The Comeback of Gold-Standard Perspectives in Monetary Policy

Gold is evolving from a mere portfolio component to a key policy anchor for sovereign nations. Central banks have amassed 3,255 tonnes from 2022-2024, marking the most robust three-year period since the 1970s, as market dynamics indicate a re-evaluation of monetary sovereignty. This transition unfolds even as paper markets show notable instability.

Remonetization is evolving through three main forces: official-sector accumulation, structural supply limitations, and a regulatory framework that pushes flows into illicit channels. The data analyzed in Ubuntu Tribe’s Gold for All report supports these trends and provides insights into policy implications often overlooked by investors and builders.

Sovereigns are making their choice known

Official purchases dictate the pace: central banks acquired 1,136 tonnes in 2022 and 1,037 tonnes in 2023, with projections for 2024 also exceeding 1,000 tonnes. This trend is pronounced in nations seeking to mitigate sanctions and explore settlement alternatives, with many stating a preference for domestic custody.

Countries like China, Turkey, and Poland have bolstered their reserves and emphasized domestic storage; Europe’s repatriation efforts have returned hundreds of tonnes to Germany, the Netherlands, Austria, and Poland. This shift underscores a pursuit of financial independence.

Supply is dictated by geology and time

In light of this demand, the gold supply is not only limited but also structurally inelastic. Global mine output has stagnated over the years, reaching 3,661 tonnes in 2024 near previous highs, while the industry contends with declining yields, increased capital expenditures, and prolonged permitting delays.

On average, it now takes about 16-18 years for a mine to progress from discovery to the production of its first metal, extending the adjustment timeline beyond most policy cycles. Recycling contributes marginally, delivering 1,144 tonnes in 2022, roughly one-third of that year’s mine output. Thus, scarcity is inherent.

Long-standing producers are influencing this transition. South Africa, once a powerhouse in gold mining, has reduced its share of global output, illustrating how historic mining regions no longer hold dominance over the marginal ounce of gold. 

Logistical and refining challenges

A logistical challenge has now transformed into a monetary liability. Switzerland’s refining sector remains the world’s pivotal throughput hub, currently operating near capacity as global flows fluctuate. The concentration risk in refining, combined with bar-size standards and air cargo limitations, aligns on the policy radar with interest rate differences. 

Compliance measures that exclude artisanal producers from banking access have expanded illicit networks. A Swissaid report indicates that at least 435 tonnes were smuggled out of Africa in 2022, representing over 10% of annual global mine output. This results in substantial tax losses and risks for producer nations.

More robust standards and enhanced traceability could redirect this metal back into legitimate markets and mitigate the premium on obscure liquidity. 

Understanding ‘paper markets’

Futures, ETFs, and unallocated accounts facilitate price discovery and offer hedging options, yet they come with inherent counterparty risks. Although these instruments provide liquidity and risk management avenues, they depend on trust in a system that is currently being reevaluated. By December 2024, COMEX open interest reached 52 million ounces versus 3.2 million registered ounces — translating to over 16 claims for every deliverable ounce. In London, estimates suggest 7–9 claims exist for each bar in the unallocated pool, replicating fractional banking mechanics. This counterparty risk is only alleviated through allocated delivery.

As policymakers and treasurers increasingly value assured delivery, the preference for allocated custody and strong redemption processes will grow. Recent dislocations have highlighted this trend: Shanghai premiums remained above $25/oz in Q3 2024, even as COMEX prices declined, demonstrating that physical signals can outweigh paper quotes.

Monetary policy is adapting

These structural challenges permeate rate-setting through balance sheet strategies, collateral practices, and liquidity regulations.

Firstly, balance sheet composition is pivotal. The make-up of reserve assets — ranging from gold to forex — increasingly serves as a tool of sovereign strategy. Gold’s growing significance as a non-liability reserve is becoming evident in nations confronting sanctions and forex volatility. When a significant portion of yearly demand is driven by central banks, policy responses begin to reflect the actions of gold holders just as much as those of dollar bondholders. 

Secondly, logistics are often overlooked in the Phillips Curve (the inflation-unemployment trade-off). Refinery bottlenecks and custody issues can lead to regional price premiums, collateral discounts, and funding disparities. Monetary authorities focusing solely on headline price indices may fail to account for the microstructural factors tightening financial conditions. 

Thirdly, financial plumbing influences real economic outcomes. When regulations drive over 10% of mine-equivalent supply off official records, anti-money laundering goals are undermined and price signals deteriorate. By implementing smarter entry points for small-scale miners, standardizing provenance data, and establishing reciprocal enforcement between hubs, illicit flows can be curtailed without jeopardizing legitimate livelihoods. 

Tokenization can enhance an age-old anchor

The reserve community is rediscovering a fundamental principle: assets without an issuer offer the most straightforward settlement. The technology sector can enable programmable settlement. In a time of increasing cross-border fragmentation and rising custody risks, programmable assets deliver both resilience and reach.

If structured appropriately (allocated metal, segregated custody, real-time audits, and enforceable redemption), tokenization can enhance transparency and reduce settlement friction while preserving gold’s essential monetary characteristics. For households and smaller institutions, tokenization broadens access through smaller denominations and lower minimums.

By the close of 2024, tokenized gold is projected to exceed $1.5 billion in assets under management, doubling the previous year’s figure. Major standard-setting organizations are beginning to delineate how tokenization can enhance market efficiency, interoperability, and governance.

Integrating physical assurance with digital verification forms a more resilient foundation for cross-border transactions, collateral management, and personal savings. This is particularly evident in regions with limited access to traditional custody options. Builders should prioritize transparency, attestation, and settlement conclusiveness; policymakers should focus on legal ownership, insolvency protection, and regulatory frameworks. 

A practical strategy

For sovereigns, the key takeaways are strategic. Establish a reserve policy that encompasses non-correlated ballast and ensure domestic custody capabilities to lower third-party risks. For institutions, view gold as working capital for the balance sheet instead of a speculative asset. Optimize for delivery, collateral treatment, and integration with payment systems. Institutions should prepare for gold’s reintegration into capital markets, not merely as a passive reserve but as programmable working capital. For households, create documented core reserves through transparent channels with verified provenance. For the industry, align on audit protocols, traceability, and dependable delivery to reconnect compliant finance with actual supply.

Monetary policy will adjust to these realities, whether it acknowledges them or not. The resurgence of gold-standard thinking serves as an operational response to a world that values settlement over mere promises.