“Currency Wars” author James Rickards recently wrote an article updating his price prediction for gold in 2026, stating that the price of gold will surpass $27,000. He also explained that if trust in sovereign currencies collapses, global central banks may reluctantly return to the gold standard.
In the context of gold being considered a safe haven asset, with annual volatility even higher than that of US stocks, and the loss of the yen’s status as a safe haven currency, James Rickards, a renowned American economist, lawyer, and investment banker, as well as the author of the best-selling book “Currency Wars,” wrote an article this week stating that he has updated his previous prediction that the price of gold could reach $15,000 by 2026, now believing that it will surpass $27,000.
Rickards even stated that if multiple factors such as excessive currency issuance, competition from Bitcoin, high US debt, new financial crises, wars, or natural disasters lead to a collapse in public confidence in sovereign currencies, central banks may have no choice but to rely on gold and return to the gold standard. Although this is not their preference, they must do so in order to rebuild the order of the global monetary system.
Rickards then used economic principles and past historical experiences to speculate on the price of gold. He believes that if the US dollar is once again linked to gold, the price of gold must support the current money supply in order to maintain market stability and confidence. Rickards used the US M1 money supply as the basis. M1 includes physical cash, bank reserves, and demand deposits that can be easily converted into cash, which is the most liquid part of the money supply. Currently, the US M1 money supply is approximately $17.9 trillion.
Based on the historical requirement of the Federal Reserve from 1913 to 1946, Rickards assumed that a 40% gold coverage ratio is needed to maintain market confidence in the currency (although this ratio later dropped to 25% and is currently zero). Based on this assumption, the 40% coverage of the $17.9 trillion money supply is approximately $7.2 trillion.
Currently, the US Treasury holds approximately 8,100 tons (26.15 million troy ounces, with 1 troy ounce approximately equal to 31.1035 grams) of gold reserves. Therefore, based on the above data, Rickards calculated that the price of gold should be $27,533 per ounce.
Rickards pointed out, “This is the implied non-inflationary equilibrium price of gold under the new global gold standard.” However, he also added that there are many variables that can fluctuate, such as the money supply, which has been continuously increasing in several countries including the United States.
In summary, Rickards believes that when public confidence in sovereign currencies collapses, central banks will embrace gold again, which will drive up the price of gold. Although we do not want to see this situation happen, it may not be bad news compared to Bitcoin. If the US dollar really collapses, Bitcoin may also rise as an inflation-resistant asset, just like gold. After all, the original intention of Bitcoin’s creation was to escape the control and intervention of traditional financial institutions (such as banks) and central authorities (such as central banks). Unlimited printing of money by governments leads to inflation, while the fixed design of Bitcoin’s total supply is intended to prevent this risk.
However, how exactly things will develop remains uncertain. When traditional economic uncertainty increases, investors may turn to non-sovereign assets like Bitcoin for preservation or hedging, but this still needs further verification over time.