Central banks are bolstering their gold reserves amid concerns about the dollar and geopolitical instability.
Despite the increasing adoption of Bitcoin [BTC] by institutions, and even at the state level, Peter Schiff, the economist and gold advocate, remains steadfast in his entrenched doubts about this digital asset.
Schiff defends gold
Schiff is known for his support of gold, and he recently turned to X (formerly known as Twitter) to reaffirm his position, describing the precious metal as a safe and superior investment.
In a scathing critique, he highlighted the ongoing accumulation of gold by foreign central banks as evidence of its enduring value, affirming his belief that gold, not Bitcoin, is the true preferred reserve asset.
He said:
"If gold is the past and Bitcoin is the future, why are foreign central banks, preparing for a future where the US dollar will not be a reserve currency, replacing their dollar reserves with gold and not with Bitcoin?"
Community Reactions
In response to his comment, Anthony Pompliano pointed out that:
"Central banks are always behind the curve."
Indeed, as expected, many criticized Schiff's statements.
But not everyone shares the same view, as Justin Pitcher, a user on X, added:
"You know the reason. Because central banks are traditional institutions. They do not anticipate monetary transformations; rather, they lag behind them. Gold is their safe haven. Bitcoin, on the other hand, is the threat they cannot control, monitor, or confiscate. When the game is over, they will be the last to acknowledge its end."
Interestingly, recent global trends seem to support Peter Schiff's position.
Do central banks lean towards gold?
An increasing number of central banks are bolstering their gold reserves, driven by concerns over US monetary policy and broader geopolitical tensions.
Additionally, the weakness of the US dollar, partially influenced by President Donald Trump's strict tariff measures, has pushed countries to seek more stable reserve assets.
Moreover, Russia's invasion of Ukraine in 2022 exacerbated global instability, prompting a quicker shift towards gold as a reliable safe haven. This is because central banks, following Russia's invasion of Ukraine, doubled their investments in gold, acquiring over 1,000 metric tons annually, which is double the average of the past decade.
In this regard, Michael Widmer, a commodity strategist at Bank of America, stated:
"Emerging market central banks currently hold about 10% of their assets in gold. In fact, they should hold 30% of their assets in gold."
Gold and Bitcoin Price Movements
This coincided with gold trading at $3,357.4 per ounce, recording a daily increase of 1.82% despite a decrease of 1.12% over the past month.
In contrast, the price of Bitcoin has decreased by 2.34% in the past 24 hours, bringing its current price to $108,300.54, according to CoinMarketCap.
However, with Bitcoin's continued stability above the $100,000 mark, there is ongoing buying interest even after its recent breakout.
Interestingly, this phase also saw an increasing divergence from the price trajectory of gold, indicating the possibility of a decoupling.
Therefore, as Bitcoin charts its own course away from traditional safe havens, the market may enter a new era in which digital and physical stores of value respond differently to global economic shifts.
