Striking report from Deutsche Bank: The dollar's hegemony is shaking
According to Deutsche Bank's latest report, the share of gold in global reserves is rising rapidly while the dominance of the dollar is declining. BRICS countries are also taking steps toward a new gold-backed currency.
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A new report published by Deutsche Bank has once again highlighted the transformation in the global financial system. Gold has begun to replace the dollar, which has been dominant in global trade since the 1990s. The bank's report also draws attention to the efforts of BRICS countries to create their own currency and the signs of a new gold-backed global monetary order.
THE ERA OF GOLD AS A ‘BARBAROUS RELIC’ IS ENDING
Deutsche Bank strategists Mallika Sachdeva and Michael Hsueh state in their report that gold has become a geopolitical symbol rather than an economic one. In the 1990s, under the influence of US hegemony, the share of gold in global reserves decreased rapidly, and the dollar took center stage. However, today, this ‘unipolar world’ order has been shaken significantly.
THE DOLLAR'S SHARE HAS FALLEN FROM 60 PERCENT TO 40 PERCENT
The report reveals that the dollar's share in global reserves has fallen from 60 percent to 40 percent. In contrast, gold's share in reserves has rebounded to 30 percent. This shift has caused gold to re-emerge as a safe haven. Increasing geopolitical uncertainties have enhanced the value of gold, transforming it from an ‘old relic’ into a strategic asset.
Developing countries, including Turkey, are trying to reduce their dependence on the dollar by rapidly increasing the amount of gold in their reserves. In particular, the financial sanctions imposed by the West following the Russia-Ukraine war have led these countries to accumulate more gold.
THE 8,000 DOLLAR LEVEL
Deutsche Bank predicts that if developing countries aim to increase their gold reserves to the 40 percent level as global geopolitical polarization deepens, gold prices could rise to as high as 8,000 dollars. The bank estimates that the increasing demand for gold will trigger upward pressure on prices over the next 5 years.
Another notable development in the report is the effort by BRICS countries to create a gold-backed currency for trade among themselves. This move is considered a major step taken against the dollar's dominance in global trade. It was noted that last year, the value of total gold stocks worldwide exceeded the total value of US Treasury bonds for the first time.
THE RETURN OF HISTORY: GOLD IS RISING AGAIN
Deutsche Bank emphasizes that the value of total above-ground gold stocks worldwide exceeded US Treasury bonds last year, describing this development as the “return of history.” Gold is now accepted as a larger asset class than the world's main safe asset.