A Major Geopolitical and Economic Transition is Underway

The world is entering a new phase of strategic rebalancing, marked by a gradual yet profound shift in the international order established since 1945. Unrivaled for much of the postwar era, the United States’ dominant position in the economic, financial, technological, and military spheres is now steadily weakening, as new powers are gaining influence. This shift is not driven by a single event, but rather by a set of underlying structural dynamics.

1. Weakened Financial Foundations

The American empire is facing unprecedented fiscal constraints. Public debt has now reached $36 trillion, and continues to grow in a high-interest rate environment. As in the late 1960s, persistent inflation is severely limiting the Federal Reserve’s room for maneuver amid a growing threat of stagflation. The annual cost of servicing its public debt — now exceeding $1.2 trillion — has, for the first time, surpassed the country’s military budget. Moreover, $250 billion of these interest payments are made to foreign creditors each year, highlighting a structurally unsustainable external position.

2. A Shrinking Economic Lead

While the U.S. economy still holds an advantage, its relative weight is gradually declining. In 1960, it accounted for 40% of global GDP. By 2025, that share has dropped to 26%, and projections place it near 20% by 2040. The average American income, once seven times the global average two generations ago, is now only five times greater. Emerging economies — led by China and now India — are narrowing the gap and gaining demographic and technological weight.

3. Increasingly Contested Military Supremacy

America’s military monopoly is also being challenged. Its share of global military spending has fallen from 55% to 42% due to the combined effect of Russia’s rearmament and China’s rise. Despite massive budgets, the effectiveness of the U.S. military apparatus is under scrutiny: $80 billion is allocated solely to maintaining 750 bases in 80 countries. Meanwhile, technological advances from its competitors are being felt on the ground — Russian hypersonic missiles and Chinese fighter jets deployed by Pakistan are reshaping the strategic balance.

4. U.S. Dollar’s Decline in Global Reserves

The dollar’s share of global foreign exchange reserves continues to decline — from over 70% in 1999 to 57% in 2024. Several factors drive this trend: the proliferation of U.S. extraterritorial sanctions, the rise of trade in local currencies, and the growing desire among central banks to diversify their reserves. This diversification is benefiting so-called “non-traditional” currencies (Australian dollar, Canadian dollar, renminbi, won, etc.) — but most significantly, the ultimate reserve asset: gold.

Gold: The Major Beneficiary of the Ongoing Transition

In a world marked by the erosion of U.S. leadership, structural inflation, geopolitical tensions, and the fragmentation of the international monetary system, gold is once again regaining its natural role: a universal reserve asset, free of counterparty risk, immune to sanctions, and independent of national monetary policies.

This gradual reallocation of reserves toward gold is more than a short-term trend. It reflects a strategic reassessment of the very foundations of the global financial system. As central banks adjust their asset allocations to guard against instability and uncertainty, gold is asserting itself as the essential cornerstone of a new international monetary equilibrium.

With weakening trust in fiat currencies and rising geopolitical uncertainty, gold is quietly reasserting itself as the foundation of long-term monetary stability.