Gold Won the Uncertainty Trade & the Structural Reason Bitcoin Didn’t

Source: FRED

I. Uncertainty Regimes and Gold’s Phase Transitions

The chart above plots the World Uncertainty Index (GDP-weighted) against the export price index for non-monetary gold since the early 1990s.

A brief inspection reveals at least three structural phase transitions:

Phase I (1990–2007)
Uncertainty spikes episodically (9/11, dot-com collapse), but gold does not behave as a systemic hedge. It trades like a commodity with monetary memory, not like a reserve instrument.

Phase II (2008–2021)
After the Global Financial Crisis, gold becomes a policy hedge. Each episode of institutional fragility (the Euro crisis, QE expansion, COVID) produces a stronger and more synchronized gold response.

Phase III (2022–present)
Gold’s response to geopolitical uncertainty intensifies further. The recent spike in global uncertainty has been accompanied by a decisive repricing of gold to historic highs.

The implication is subtle but unmistakable.

Gold has transitioned from a commodity to a geopolitical hedge.

As uncertainty rises, especially uncertainty linked to monetary weaponization and bloc formation, it is gold that absorbed marginal sovereign demand.

What is conspicuously absent from this dynamic is Bitcoin.

Despite its fixed supply and hard money principles, Bitcoin has not yet assumed the marginal sovereign diversification role that gold occupied during this recent uncertainty spike.

To understand why, we must shift from price theory to institutional architecture.

II. The Gold Exchange Standard as Warning

Under the classical gold standard (1870s–1914), gold functioned as a settlement anchor. Countries held specie. No single power controlled the clearing infrastructure.

After World War I, the architecture shifted to the gold exchange standard. Instead of holding gold directly, many countries held dollar claims convertible into gold.

By 1945, the United States held roughly two-thirds of official global gold reserves (over 20,000 tonnes at peak). Even before Bretton Woods formalized dollar centrality, the gold exchange structure embedded asymmetry.

Gold was nominally the anchor; the dollar became the operative intermediary.

The interwar period demonstrated a key principle of reserve design:

This is not abstract history. It is a structural lesson.

Imagine what a world would look like currently if Bitcoin were seen as perfectly substitutable as reserve assets by countries and there was a series of events that made world uncertainty soar.

If Bitcoin becomes globally distributed primarily through US-dominated ETFs, custody platforms, derivatives markets, and dollar liquidity rails, then a Bitcoin exchange standard would have emerged. Even without a formal peg.

Bitcoin would be the nominal anchor. The US financial system would be the clearinghouse. This is, of course, precisely the inverse of what sovereign nations want in a multipolar world where the source of uncertainty is more often than not the US itself.

Reserve managers study history. They do not casually enter architectures that entrench asymmetry.

III. Stock, Flow, and Sovereign Mobilization

Gold’s Geographic Dispersion

Consider this second set of charts on official gold reserves and private gold holdings. Together they reveal a profound structural difference between gold and Bitcoin.

Sovereign gold reserves, though vastly dominated by the United States, have steadily been rising primarily in countries that are not all closely allied to the US. The key players have been China, Russia, India, Turkey and Poland over the last few years.

India’s private gold holdings alone are estimated at 35,000 tonnes, exceeding most sovereign holdings globally. China’s private holdings are similarly massive.

This dispersion matters only in principle, sure, but it does create what can be termed a sovereign mobilization option.

Historically:

• The United States executed gold confiscation in 1933.
• India has repeatedly imposed gold import restrictions and monetization schemes.
• Turkey has mobilized household gold via deposit programs.

Gold held privately can, at least in theory, be internalized under stress through buybacks, taxation, incentives, or coercion.

Bitcoin offers no comparable domestic reservoir in most countries.

Accumulation requires participation in global markets. At scale, that means moving price and transferring wealth to incumbent holders.

Bitcoin’s Acquisition Stack

Now contrast this with sovereign Bitcoin holdings and public company treasuries.

The United States government holds over 300,000 BTC and US-listed public companies clearly dominate treasury holdings.

Moreover, ETFs and custodians are disproportionately US-regulated.

The point is not even subtle anymore.

This creates a structural asymmetry. If an adversarial state publicly accumulates Bitcoin, it creates a ripple effect that includes:

• raising the price;
• asymmetrically enriching US-based incumbents;
• thus deepening US financial market dominance, and
• potentially strengthening dollar-adjacent derivatives liquidity.

Not a compelling instrument of choice.

Not while gold accumulation does not produce this effect to anywhere near the same degree.

Gold is globally mined and widely dispersed. Its acquisition does not disproportionately subsidize a rival’s capital markets.

IV. The Bitcoin Exchange Standard Hypothesis

Imagine the following equilibrium, whereby the US announces sustained Bitcoin accumulation.

ETFs would naturally intermediate global access through existing financial rails and dollar liquidity would remain the primary settlement rail. As a matter of fact, US custodians dominate safekeeping.

Sure, these are not necessary outcomes and can be circumvented. But that would require a concerted national strategy to deliberately avoid those channels. And would impose real additional costs along the path to adoption.

So, countries seeking exposure would effectively route demand through US financial architecture.

This then resembles the gold exchange standard dynamic. Only this time we would have as the nominal anchor Bitcoin and as the operational intermediary US capital markets.

In such a regime, reserve diversification into Bitcoin would not weaken US financial primacy. It could entrench it.

For countries whose objective is diversification away from US leverage, this is not attractive.

Does this neccessarily mean that gold plays the role of sovereign reserve asset in times of stress and Bitcoin vies for a position in private portfolios for that role?

Some strategic thinking here helps examine the situation.

Game Theory: Why Stealth Dominates

Consider a simplified two-player model:

Player A: United States
Player B: Adversarial Sovereign

Strategies available to B:

1. Gold-only diversification
2. Public Bitcoin accumulation
3. Stealth Bitcoin accumulation (plus gold)

In this sort of setup, the payoffs are logical.

Public BTC buying by B increases its price and enriches A’s private sector. This might be seen by B as an externality that must be avoided. It might be seen as a move that might invite countermoves from A to disrupt B’s strategy. Indeed, there is a non-zero probability that A would indeed act to deter B.

• Public buying signals strategic alignment with a US-embedded asset.
• Gold accumulation, meanwhile, avoids these transfers or any such overt signals.
• Stealth accumulation, however, reduces both — the price impact and the signaling costs.

Given these dynamics, public accumulation is a dominated strategy. This may seem logical enough unless one considers that countries have horizons that stretch over longer periods that we are accustomed to. This matters.

• B might well believe that long-term control outweighs short-term enrichment of A, or
• B might believe the asset will eventually escape US intermediation.

In either case, the point is that the rational equilibrium is opacity.

Which aligns with observed behavior. Central banks announce gold purchases. Bitcoin reserve announcements remain rare or symbolic.

V. Conclusion

The recent phase transition in the gold–uncertainty relationship suggests that sovereign diversification behavior is accelerating. I have written before about the emerging multipolar world we live in and, really, in that context, this is hardly surprising.

Gold has absorbed that marginal demand.

Bitcoin has clearly not. Not because it lacks scarcity or anything is “broken”, but because its current distribution and intermediation architecture remains disproportionately US-anchored.

History warns that reserve systems are rarely neutral in practice.

The gold exchange standard entrenched dollar primacy not through formal decree, but through distributional asymmetry.

Unwittingly stepping into a Bitcoin exchange standard could do the same. That countries may wish to avoid this, especially in a world replete with uncertainty that is caused by the US, seems rather rational to me.

Until custody, liquidity, and acquisition become meaningfully multipolar, gold will dominate marginal sovereign diversification in periods of geopolitical uncertainty.

Stealth, not signaling, remains the rational strategy for any state seeking exposure without subsidizing a rival’s incumbency.

-Prateek

Gold Won the Uncertainty Trade & the Structural Reason Bitcoin Didn’t was originally published in Coinmonks on Medium, where people are continuing the conversation by highlighting and responding to this story.