The Interest of Monetizing Gold in the 21st Century: From Barbarous Relic to Ultimate Monetary Asset
The discussion around the monetization of gold is polluted by a storybook image: a return to the rigid and deflationary Gold Standard of the 19th century. This is a fundamental error in analysis. The monetization of gold in 2025 is not a nostalgic regression, but a sophisticated evolution unfolding on three simultaneous fronts: (1) the reaffirmation of its economic function as « ground zero, » (2) its integration into new financial technologies, and (3) its use as a lever of liquid power within the plumbing of the global financial system.
The Fundamental Economic Rationale – Gold as the « Ground Zero » of Finance
First and foremost, we must stop considering gold as a simple commodity. Its primary function is not industrial; it is monetary. It is an a-systemic asset, the only one that exists outside the financial system while being universally accepted as a form of final settlement.
Beyond the « Safe Haven » Cliché: Analysis of an Asset without Counterparty Risk
The term « safe haven » is overused. Gold’s true economic power lies in a unique and absolute characteristic: the absence of counterparty risk.
- A stock is a claim on the future profits of a company that can go bankrupt.
- A bond is a claim on a government or a corporation that can default.
- A bank deposit is a claim on a bank that can become insolvent.
- Even cash, whether the euro or the dollar, is a liability of a central bank, whose value can be destroyed by inflation.
Physical gold, held outright, is no one’s liability. Its value does not depend on the promise of a third party. It is final settlement. In a world where total debt (public and private) exceeds 300% of global GDP, this attribute is not a detail; it is the central argument.
The Economic Engine: The Barometer of Real Interest Rates
The price of gold is not irrational. It is primarily governed by an implacable economic logic: its inverse correlation with real interest rates (nominal rates minus anticipated inflation).
- When real rates are high, holding gold has a high opportunity cost (one forgoes a safe and significant return). Gold underperforms.
- When real rates are low or negative (as has been the case for over a decade), holding bonds or cash makes you lose money. The opportunity cost of holding gold becomes zero or even negative. Gold outperforms.
The policies of central banks since 2008, which consist of keeping rates artificially low, have therefore created a structurally favorable environment for gold. The monetization of gold is the logical consequence of a world where fiat currency no longer rewards saving.
Modern Forms of Monetization – Integration into the System
Monetization no longer involves transporting bars of gold. It occurs through financial instruments that make gold liquid, accessible, and transactional, effectively reintegrating it into the monetary circuit.
Democratization via ETFs (Exchange-Traded Funds)
ETFs like the SPDR Gold Shares (GLD) were a revolution. They allowed any investor to buy gold as easily as buying a stock. In doing so, they have channeled hundreds of billions of dollars into the gold market, increasing its liquidity and reinforcing its role as a major financial asset. This is a form of passive monetization: the gold does not circulate, but its value is integrated into millions of portfolios, influencing allocation strategies just like stocks or bonds. The criticism, however, remains valid: this is « paper gold » that reintroduces counterparty risk (the custodian storing the gold for the fund).
The Revolution of Gold-Backed Stablecoins and Tokenization
This is where the analysis must be pushed further. Crypto-assets like Paxos Gold (PAXG) or Tether Gold (XAUT) are a much more powerful form of monetization. Each « token » is a direct digital title of ownership to a specific gram or ounce of physical gold, segregated and audited in a vault.
This technology allows for the fusion of gold’s millennial permanence with 21st-century technology:
- Speed and Portability: One can transfer ownership of $10 million worth of gold to the other side of the world in seconds for a few cents in fees, 24/7.
- Divisibility and Programmability: A gold bar can be divided into millions of tokens, allowing for micropayments. It can be integrated into smart contracts in decentralized finance (DeFi) to serve as collateral for loans in an automated and transparent manner.
This is active monetization. Gold is leaving the vaults to become a medium of exchange and a unit of account in the digital economy.
The Hidden Power – Unlocking Liquidity and the Power of Collateral
This is the most misunderstood and most important aspect, the one that interests central banks and large institutions. Gold in a vault is not a « dead asset. » It is a dormant lever of financial power.
The Gold Lending and Swap Market
Central banks do not just store their gold. They put it to work. They can lend it (via a « gold lease ») to commercial banks (bullion banks) in exchange for an interest rate (the « lease rate »). These bullion banks then use this gold for their market operations. A gold reserve thus becomes a source of income.
They can also engage in swaps: temporarily exchanging gold for currencies (usually dollars) to obtain emergency liquidity, with an agreement to buy it back later. This is a way to mobilize the value of gold without having to sell it permanently. It is a temporary and strategic monetization.
Gold, the Ultimate Collateral in a World of Dubious Debt
The modern financial system runs on collateral. To obtain short-term loans in the repo market (the heart of the financial plumbing), banks must post high-quality assets as security, primarily government bonds.
However, the credibility of many sovereign debts is eroding under the weight of deficits. What will happen on the day that U.S. Treasury bonds or German Bunds are no longer considered risk-free?
The answer is gold. As an asset with no counterparty risk and no default risk, it is the ultimate collateral, the collateral of last resort. A nation that owns significant gold reserves will always be able to obtain the liquidity it needs because it offers a guarantee that no one can refuse. This is the fundamental reason why Russia and China are accumulating physical gold on their territory: it is not just about protecting themselves from the dollar, but about preparing for a future system where the quality of collateral will be the key to financial power.
The power of monetization lies here: it transforms a stock of metal into a potential flow of unlimited liquidity and absolute negotiating power in a financial system in crisis.
A Strategic Competition
The interest in monetizing gold is therefore much deeper than a simple academic debate. It is a multi-level strategy. For the individual, it is a way to exit a failing fiat system, using modern tools like gold-backed stablecoins. For the financial system, it is the integration of a final settlement asset onto the digital rails of the 21st century. And for nations, it is the ultimate strategic weapon in the competition for the future global monetary order. The question is no longer whether gold will be remonetized, but to observe how its different forms of monetization (physical, paper, digital) will interact and reshape the hierarchy of power.
In this competition, the finest and most complete analysis prevails. Gold is not the past. It is an asset that forces us to think about the future of money, and its monetization is the pivot of this reflection.