Berlin, Germany (Weltexpress). Do the constantly new gold price records signal the final ‘end’ for Western demonetisation and price suppression of the yellow metal, while China wants to ‘de-Westernise’ the global precious metals market with its own exchanges?
For decades, the West, especially the US Federal Reserve, has manipulated the market price of gold downwards as the only true yardstick for inflation. This made it easier to hide the inflationary effects of ever-new floods of dollar paper money from the public. Amid the current global changes in finance, in which China is playing a greater role, and against the backdrop of increasing crises and growing threats of war, many international gold traders expect a ‘tsunami of capital’ to flood the gold market, which does not bode well for the dollar and US government bonds.
China is currently stepping up its efforts to break Western dominance of the global gold market and is positioning itself as a key player in the trading and storage of gold in order to create a global alternative to the US-dominated financial system. To this end, the People’s Bank of China (PBOC) is using the Shanghai Gold Exchange (SGE) to persuade central banks from friendly countries, particularly in Southeast Asia, to store their national gold reserves in China rather than in New York, London or Zurich.
Such a show of confidence would further strengthen Beijing’s role in the global financial infrastructure and reduce the Global South’s dependence on the US dollar and Western financial centres.
Gold prices reached new record highs in September 2025. This development is driven not only by geopolitical tensions fuelled by the collective West, but also by national central banks and financial institutions, which have rapidly increased their demand for gold in recent times. Added to this is a boom in private investors converting their savings into physical gold to hedge against economic and political crises and a resurgence of inflation.
China’s push to de-Westernise the gold market is driven by the strategic goal of internationalising the yuan and reducing dependence on the dollar-centric financial system. The decision by the US and its allies to freeze Russia’s foreign exchange reserves held in Western countries in 2022, following the start of Russia’s special military operation in Ukraine, has alarmed international investors in assets in EU countries and the US.
To make matters worse, the West is now stealing the interest income from the frozen Russian funds, and to add insult to injury, Western politicians, especially those in the EU, are now declaring their intention to steal all Russian funds, amounting to well over €200 billion – there is no legal basis for such a move. All this makes it clear to the rest of the world, especially the Global South, what risks they are taking when they deposit their assets in Western countries.
Gold, the best protection against crises of all kinds
Over the last 6,000 years of human history, gold has survived every crisis, whether political, military or economic, unscathed and, unlike other so-called ‘assets’, has lost none of its value. In contrast, all paper currencies in the world have sooner or later collapsed or lost all connection to their original value. Today’s US dollar is worth less than one per cent of what it was worth a hundred years ago. Inflation has eaten away the rest. But it is only in recent years that gold has once again become a key asset in the West.
What makes the Shanghai Gold Exchange particularly promising for investors is the prospect that the criminal machinations of the Western gold exchanges will come to an end. In particular, the gold exchanges in London and New York, in coordination with their respective national regulatory authorities, have manipulated the price of gold downwards in recent decades in order to make investments in gold unattractive compared to government bonds. This worked even when government bonds yielded less interest income than inflation eroded. In other words, even if investing in government bonds was a losing proposition for savers, gold was even less attractive. The only ones who profited from this gigantic fraud were the states, or rather the irresponsible and dishonest politicians at the helm. For a better understanding, here is a brief historical digression:
The end of the dollar’s gold standard and the suppression of the gold price
In August 1971, US President Richard Nixon initiated one of the most momentous decisions in modern financial history: the demonetisation of gold. He closed the so-called ‘gold window’ of the Bretton Woods system, meaning that the US dollar could no longer be exchanged for gold at a fixed rate of 35 US dollars per ounce. This ended the post-war system that had pegged the dollar to gold and other currencies. The move was forced by growing US deficits, the costs of the Vietnam War and demands from foreign countries for gold deliveries, particularly France, which no longer trusted the dollar’s stability.
This caused US reserves to shrink from 574 million ounces in 1945 to less than 300 million in 1971. By 1973, the Bretton Woods system had completely collapsed, floating exchange rates replaced fixed parities, and the dollar became a fiat currency – detached from any commodity link or other real values. Western central banks, led by the US Federal Reserve (Fed) and the Treasury, henceforth classified gold as a ‘barbarous relic,’ a term coined by economist John Maynard Keynes. They praised fiat money, i.e. printed paper, as modern and flexible, as it did not limit the money supply through gold reserves but promoted economic growth (through inflation).
In 1978, the US lifted restrictions on private gold ownership, but the role of gold in official foreign exchange reserves was marginalised. The International Monetary Fund (IMF) and the G7 countries supported this course by selling their gold reserves – the IMF, for example, sold 50 million ounces in the 1970s. In 1971, central banks worldwide still held 1.1 billion ounces; in the US, the share of gold in reserves fell from 25 per cent to less than 10 per cent by the 1980s.
Gold price suppression – a covert raid by central banks
Although officially demonetised, gold remained an indicator of monetary stability for incorrigible critics of unbacked paper money, and thus a thorn in the side of central banks, as gold price developments revealed inflation or dollar weaknesses, thereby undermining the credibility of the fiat paper money system.
There is evidence that the Federal Reserve, together with other central banks such as the Bank of England and the Bundesbank, deliberately manipulated the gold price between the 1970s and 1990s: the central banks flooded the market with massive sales and money leasing. The US sold around 17 million ounces between 1975 and 1979, and the IMF sold a further 25 million. Leasing allowed banks to lend gold to bullion banks, which sold it short to keep prices low. In the 1990s, leased gold accounted for 10–15 per cent of global supply. This means that by selling non-existent gold, which existed only on paper, on the stock market, the market prices of real, physical gold were depressed in order to maintain the illusion of price stability for the dollar and other fiat currencies.
Before 1971, the US and its allies had stabilised the gold price at $35 per ounce through the London Gold Pool (1961–1968). After 1971, this coordination continued informally. Declassified documents, such as Fed minutes from the 1970s, show discussions about the ‘psychological’ effect of the gold price. The 1999 Washington Gold Agreement limited sales by European banks to 400 tonnes per year and indirectly admitted to previous flooding.
Central banks also promoted gold price manipulation via derivatives markets. With their support, bullion banks were able to create further artificial supply by betting (futures and options) on the future movement of the gold price in order to manipulate prices downwards. According to the Gold Anti-Trust Action Committee (GATA), memos from the Bank of England in the 1990s confirm so-called ‘stabilisation measures’ through swaps, which often kept the price below $300 per ounce.
After deregulation in 1971, the price of gold rose to $850 per ounce by 1980, but fell back to $250–300 in the 1990s despite significant inflation – a clear indication of manipulation. Studies, such as those by GATA, estimate that this reduced the market value of an ounce by 20–30 per cent, maintaining the illusion of the dollar’s stability and protecting its hegemony.
From the 2000s onwards, manipulation subsided as emerging economies such as China and India boosted demand for real, physical gold, driving the price up to $1,900 by 2011. The Fed and its allies have never publicly admitted to gold manipulation, but government documents and market anomalies that have since been declassified support the claim of deliberate price controls to prop up the fiat system.
These are exclusively documents from the CIA, the State Department and the Federal Reserve. They show efforts to maintain the hegemony of the dollar after the end of the Bretton Woods system through interventions in the gold market and coordination measures to control prices. These documents were brought to light through requests under the Freedom of Information Act (FOIA) and are frequently cited by the Gold Anti-Trust Action Committee (GATA). Here are a few examples:
- The Federal Reserve memorandum from Chairman Arthur Burns to US President Gerald Ford detailing a secret US-German agreement in which Germany agreed not to buy gold above the official US price of $42.22 per ounce, even though market prices were $160–175. It shows the Fed’s efforts to coordinate with allies to prevent price spikes. See “U.S. Government Gold Manipulation Document Declassified “.
- The Reserve Protocol of the G-10 Gold and Foreign Exchange Committee. Released through a lawsuit filed by GATA against the Fed in 2009, these protocols document secret agreements between Western finance ministers and central bankers on gold policies, including sales and swaps to influence prices.
Gold price catching up?
After decades of gold price suppression amid persistent inflation, many experts believe that a huge backlog has built up, which has been unleashed tentatively at first and then rapidly over the last 12 months, currently manifesting itself in new record prices for gold almost every day. This spectacular development is taking place against the backdrop of a fundamental change in the structure of the financial system: after decades of dominance by the 60/40 portfolio – 60 per cent equities, 40 per cent bonds – leading financial institutions are now recommending investing capital in precious metals such as gold for the first time in over half a century.
This development marks a tectonic shift in the investment world, as gold has long been considered a ‘barbaric relic’ that was rejected as unproductive by legendary investors such as Warren Buffett. Those who suggested owning gold were often ridiculed as conspiracy theorists. But now influential voices are signalling a turnaround. Mike Wilson, chief strategist at Morgan Stanley, even advocates a 60/20/20 allocation: 60 per cent equities, 20 per cent bonds and 20 per cent precious metals. Jeff Gundlach, the famous ‘Bond King’ and manager of a major bond fund, recommends a 25/25/25/25 portfolio with one quarter each in equities, bonds, precious metals and cash. The fact that even a bond specialist like Gundlach recommends gold underscores the significance of this shift.
These new recommendations from major financial institutions such as Morgan Stanley and other investment giants signal that gold is once again being recognised as a legitimate asset class. The consequence: billions of dollars could flow into the gold market. The total annual gold bar market is only about £60 billion, and the market capitalisation of all gold mining stocks traded in the United States is only £600 billion. Given this small market size, the influx of capital holds enormous upside potential, fuelling the current gold bull market in addition to geopolitical uncertainties and rising demand from central banks.
This shift does not bode well for the US dollar, as it supports China’s push to de-Westernise the gold market and the global financial order, as discussed at the outset.
