Gold’s historic run and why you should care

In April 2019, the Bank for International Settlements (the institution that coordinates central banks globally) reclassified physical gold from a Tier 3 to a Tier 1 asset under its Basel III banking framework. That framework, born out of the 2008 financial crisis, is the rulebook that tells banks how much capital they need to hold and what qualifies as safe. Tier 1 is the highest classification (the same tier as cash and U.S. Treasury bonds) meaning zero risk weight. As of July 2025, U.S. banks can now count physical gold at 100% of its market value toward their core capital reserves, where previously only 50%. In regulatory terms, gold went from being treated as speculative to being put in the same asset class as cash in hand or U.S. Treasury bonds.

What followed has been historic. Total gold demand in 2025 exceeded 5,000 tonnes for the first time, translating to $555 billion in total demand value. Central banks purchased 863 tonnes last year alone, on top of more than 1,000 tonnes in each of the three prior years. Poland’s central bank was the largest single buyer for the second consecutive year, adding 102 tonnes, with its governor citing national security as the motivation. And perhaps most tellingly, 57% of sovereign gold buying in 2025 wasn’t even publicly disclosed. The World Gold Council’s estimates consistently exceed what governments officially report.

Gold started 2025 at around $2,624 per ounce and hit an all-time high of $5,589 in late January 2026, more than doubling in roughly 14 months. While it has pulled back a bit as of this writing, gold still outperformed the S&P 500 in both 2024 and 2025, returning 28% and 65% respectively while the S&P returned 25% and 18% over the same periods.

The reason this matters for Americans is that our global financial unit of measurement, the U.S. dollar, has lost credibility relative to this hard asset. When central banks around the world are accumulating gold at these levels, they’re expressing an institutional view that holding reserves in USD carries more risk than it used to. Sanctions that weaponized the dollar, tariff uncertainty, unsustainable fiscal deficits, a politicized Federal Reserve and five U.S. bank failures in 2023 totaling $549 billion in assets have all eroded the contract that the dollar is a neutral and stable reserve asset. Gold is the only reserve asset that isn’t simultaneously someone else’s liability. It doesn’t default, it can’t be frozen, and it doesn’t care who’s president. And, much of the world is diversifying away from the currency your savings, wages and retirement are denominated in.

Meanwhile, on the other side of the same regulation, the United States has been softening the capital requirements that are supposed to keep your bank deposits safe. The original Basel III proposal would have required the largest banks to hold 16%-19% more capital as a buffer against losses. A revised proposal unveiled just Monday is described as “capital neutral,” meaning banks won’t be required to hold meaningfully more capital than they already do. Those buffers weren’t enough to prevent five banks from failing in 2023, and the FDIC had 63 more on its problem list heading into 2024. Everyday depositors find themselves on the wrong side of both moves where savings are denominated in the currency being diversified away from, held at institutions whose safety cushions are potentially less effective.

All of this happened in plain sight, inside documents that most people will never read, written in language designed to be inaccessible and complicated. But you still need to be knowledgeable, as how far your dollar stretches matters more than ever. The FDIC publishes quarterly financial data on every insured institution. Look yours up this week and know what you’re working with, especially if your deposits exceed the $250,000 insurance cap at any single bank. Then look at what your retirement accounts are invested in, because most 401(k)s and IRAs are overwhelmingly stocks and bonds, all dollar-denominated, and even a modest allocation toward assets outside that system changes the risk profile when the currency itself is what’s shifting. You don’t need to become a gold investor or a banking regulation expert, but the people who run the global monetary system are making moves, and the least any of us can do is understand what those moves mean for our milk money.