2025 is likely to be remembered as a year that disrupted many long-held perceptions in global markets. While digital assets have dominated for years, it is physical assets that ultimately performed the strongest. Precious metals, led by gold and silver, significantly outperformed Bitcoin and most risk assets, revealing a deeper structural shift rather than mere cyclical fluctuations.

Silver prices recorded their largest increase since 1979, with an annual rise of 141.4%. Gold prices repeatedly hit new highs, easily surpassing the $4,000 mark and achieving the best annual performance in nearly four decades, with an annual increase of 65.0%. In contrast, Bitcoin's price fell sharply after peaking at $126,000 in October. As liquidity tightened and profit-taking accelerated, Bitcoin entered a technical bear market by the end of the year, ultimately finishing 2025 with a decline of 6.5%.

These outcomes raise some unsettling yet unavoidable questions. Why did precious metals soar in price over the past year? Is inflation really the main driving factor? Or are there deeper structural issues at play? How should we understand the relationship between gold and Bitcoin in today's environment? Perhaps most importantly: with gold prices reaching historic highs, has the opportunity been missed—or is the story far from over?

To answer these questions, we must first explore the true factors driving the rise in gold prices.

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The Real Driving Force Behind the Surge in Gold Prices: A Crisis of Trust, Not Inflation

At first glance, the explosive rise in gold seems to fit a familiar narrative. Rising geopolitical risks, persistent inflation concerns, and global monetary easing policies are all traditional positive factors for precious metal prices. However, a closer analysis reveals that this explanation quickly falls apart.

The upward trend in gold did not begin in 2025. In fact, the groundwork was laid as early as 2024. The decisive force driving this trend has not been retail speculation or inflation hedging, but rather the coordinated and sustained accumulation of gold reserves by central banks—especially those in emerging markets.

Over the past two years, global central bank purchases of gold have consistently exceeded 1,000 tons annually, reaching record highs. China has played a central role in this process. From January 2022 to April 2024, the People's Bank of China increased its gold reserves for 18 consecutive months, adding approximately 300 tons, equivalent to about 10 million ounces.

In May 2024, when gold prices reached the range of $2,300 to $2,400 per ounce, China announced a halt to the public disclosure of its gold purchases. Based on official disclosures and cost estimates, the central bank's gold accumulation during this period seems to have concentrated in the range of $1,900 to $2,250 per ounce. At current prices, this means that the returns on national strategic asset allocation would exceed 100%.

This was not a passive response but a well-considered repositioning completed before the market fully understood the situation.

More importantly, the suspension of official reporting does not mean that gold accumulation has stopped. Customs data shows that throughout 2024 and into the first half of 2025, China continued to import large amounts of non-monetary gold through Hong Kong and Switzerland. This reflects a broader strategy often referred to as "people holding gold" or indirect sovereign gold accumulation through state-associated channels.

This sustained demand explains why gold prices have continued to rise and maintain a steady upward trend. However, to understand why countries like China and Russia are so aggressively stockpiling gold, we need to look beyond the confines of gold itself and examine the geopolitical factors reshaping global reserve management.

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The Moment $300 Billion Disappeared: Russia's Frozen Foreign Reserves Sounded the Alarm for the World

The turning point did not come from inflation data or interest rates, but from geopolitics.

During the Russia-Ukraine conflict, the U.S. and its allies froze approximately $300 billion of Russia's foreign reserves. This was not a symbolic sanction but a systemic shock to the global financial order.

These reserves were not piles of cash stored in vaults. They primarily consisted of U.S. Treasury bonds, European sovereign bonds, deposits in commercial banks across the U.S., U.K., and EU, as well as funds held through European clearing systems. Through coordinated legal and administrative measures, Western governments effectively locked these assets within the global settlement system.

Russia can still see the numbers on its balance sheet—but these funds cannot be transferred, used for imports, exchanged for rubles, or utilized for wartime needs.

The message is clear: dollar-denominated assets carry sovereign-level counterparty risk.

In the context of globalization moving toward de-globalization and group confrontation, this realization fundamentally alters reserve strategies. For any country outside the Western alliance system, holding large amounts of dollar assets is no longer a prudent move but rather a sign of vulnerability.

In extreme cases, a country may be at war, facing energy shortages, or dealing with food security issues—only to find that its financial reserves are effectively locked within the systems of other nations.

It is in this context that gold has regained its core status.

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Gold as the Ultimate Non-Debt Asset

In the current environment, gold's appeal has little to do with yield or speculation. Its advantage lies in what it is not.

Gold is not a liability of any government. It does not rely on payment networks, internet infrastructure, or clearing systems. Once the physical asset is returned, it cannot be frozen, sanctioned, or nullified by administrative decree.

In this sense, gold represents the ultimate expression of decentralization. It does not require electricity, the SWIFT system, or any permissions. Two countries can trade and settle using airlifted gold, completely free from the control of third-party financial institutions.

As global trust in the neutrality of the dollar system declines, gold has become the default reserve currency for countries prioritizing sovereignty and resistance to sanctions. Its price increase is less about optimism and more about fear—fear of uncertainty, fear of exclusion, and fear of losing control over national wealth.

This is the reason behind the sustained rise in gold prices. It is not a cyclical trading fluctuation driven by inflation but a structural response to the fracturing of the world order.

In this context, we must reassess Bitcoin's role—not as a substitute for gold, but as a parallel asset operating on a completely different battlefield.

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The next section will delve into the dual currency battlefield between physical gold and Bitcoin, exploring how the U.S. and emerging powers are adopting vastly different strategies and what this means for future asset allocation.

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