The debate about gold and bitcoin as competing safe havens misses the point. Both are responding to the same underlying shift – but they hedge different failure modes within it.
For decades, the global financial system rested on a single, largely uncontested foundation: the dollar. It functioned as the neutral medium of exchange, the world’s reserve currency, and the risk-free anchor against which everything else was priced. That foundation hasn’t cracked outright – but it is starting to show strain.
The dollar’s share of global foreign exchange reserves has slipped from above 70% in 2001 to about 58% today, according to the International Monetary Fund. The move has been gradual, and the dollar remains dominant. But the direction is consistent, and the drivers are structural rather than cyclical. High US debt, the growing use of financial infrastructure as a geopolitical lever, and the weaponisation of dollar-based systems have introduced a different kind of risk – less about volatility, more about discretion.
It’s against this backdrop that renewed interest in both gold and bitcoin makes sense. They are often framed as opposing bets – old money versus new. That’s too neat. Instead, they need to be treated as complementary: two ways of insuring against a system that is fragmenting in different directions. What matters is not choosing between them, but understanding what each is actually doing.
What the dollar dilemma means for investors
“We’re facing a “reserve currency paradox”. The US faces a structural trilemma: it cannot simultaneously maintain reserve-currency status, run a balanced trade, and reindustrialise. At best, it can pick two”. Says Tino Mombo, Novare Actuarial Specialist
For much of the past 80 years, the US has prioritised a strong dollar to preserve its reserve status, or so-called “banking”. The trade-off was a hollowing out of domestic industry, as manufacturing struggled to compete with cheaper offshore production. Surplus economies – China, Germany, Japan – recycled their earnings into US Treasuries, locking in the imbalance.
Now the pendulum is swinging towards “building”: reshoring industry, investing in energy and technology, and leaning into industrial policy. But a country cannot rebuild its industrial base while running a structurally overvalued currency. A weaker dollar – and likely stickier inflation – is the price of that shift.
US debt already exceeds 100% of GDP. There is a historical precedent for what happens next: in 1985, the G5 struck the Plaza Accord, agreeing to coordinated depreciation of the dollar to correct trade imbalances. It worked – but Japan absorbed much of the adjustment and spent the following decade trapped in a deflationary spiral. These things don’t resolve cleanly.
For South African investors, the pressure is not abstract. National Treasury projects local debt to peak at around 78.9% of GDP – a reminder that fiscal strain is hardly a US-only problem. And if the old assumption – that bonds reliably offset equity risk – starts to wobble when inflation and geopolitical risk rise together, the question is no longer which traditional asset to lean on, but how to hedge a system that may be forced into uncomfortable trade-offs.
What gold is actually hedging
Gold’s resurgence is often framed as an inflation story. That’s only part of it. Increasingly, it’s about governance risk.
The global system once ran on the assumption that reserve assets were politically neutral – that access to financial infrastructure was predictable, even in tense moments.
Then, in 2022, Western governments froze roughly $300bn of Russia’s central bank reserves in response to the invasion of Ukraine. Whatever one thinks of the decision, the consequence was unmistakable: a sovereign central bank discovered that assets it believed it held could be made inaccessible overnight. That’s the moment the assumption broke, and the world’s central banks noticed.
Gold hedges that risk because it sits outside the system. It is no one’s liability. It carries no counterparty exposure. It doesn’t depend on a payment network, a regulator, or a policy decision to retain its value.
That helps explain why central banks – particularly in emerging markets – have been buying at pace. Net purchases reached 863 tonnes in 2025, and the World Gold Council says 43% of central banks plan to increase holdings further. They are not chasing returns; they are reducing reliance on assets that can be frozen, sanctioned or otherwise politicised.
None of this prevents gold from behaving like a commodity in the short term. It will still sell off in liquidity squeezes as investors raise cash. That’s a feature of markets, not a contradiction of their role.
There is, however, a fair counterpoint. Some investors have argued that gold is showing signs of speculative excess. The speed of the rally to a record high of $5,595 per ounce on January 29 and back to about $4,600 in early April suggests demand may not be entirely fundamental. That caution is warranted – commodity cycles do turn, and South African investors are particularly exposed, with gold and platinum stocks making up roughly a quarter of the JSE All Share.
But the cyclical and structural cases can coexist. Gold can be expensive – even frothy – and still serve a purpose as insurance against a system where political risk has become embedded in the plumbing.
What bitcoin is hedging instead
Bitcoin addresses a different vulnerability altogether: access.
Where gold hedges the breakdown of trust between states, bitcoin hedges the breakdown of trust between individuals and institutions. Its value isn’t in stability – it’s still far too volatile for that – but in its ability to function outside traditional channels.
Bitcoin works as a “mobility asset”. It protects the ability to move and store value when the usual routes – banks, payment systems, capital markets – are restricted or conditional.
That matters in a world of capital controls, banking fragility, and increasingly tight regulatory oversight. In those edge cases, volatility is almost beside the point. Bitcoin’s appeal lies in its offering an alternative route altogether.
The contrast with gold is telling. Gold doesn’t threaten the system; central banks hold it. Bitcoin, by design, sidesteps it. It weakens the effectiveness of capital controls and reduces reliance on intermediaries. Unsurprisingly, it attracts more scrutiny.
That doesn’t invalidate its use case. If anything, it defines it more clearly. Bitcoin’s role sits outside the institutional framework. Gold sits within it.
Put that way, we can look at holding both assets as a “trust barbell”: a way of holding insurance against different outcomes.
Gold anchors one side – against sovereign overreach, policy error, or currency debasement. Bitcoin sits on the other – a more volatile, asymmetric hedge against restrictions on access and movement.
They are not substitutes for each other.
The barbell isn’t a fringe idea – it’s a response to a system that no longer fails in just one way.
