Is it too late to buy Gold?

Gold is having its moment. After years of languishing as a relic in the modern financial system, the yellow metal has erupted, smashing through previous records to trade at all-time highs above USD 2,400, or a staggering SGD 3,200 per ounce. This is not a slow, steady climb; it is a violent breakout, a financial earthquake that has shattered the long-held rules of the investment playbook. For decades, gold’s price was governed by a simple, inverse logic: it fell when interest rates rose and when the US dollar was strong. Today, both of those conditions are true, yet gold is soaring. This isn't just another bull market. This is a fundamental repricing, a global crisis of faith in the very foundations of the traditional financial order, and it signals a new, more volatile era for every investor.

The Death of the Old Playbook: Why This Rally is Different

To understand the magnitude of this shift, one must first appreciate how spectacularly the old rules have broken. The most powerful force that has historically suppressed the price of gold is high "real yields"—the return on a government bond after accounting for inflation. Gold pays no interest, so when you can earn a risk-free, inflation-adjusted return from a US Treasury bond, holding gold has a high opportunity cost. Today, the US 10-year real yield is hovering around a healthy 2.2%, a level that, according to the historical playbook, should have sent gold plummeting. Instead, it has rallied by over 30% in the last 18 months.

This is the first great anomaly. The second is gold’s relationship with the US dollar. Traditionally, the two have an inverse correlation; a strong dollar makes gold more expensive for foreign buyers, dampening demand. Yet, gold's recent surge has occurred while the US Dollar Index (DXY) has remained stubbornly strong, trading in a high range above 104. For gold to be rallying aggressively despite high real yields and alongside a strong US dollar is unprecedented in the modern financial era. It is a clear signal that the primary drivers of its price are no longer the simple mechanics of Western financial markets, but a new and far more powerful set of global forces.

The New Kings of Gold: The Unseen Hand of Central Banks

The most powerful of these new forces is a tectonic shift in the behaviour of the world’s central banks. This is not speculation; it is a verifiable stampede. According to the World Gold Council, central banks have been buying gold at a historic, record-breaking pace, absorbing over 1,000 tonnes annually in both 2022 and 2023. This trend has continued unabated, with central banks now being the single largest source of demand, accounting for roughly a quarter of all gold purchased globally.

The identities of these buyers are revealing: the central banks of China (which has reported buying gold for 17 consecutive months), Poland, Singapore (the MAS made a huge 174-tonne purchase in 2021), and Turkey are among the most aggressive accumulators. This is not a coordinated investment strategy; it is a coordinated flight from risk. The weaponization of the US dollar and the freezing of Russia's USD 300 billion in foreign reserves served as a global wake-up call. It demonstrated that holding reserves in US dollars or euros carries an immense counterparty risk. Gold is the only reserve asset that is politically neutral, exists outside any single nation's control, and carries zero default risk. This is the beginning of a multi-decade process of de-dollarization, a structural shift where the world's central banks are systematically reducing their reliance on the US dollar.

The Silent Retail Stampede: A Global Crisis of Trust

While central banks are the unseen giants, they are being joined by a silent, global stampede of individual investors. This is not the speculative frenzy of a crypto bubble; it is a rational flight to safety driven by a profound and growing crisis of trust in the stability of the global system. This fear is fueled by persistent geopolitical turmoil—from the ongoing war in Ukraine to the conflicts in the Middle East—and the rising political polarization in the West, which erodes faith in its institutions.

Even more fundamentally, this is a response to the global debt nightmare. Total global debt has now surged past 330% of global GDP, an unfathomably large number. The United States government alone is adding USD 1 trillion to its national debt every 100 days. This makes fiat currencies—paper money backed by nothing more than the promise of these indebted governments—inherently fragile. Individuals are beginning to understand that in a world of perpetual deficits and relentless money printing, holding cash or government bonds is a guaranteed way to lose purchasing power. Gold is re-emerging in the public consciousness not as a speculative asset, but as its historical role intended: a timeless store of value and the ultimate form of financial insurance against systemic failure.

The Eastern Bid: A Shift in Market Gravity

A crucial, underreported aspect of this rally is the shift in the global gold market's center of gravity from West to East. For decades, the price of gold was effectively set in the paper markets of London and New York. Today, the physical market in Shanghai is exerting a dominant influence. This is evident in the "Shanghai premium"—the price of an ounce of gold on the Shanghai Gold Exchange (SGE) has been trading at a consistent and often significant premium to the price in London, sometimes by as much as USD 50-USD 100 per ounce.

This premium is hard evidence of an insatiable physical demand from Chinese households and investors that is outstripping available supply. It signifies that the buying pressure from the East is now so powerful that it is dictating the global price, pulling it higher regardless of the actions of Western institutional traders. This Eastern bid, driven by a culture that has a deep-seated affinity for gold as a store of wealth, provides another powerful and structural support for the price.

The Path to SGD 4,000: Charting Gold's Next Chapter

The question for investors is not whether gold has run too far, too fast, but whether this new, higher valuation represents a permanent re-rating. While a short-term pullback is possible, the long-term outlook is now structurally bullish. The new pillars supporting its price—relentless central bank demand, a global crisis of faith in fiat currencies, and a powerful Eastern bid—are not cyclical trends that will fade. They are deep, structural shifts that will likely define the coming decade. The central bank buying has created a permanent, high floor under the price, absorbing any significant dips.

Therefore, it is my view that the recent breakout is not a peak, but the beginning of a new, higher trading range. The forces of de-dollarization and public distrust are only in their early innings. As this trend continues, a price target of USD 3,000 per ounce is no longer a fringe prediction but a plausible medium-term reality. At current exchange rates, that would translate to a Singapore dollar price of over SGD 4,000 per ounce. This is not a forecast of a speculative mania, but a logical conclusion based on a world that is rationally and systematically moving away from debt-based paper assets and towards the timeless security of hard money. Gold is not in a bubble; it is reclaiming its historical role as a core, indispensable asset in a world that is losing its financial anchors.