors don't choose either-or; they choose both-and: and betting on progress (progress) and hedging uncertainty (paranoia).

The result is cognitive dissonance investing as the operating norm: tech creates expected productivity gains but also tears apart the old order; gold absorbs that very chaos as institutional-monetary insurance. This is not a short-term psychological game, but a long-term revaluation cycle as the world shifts from unipolar order (USD) to bipolar (USD + Gold). Evidence lies not only in tickers, but in reserves: central banks on their longest gold buying streak in decades, while Beijing builds “Eastern London” – opening peripheral vaults, standardizing gold liquidity on SGE, inviting BRICS to deposit gold as alternative trust infrastructure.

In other words, the story isn't just who buys gold, but who is trusted to hold it. That's the new frontier of US–China financial competition. London and New York have liquidity heritage; Shanghai has geo-economic momentum. As gold's reserve share approaches (even exceeds in some metrics) U.S. Treasuries, we're no longer discussing “inflation hedge”; we're witnessing a reserve architecture shifting axes.

And if you're still asking: “Why is Nasdaq still flying?” – short answer: pricing two futures. A tech-led growth future, where AI extends cash flow duration and improves margins. A high institutional-geopolitical risk future, where tariffs, public debt, and central bank independence become uncertain variables. Both get priced into the market simultaneously. That's why Nasdaq hits highs in USD while gold hits highs in its own right, and Nasdaq lags when measured in gold.

This week, no taste arguments. Viethustler and I pick six backbone charts to cut through the noise, reconstruct the picture with data over emotions:

1. Gold Price & US Public Debt (1970–2023) – fiscal heat raises the gold pricing floor.

2. Stocks vs. Gold (1995–2025) – societal sentiment thermometer: optimism vs. defense.

3. Debasement Trade: Central Bank Liquidity vs. Gold Price (2004–2025) – real yields are the spark, liquidity is the oxygen.

4. Longest Central Bank Gold Buying Cycle (post-GFC → 2025) – institutional demand reshapes reserve structure.

5. Gold & Nasdaq-100 Both Soaring (2025 YTD) – deliberate weak dollar, AI extends duration, hedge instability.

6. $4,000/oz in the Eye of Trade War Round 2 – political-trade catalyst shifts phase.

The 2025 market isn't irrational. It's teaching an old tough lesson: hold GPUs for tomorrow, gold for stormy days. The rest of the article will walk through each chart, unpack transmission mechanisms, and wrap with a simple playbook: coexist with bipolarity.