Gold-backed currencies: Which ones truly hold up? - Video
Many countries are revisiting gold-backed currencies as bullion prices surge by more than 25% in 2025, driven by concerns about inflation, mounting debt, and uncertainty stemming from U.S. President Donald Trump’s tariff policies, which are rattling global markets.
Governments from emerging economies to resource-rich states often claim their currencies are “backed by gold.” In practice, most hold reserves that cover only a fraction of their money supply, leaving currencies vulnerable to inflation and external shocks.
Hybrid systems, where part of the currency is pegged to gold, have also struggled because they tend to collapse under speculative pressure or are quietly abandoned when fiscal needs demand flexibility.
Some states highlight gold holdings to boost public confidence while continuing to rely on the U.S. dollar for trade and debt payments. A typical example is Zimbabwe, where it launched the ZiG (Zimbabwe Gold) last year. A currency supposedly anchored to its bullion reserves, after years of hyperinflation and repeated currency collapses.
Authorities pledged every unit would be backed by gold or foreign currency reserves. The move initially boosted public confidence, but analysts warn the system faces the same risks that doomed previous gold-anchored experiments.
Local schemes, reserve-enhanced fiats, or tightly run currency boards can tie value to gold, but such arrangements demand transparency, strict fiscal discipline, and are rare in national practice. Economists say the model holds up mainly at smaller scales.
Gold is less liquid than modern capital flows, governments need flexibility in crises, and international trade remains dominated by fiat currencies. Without full transparency, markets are quick to test the credibility of any gold peg.
This story is written and edited by the Global South World team, you can contact us here.
