Written by: Metrics Ventures
Gold's performance over the past year has been particularly striking. More importantly, the demand structure has undergone a significant shift: central banks and sovereign governments have shown a marked increase in their willingness to allocate assets. This can no longer be simply explained as inflation hedging or short-term safe-haven trading. A more reasonable understanding is that gold is responding to a deeper change—a repricing of sovereign currency credibility and the effectiveness of global governance.
This shift was repeatedly discussed at this year's Davos Forum. Whether in formal agendas or private discussions, the common themes were "the imbalance in global governance," "the collapse of the old order," and "we are entering a phase from which there is no going back." On Tuesday, Canadian Prime Minister Mark Carney's speech in Davos clearly articulated this pervasive unease. He stated bluntly that the so-called "rules-based international order" is crumbling, and humanity is moving from a once-useful but somewhat fictional narrative towards a more brutal reality: great power competition is no longer constrained, economic integration is weaponized, and rules are selectively applied to the powerful.
Carney doesn't simply blame any one country for the problem, but points to a more general shift in circumstances. When tariffs, financial infrastructure, supply chains, and even security commitments can be used as bargaining chips, the multilateral institutions upon which middle powers and open economies rely—whether the WTO, the UN, or other rule-based frameworks—are losing their binding force. In this environment, continuing to pretend that the rules are still functioning properly becomes self-deception. He uses Havel's metaphor of "living in a lie" to remind countries that the real risk lies not in the changing order, but in people continuing to act according to the language and assumptions of the old order.
More importantly, Carney repeatedly emphasizes not ideological confrontation, but a shift in governance choices. When rules no longer automatically provide security, states turn to another form of rationality: enhancing strategic autonomy, diversifying dependencies, and building resilience to pressure. He sees this as a typical risk management logic, not a betrayal of values. But it is precisely here that the foundations upon which the old order rests begin to crumble—because once states no longer believe the system can sustainably provide public goods, they will instead purchase "insurance" for themselves.
If we remove the discussions at Davos from specific national contexts, we find a deeper, shared underlying trend: countries haven't suddenly become more conservative, but rather have begun to accept the premise that the existing global governance system can still coordinate fiscal, monetary, and international responsibilities in the long term. When this premise is no longer widely believed, national behavior shifts from "division of labor within the rules" to "preparing for uncertainty." This shift will ultimately be reflected in the most fundamental areas: debt, fiscal policy, and monetary policy.
It is here that cracks in global governance begin to seep into financial pricing. National debt is no longer merely a tool for macroeconomic control, but is being re-examined as a discounting of governance capacity and political constraints; sovereign currencies are no longer just a medium of exchange, but are required to simultaneously assume the functions of intertemporal commitments, international responsibilities, and crisis buffers. Once the market begins to doubt whether these roles can still be fulfilled simultaneously, the impact on monetary credibility is no longer an extreme scenario, but a gradual but irreversible process.
All of this stems not from the fiscal failures of any single country, but is embedded within the existing international monetary system. The dollar-centric system dictates that the world must have a long-term deficit center to absorb external savings, and that surpluses and deficits are not accidental, but rather a rigid division of roles solidified by the system. The dollar is both the sovereign currency of the United States and the foundation of global reserves, pricing, and safe-haven assets. This means that global demand for "risk-free dollar assets" will be further amplified when uncertainty rises. To provide such assets to the world, the United States can only fulfill this role through continuous external debt.
In an environment of financialization and free capital flows, this division of labor is amplified. Trade surpluses are no longer primarily absorbed through commodity price or exchange rate adjustments, but are instead transformed into long-term allocations to US Treasury bonds and dollar-denominated financial assets; deficits are no longer immediately constrained, but are postponed and absorbed through financial system and central bank intervention. As long as the world continues to believe in the irreplaceable safety of dollar-denominated assets during crises, this imbalance can persist for a long time, and may even be seen as one of the sources of systemic stability.
However, when trust in governance declines, rule constraints weaken, and financial instruments are frequently weaponized, this structural imbalance begins to be repriced. Trade surpluses and deficits are no longer merely macroeconomic phenomena, but become risk exposures themselves. It is against this backdrop that Japan and China, both surplus countries, have gradually taken different paths.
Japan played the most typical and "cooperative" role as a surplus country in this system. Under external pressure and regulatory constraints, Japan chose to absorb adjustment costs through currency appreciation, financial liberalization, and long-term loose monetary policies, thereby maintaining the stability of the overall order. This strategy reduced friction in the short term, but transformed structural adjustments into low domestic growth, high debt, and deep central bank intervention. The surplus did not disappear but was internalized as the cost of long-term stagnation, and Japan's currency internationalization capabilities were significantly limited in the process.
China entered this system later, and its stage of development and internal constraints differ significantly from Japan's. Faced with expanding trade surpluses and external pressures, China did not choose to quickly clear its trade through price and financial channels. Instead, it maintained policy autonomy as much as possible within the framework of exchange rate management, capital account controls, and industrial upgrading. This choice has long been controversial, with accusations of "distorting the rules" or "free-riding." However, from a governance perspective, this appears to be a strategic arrangement to buy time and space for internal transformation within the existing system, rather than simple institutional arbitrage.
More importantly, this path has not stopped at "maintaining a trade surplus," but is subtly changing the structure of RMB demand. As China's position in global trade, manufacturing, and key supply chains rises, the RMB is no longer merely a settlement tool, but is increasingly being seen by many economies as a realistic option to reduce external dependence and diversify currency risks. Against the backdrop of escalating geopolitical and financial sanctions, a singular reliance on the dollar system is itself being viewed as a risk exposure, giving the demand for RMB settlement, RMB financing, and RMB asset allocation a clear strategic motivation.
Once the demand for RMB shifts from passive use to active allocation, its impact will no longer be limited to the trade level but will extend to the financial level. More frequent and stable use cases mean the market needs a deeper and more liquid pool of RMB assets to support this demand. Increased liquidity, in turn, will affect asset pricing, gradually shifting RMB assets from "domestic policy pricing" to "pricing logic closer to international boundaries." This process does not rely on complete capital liberalization but is driven more by real demand; it is a gradual but irreversible change.
It is precisely in this contrast that the "rise of the East and fall of the West" has once again become a topic worthy of serious discussion in recent years. It is no longer an emotional judgment about the rise and fall of a particular country, but a reflection of changes in the costs of roles within the system. As the self-correcting capacity of the dollar system declines, the space for deficit centers to continue absorbing imbalances through debt and financial expansion is shrinking; simultaneously, surplus economies are gaining importance in industrial chains, security, and regional arrangements. In this process, China, by not completely replicating Japan's adjustment path, has retained industrial, policy, and monetary space, giving it greater strategic flexibility in systemic restructuring.
However, this change does not signify the formation of a new, single, hegemonic currency. A more realistic picture is a shift towards a multi-centered and coexisting monetary system. The centrality of the US dollar may be weakened, but it will not disappear rapidly; the RMB's position in trade settlement, regional finance, and liquidity supply will gradually rise, but not on the premise of completely free floating, but rather relying more on trade networks, industrial chain depth, and policy credibility. Currency internationalization here is no longer an institutional label, but a result of its use.
In this evolution of the system, the logic of reserve assets also changes. Gold has returned to a central position not because it can provide returns, but because it is independent of any country's tax base, political stability, or international commitments, and is a direct response to governance uncertainty. It provides countries with a de-sovereign and de-credited reserve option, making it particularly suitable for playing a role in environments with insufficient consensus and weakened rule constraints.
Bitcoin represents another level of desovereign asset. Although it has lagged behind gold and some traditional assets in the past year and a half, its core logic has not been disproven. As a digital, scarce asset that is not dependent on any single governance system, it is more like a long-term option on the future form of currency. As the restructuring of the monetary system gradually becomes explicit and liquidity is reallocated, its pricing logic is more likely to catch up later rather than lead in the early stages.
If we ultimately piece together these clues, we'll find that this unnamed shift in order hasn't truly altered the short-term balance of power, but rather the preconditions for asset existence. When rules no longer automatically provide security, and when monetary credit itself becomes a risk that needs to be hedged, the core issue of asset allocation is no longer betting on who will win, but rather how to maintain viability in a world where uncertainty is the norm.
In this context, gold represents a defensive response, while a more directional choice is embodied in the RMB and Bitcoin. The RMB represents real liquidity embedded in the new order, a bet on monetary restructuring driven by trade, industry, and real demand; Bitcoin, on the other hand, represents the ultimate hedge against governance uncertainty, a long-term option detached from any single sovereign system. Choosing them is not an expression of stance, but rather a self-consistent asset allocation result given that cracks in global governance have become apparent.
History doesn't unfold through dramatic events. It's often only when we look back at a certain moment that we realize how order has shifted imperceptibly.
