The gold price is currently going through one of its most turbulent periods in recent history.
This has unfolded against a backdrop of escalating conflict in the Middle East, disruption to critical energy routes and renewed uncertainty around inflation and interest rates. The Strait of Hormuz, through which a fifth of the world’s oil supply passes, is under threat. Markets are reacting, but much of it is perhaps not playing out as one might have expected.
Whilst much of today’s reporting on the Middle East Crisis is about geopoltical fractures and the impact on inflation, there is also the small issue of the future of the petrodollar. How will workarounds impact the global financial system?
Today’s video examines what got us here and where we might be headed.
“The System That Replaced the Dollar Is Already Running. And It Runs on Gold.”
For half a century, the global financial system has rested on a relatively simple arrangement. Oil is priced in dollars, global trade is settled through dollar-based infrastructure, and surplus capital flows back into U.S. debt markets. This architecture has been remarkably durable, not least because it has been supported by geopolitical stability and security guarantees.
Both of those assumptions are now being questioned.
Gold sits at the centre of a changing of the guard. It is increasingly being treated as a reserve of last resort in a world where financial relationships are becoming more conditional and more fragmented.
In the video, we explore how this transition is unfolding in practice, from the mechanics of the petrodollar system to the emergence of parallel settlement networks, and the role that countries such as China, Iran and, potentially, Saudi Arabia are beginning to play.
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