Gold vs Bitcoin: Why global central banks are choosing gold as dollar reserves dwindle
As central banks worldwide accelerate their gold purchases to unprecedented levels and steer clear of Bitcoin, economist Peter Schiff sees a clear signal about the future of money.
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In a recent post on the social media platform X, the vocal gold advocate reignited the debate between traditional bullion and cryptocurrencies, questioning why global monetary authorities are increasingly relying on gold as a hedge against a post-dollar era.
"If gold is the past and Bitcoin is the future, why are foreign central banks that are preparing for a future where the U.S. dollar is no longer the reserve currency, replacing their dollar reserves with gold and not Bitcoin?" Economist Peter Schiff posted on X.
Schiff's comments come amid a sustained increase in central bank gold acquisitions, with annual purchases now exceeding 1,000 metric tons—more than double the decade-long average, according to Reuters. The economist, known for his scepticism toward cryptocurrencies, argues this trend reflects mounting distrust in the US dollar and underscores gold's enduring role as a reliable reserve asset.
In a follow-up post, Schiff pointed out, 'The Dollar Index had its lowest weekly close in over three years, 30-year Treasuries had the lowest weekly close in almost two years, and gold had its highest weekly close ever.
The world is divesting of US dollars and bringing their money home to buy gold and invest locally.'
This gold accumulation is not a recent development. Nations like Russia have steadily expanded their gold reserves since 2014 to shield themselves from Western sanctions and geopolitical isolation. Schiff notes that this approach now serves as a model for other emerging markets, especially in light of ongoing global uncertainty fueled by former President Donald Trump's tariff-focused trade policies.
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Challenging Bitcoin's status as the currency of the future, Schiff asks, 'If Bitcoin is the future, why are central banks betting on gold to replace the dollar?' Despite Bitcoin's recent price rally, which touched $108,148, central banks have yet to accept it as a dependable store of value.
Gold's stability outshines crypto volatility
Gold's appeal has been further strengthened by rising geopolitical risks, turbulent global bond markets, and uncertainty surrounding US fiscal policy.
Schiff contrasts this with Bitcoin's notorious price volatility and limited institutional trust, asserting, 'Gold has proven itself as a safe asset during periods of tension,' citing its resilience through multiple economic cycles and financial crises.
Gold prices saw a slight dip on Tuesday, with spot gold falling 0.5% to $3,325.99 per ounce, while US gold futures dropped 1.2% amid a rebound in the US dollar index.
In India, June gold futures opened slightly higher at Rs 96,050 per 10 grams, recovering from a mid-May low.
Despite the recent price decline, analysts believe gold remains firmly supported by broader macroeconomic concerns, reported ET. Manoj Kumar Jain from Prithvifinmart Commodity Research said, 'Weakness in the dollar index, geopolitical tensions, and global uncertainty are supporting safe-haven buying for precious metals.'
He added that gold could find strong support near $3,200 per troy ounce in upcoming sessions.
Rahul Kalantri, VP Commodities at Mehta Equities, noted investor caution ahead of key US economic data releases, including the FOMC minutes and PCE inflation data. 'A widening US deficit and geopolitical tensions continue to support gold, especially as markets weigh the Fed's interest rate outlook,' he said.
As central banks continue to articulate their long-term monetary strategies through record bullion purchases, Schiff's pointed question remains: If cryptocurrencies are truly the future of money, why are governments doubling down on gold?
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