The Dollar We Don’t Use, and the Metal That Remembers

Australia doesn’t trade in U.S. dollars, but our economy does. Every tonne of ore, every litre of fuel, every container at port is priced in green paper we don’t print. The Reserve Bank can move its cash rate, but the cost of money still drifts with decisions made in Washington. When the Federal Reserve tightens, our borrowing costs rise. When the dollar strengthens, our imports climb. The illusion of independence survives because we speak in AUD, but the system breathes in USD.

Australia’s Invisible Dollar Dependency

The dependency runs deeper than trade. The U.S. dollar underpins most global pricing: commodities, shipping, energy, derivatives, even online advertising. To leave its orbit would mean rebuilding global settlement systems—payments, collateral, clearing—from scratch. So we stay tethered, not by policy choice but by infrastructure.

For decades this arrangement looked stable. But as U.S. debt piles higher, and political gridlock becomes the norm, the rest of the world has started to hedge. Central banks have been quietly reducing their share of reserves held in U.S. dollars and increasing holdings of physical gold. Gold reserves now make up the largest share of official assets in thirty years. The shift is slow, but it’s consistent. It says: “we still use your system, but we’re keeping a backup.”

Gold’s Rise: A Barometer of Trust

In the last twelve months, gold priced in Australian dollars has moved past A$6,000 per troy ounce, a record high. That’s up more than 20 percent since mid-2023, and almost double its price five years ago. The U.S. spot price is also at a record, but the AUD weakness against the USD has amplified it further for Australian investors.

The move isn’t about jewellery demand or mining constraints—it’s about confidence. When inflation is sticky and public debt looks permanent, gold becomes the yardstick for disbelief. It’s not about yield; it’s about endurance.

Gold performs best when two things line up: falling trust in fiat money and falling opportunity cost. Real yields—the interest you earn after inflation—have turned negative in several major economies this year. That makes gold’s zero return suddenly competitive. Central banks understand that logic. China, India, and even some European institutions are adding tonnes to their reserves. The metal isn’t a bet on collapse; it’s a vote for optionality.

For Australia, this dynamic cuts both ways. We are one of the world’s largest gold producers, so higher prices feed directly into export revenue. But we’re also a country that borrows, trades, and benchmarks in USD. When the global system shifts even slightly away from the dollar, volatility hits us faster than it helps us. Exporters earn more in AUD terms, but importers and households feel the drag through higher fuel, technology, and freight costs.

It’s a reminder that gold’s rise doesn’t isolate us—it exposes the fragility underneath our dollar peg to global sentiment. We benefit from the commodity story and suffer from the currency story, often at the same time.

Gold’s appeal is rarely emotional. It’s mathematical. It doesn’t default, it doesn’t dilute, and it doesn’t rely on anyone’s policy credibility. When trust in paper falls, the cost of trust—expressed in gold’s price—rises. That’s what we’re watching now.

If the USD remains the core of the global system, gold will keep shadowing it as a check on excess. If the world moves toward regional settlement systems—China-Asia trade in yuan, Gulf energy in dual pricing—gold will anchor those experiments. Either way, its role grows when confidence wavers.

Australia sits awkwardly in between: a resource-rich nation that digs up the hedge while still depending on the system it hedges against. Understanding that paradox isn’t cynicism—it’s basic accounting. The balance sheet of the world is shifting. And for a country priced in someone else’s currency, it pays to notice what the rest of the world is starting to count again.

— Aidan Walmsley, 2025