East Ascendant: How Asia’s Gold Boom Is Redefining Global Power Dynamics

**West Losing Gold, Asia Setting the Rules: A Revised Exploration of the Global Gold Shift**
*Based on “West losing gold, Asia setting the rules” by Yohay Elam, originally published on FXStreet*

The global financial power structure, once firmly rooted in Western dominance, is undergoing a significant transformation. One of the clearest signs of this shift is the evolving landscape of the gold market. Historically, the West—particularly countries like the United States and those in the European Union—held a commanding role in the accumulation, trading, and pricing of gold. However, in recent years, the balance has started to tilt in favor of Asia.

This shift isn’t merely a consequence of economic realignment; it reflects deep-rooted issues related to monetary policy, central bank strategies, geopolitical tensions, and cultural perspectives on wealth preservation. Yohay Elam’s analysis points toward a future where Asia, not the West, sets the rules in the global gold market. The implications are broad, touching everything from currency stability to international trade and geopolitical leverage.

Below is a more in-depth look at the insights from Elam’s piece, expanded to highlight the key themes and factors shaping this pivotal transition.

## The Discrepancy Between Paper and Physical Gold

One of the most glaring indicators of a structural shift is the growing divergence between paper and physical gold markets.

– **Paper gold** refers to derivatives such as gold futures, ETFs (exchange-traded funds), and other financial instruments which do not involve direct ownership of gold bars or bullion. These have been primarily dominated by Western financial institutions that trade on venues like COMEX (Commodity Exchange) in the United States.
– **Physical gold**, on the other hand, involves the actual acquisition and holding of gold bars or coins. This form is gaining traction especially in the East, where countries and individuals alike are emphasizing tangible assets.

The increasing buying pressure for physical gold in Asia has exposed vulnerabilities in the paper gold markets. There are growing concerns that the volume of paper gold significantly exceeds the actual physical gold available to back it. This disconnect has raised questions about the true price of gold and whether market manipulation is artificially suppressing prices.

Multiple analysts and commentators have pointed out this growing discrepancy, suggesting that we may be approaching a tipping point where physical demand could force a significant re-evaluation of gold prices.

## Central Banks Are Leading the Charge

Central banks across the globe are notable participants in the gold market. Since the 2008 global financial crisis, there has been a resurgence of interest among central banks to boost their gold reserves. A particularly remarkable trend is that non-Western central banks, especially those in Asia, have been accumulating gold at unprecedented rates.

– **The People’s Bank of China (PBoC)** has been one of the most active gold buyers in recent years. The exact amount of gold reserves held by China has long been a topic of speculation, but official and unofficial purchases indicate a clear strategy to reduce dependence on the US dollar.
– **India’s Reserve Bank** continues to add gold to its reserves, which is complemented by a deeply embedded cultural affinity for the metal among the Indian populace.
– Central banks in **Russia, Turkey, and Kazakhstan** have also significantly boosted their gold holdings over the last decade.

According to the World Gold Council, central bank purchases have helped stabilize gold’s price floor. The motivation? Gold offers security in a world increasingly defined by fiscal and monetary uncertainties. For many non-Western countries, diversifying away from the dollar and insulating their economies from Western sanctions or inflationary pressures is a key reason for accumulating gold.

## Geopolitical Drivers of Gold Accumulation

A major motivation behind the global gold shift is geopolitical strategy. Nations outside the Western bloc are increasingly wary of the leverage that comes with dollar dominance. The war in Ukraine, U.S. sanctions against Russia, the weaponization of the SWIFT payment system, and the freezing of Russia’s foreign reserves all served as sobering reminders

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