Last week, a seemingly routine visit to my local dentist, Dr Hau, after chipping a tooth, turned out to be unexpectedly insightful. He recognised me from my podcast, and our conversation shifted from dental repairs to the idea of using a gold filling for my tooth. As the gloved fingers of the dental assistant gently prodded the back of my mouth with the suction pipe, I was reminded that often the best investments serve multiple purposes. Like a house generating rental income or digital assets used as loan collateral, gold combines industrial, jewelry, and monetary value. With gold hovering just below $4,000 an ounce, it’s an apt moment to explore why gold remains a strategic asset amid uncertain times.
Gold’s record-setting surge is driven by three key forces: inflation expectations, systemic risk, and geopolitics.
Inflation Expectations.
Inflation expectations are persistently high worldwide, including in the US and New Zealand. Central banks’ pandemic measures (cutting interest rates to near zero) embedded a cycle of rising prices in many economies. Now, as rates rise sharply to combat inflation, doubts grow over central banks’ independence and ability to keep prices stable. This skepticism pushes investors toward scarce assets like gold. When fiat currency (abundant and prone to devaluation) loses its appeal, gold, with its proven 5,000+ year track record, becomes the logical refuge. It holds value when paper money doesn’t, providing a hedge against an unpredictable inflation future.
Systemic Risks.
It’s the risk no one likes to talk about, for fear of being labelled a doomer. Regardless, risk in the monetary system intensifies. The United States alone carries nearly $37 trillion in debt, facing a debt refinancing crisis where about 20% of outstanding debt must be rolled over in 2025 alone. How did we get here? The US government borrows heavily to avoid unpopular tax increases, which fuels unsustainable fiscal stress instead. Although US Treasury debt typically represents a “risk-free” investment due to the dollar’s global reserve status, rising interest rates threaten to destabilise this safety net (the recent classification of gold as a tier 1 asset plays a part here also). Interest rate hikes make debt securities appear less attractive, potentially triggering a vicious cycle of debt dumping and further rate increases. This looming spiral endangers the very premise of “safe” government debt, elevating gold as a scarce, tangible asset and a reliable financial backup plan.
If gold works as a back up plan for central banks, what about you?
Geopolitics.
Geopolitical tensions exacerbate uncertainty. Trade disputes between the US and China with tariffs exceeding 100%, ongoing conflicts in the Middle East, the Russian-Ukrainian, China making moves in the South Pacific…War, and rumors of war continually unsettle global markets. These tensions, while not guaranteed to escalate into catastrophe, raise probabilities that influence investor behavior today. Gold feeds off this uncertainty, much like plants feed on sunlight and carbon dioxide. This dynamic amplifies fear-driven demand for gold as a secure haven.
Hate Is Fear, Worn Inside Out.
Fear itself plays an essential role in gold’s appeal. Fear often prompts people to retreat into social media echo chambers or defensive mindsets when faced with uncomfortable realities. Rather than succumbing to panic or division, everyday investors can use gold to prepare for an uncertain world. What kind of world, you ask? One that could feel like the past, the future, or a combination of both.
Investing in gold shouldn’t scare you, it should prepare you.
If I could travel back in time I’d bring gold for spending money – If I could travel to the future, I’d bring bitcoin. The challenge is, we’re living right smack dab in the middle of the already, and the not yet. This is why I hold both.
Today, diversification must go beyond spreading holdings across countries or sectors; it requires holding alternative forms of money directly, beyond online brokerage accounts, to reduce exposure to any single currency. Gold and bitcoin complement each other: gold offers millennia of trust and stability, while bitcoin presents digital scarcity and the promise of a future monetary system.
Bitcoin’s role is gaining wider recognition, with major asset managers like Fidelity and BlackRock crafting bitcoin-focused products, and even governments considering bitcoin reserves. Yet history reminds us that better technology doesn’t always replace the old immediately. Gold may remain vital in crises where social order deteriorates, while bitcoin hedges a digital, interconnected future. Holding both assets hedges against the extremes of either outcome.
