- Treasury strategy
- Diversification strategy
Gold has rarely commanded this much attention in a boardroom.
But at the recent RIU conference in Perth, one of the most interesting conversations centred on a simple question: is gold a good use for treasury reserve?
What is happening to gold?
In 2025, gold had one of its most extraordinary years in modern history. The commodity recorded 53 new all-time highs during 2025 alone, with the price surging roughly 65–70% over the year. By early 2026, gold had broken through the U$5,000 per ounce barrier for the first time.
Two structural forces are driving this, both at the institutional and investor level.
1. Central banks are buying at historic levels
Global central banks purchased approximately 863 tonnes of gold in 2025, slightly down from 2024, but still among the highest levels since the 1970s. Much of this buying is concentrated in emerging markets: Poland, India, China, Turkey, and Brazil have all been active accumulators.
This trend of central bank buying stems back to the freezing of Russian foreign exchange reserves held in Western jurisdictions in 2022. This event sent a clear message to reserve managers worldwide that dollar-denominated assets carry geopolitical risk. Gold, by contrast, cannot be frozen, sanctioned, or seized remotely. It also protects against foreign exchange risk:
"According to a 2020 BIS study, central banks in emerging markets or those using commodity currencies benefit from holding more than 20% of their reserves in gold, as it provides strong protection against foreign exchange risk."
2. Investor demand has exploded
Global gold ETFs attracted nearly $89 billion in inflows in 2025, marking the second strongest year for gold ETF demand on record. Family offices, institutional investors, and long-term allocators are increasingly treating gold as a permanent portfolio hedge rather than a tactical trade, amid escalating global trade disputes, geopolitical tensions, and financial market volatility.
"While gold's share of total investor AUM has grown by around one percentage point over the last two years as prices and demand have increased, we still see the potential for this share to rise toward 4–5% over the coming years."
Why now? The macro context
The gold rally reflects a broader erosion of confidence in fiat currencies and traditional financial architecture. US government debt continues to expand, fiscal deficits show no sign of structural improvement, and the US dollar's share of global foreign exchange reserves has declined.
Geopolitical fragmentation - from the Russia-Ukraine war to escalating US-Iran tensions and trade policy turbulence - has elevated the premium investors place on assets that sit outside any government's control.
Gold's traditional inverse relationship with real interest rates has also broken down. Historically, rising real yields made gold less attractive as it pays no income. Yet gold surged through 2023–2025 even as the Federal Reserve held rates. This has been a significant signal that investors are no longer pricing it primarily as an inflation hedge, but as insurance against systemic risk.
Amid escalating geopolitical instability, the proliferation of trade tariffs, and a structural shift away from USD-denominated reserve assets, investors have materially accelerated their accumulation of gold as a store of value.
So, the question on our mind: is gold a good treasury reserve?
The answer is nuanced.
The case is most compelling for companies with international exposure. Gold's defining characteristic as a reserve asset is zero counterparty risk. Unlike cash held in a bank, bonds issued by a government, or currency reserves held abroad, it cannot default or be frozen. In a world where the weaponisation of financial infrastructure has become a real policy tool, that matters.
For companies operating across higher-risk emerging markets or managing currency exposure where local currencies can depreciate sharply, gold offers a hedge that operates independently.
However, gold is not without risk. It generates no income, creating real opportunity cost for companies with tight cash flow requirements or obligations that demand yield. It is also volatile: January 2026 saw gold surge 24% in under four weeks, then dropped 9.8% in a single session (the largest daily fall in 43 years). Storage and custody costs typically run 0.5–1% of stored value annually, and physical gold requires logistical infrastructure that most corporate treasuries are not set up to manage. ETF-based exposure solves the liquidity and logistics problem to some extent.
The CFO's takeaway
Gold has moved from a peripheral hedge to a legitimate strategic reserve consideration, and the debate around it reflects something more important: treasury management has never demanded more attention than it does right now.
Whether CFOs choose to allocate to gold or not, the volatility shaping that decisions in business today (daily price swings, shifting currency dynamics, and rapidly evolving geopolitical risk) is the same volatility affecting every treasury decision.
This fast changing environment requires real time treasury data so that CFOs can make educated decisions, quickly.
The pragmatic takeaway is that regardless of whether gold holds a place in your diversification strategy, broader treasury management is necessary in today’s landscape.
About Primary
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