Renowned economist Paul Krugman has recently voiced unease about the growing fascination with gold, echoing John Maynard Keynes’ dismissal of it as a “barbarous relic.” In his latest reflections, Krugman questions the practicality of gold as a currency - after all, who can buy a house with gold bars? He even mocks the notion that gold would be a savior in a post-apocalyptic scenario, likening it to the chaotic world of Fallout, where survival depends more on wits than wealth.
Yet, the numbers tell a different story. The world holds an estimated $27 trillion in gold reserves - more than six times the combined value of all cryptocurrencies, despite Bitcoin’s recent surge.
This accumulation, Krugman suggests, isn’t driven by nostalgia or survivalist fantasies but by a deeper shift in investor sentiment, particularly among foreign central banks. These institutions appear to be losing faith in the reliability of U.S. government debt as a safe haven.
What exactly are investors fearing? Krugman admits it’s hard to pinpoint. Are they bracing for runaway inflation masked by manipulated official statistics? Could it be the confiscation of reserves from nations disfavored by the Trump administration? Or perhaps a forced conversion of foreign assets into century-long U.S. bonds? Given the unconventional moves already witnessed under the current U.S. leadership, Krugman wonders how confident we can be that such scenarios won’t unfold.
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Historically, Krugman has downplayed gold’s relevance in modern economics. But the current surge in gold prices - topping $4,000 per ounce in October 2025 - has him rethinking. To him, this trend signals a troubling message: the global community is losing trust in America’s economic stability. Whether this marks the beginning of a new financial order or a temporary reaction to political uncertainty, Krugman’s cautious tone suggests the world may be at a turning point.
