Gold’s Dominance in the Global Currency Landscape: 2024 Analysis
Currency Performance Overview
In my analysis of 45 major foreign currencies against the U.S. dollar in 2024, tracking currencies from 44 of the world’s 50 largest economies and 31 of the 40 most populous nations, a clear pattern emerged. The U.S. dollar strengthened against nearly all global currencies, appreciating against 40 of the 45 tracked currencies.
Only five currencies showed gains against the dollar:
- Kenya shilling: +21.4%
- Malaysia ringgit: +2.8%
- Costa Rica colon: +2.6%
- Hong Kong dollar: +0.5%
- Thailand baht: +0.2%
The U.S. Dollar Index, measuring performance against six major currencies (euro, yen, pound, Canadian dollar, Swiss franc, and Swedish krona), posted a robust 7% gain for the year.
Gold’s Remarkable Performance
While the dollar showed strength against paper currencies, gold emerged as the ultimate winner. The precious metal surged 27.3% in 2024, climbing from $2,065.50 to $2,629.25, outperforming both the U.S. dollar and all 45 tracked fiat currencies.
Factors Driving Gold’s Rise
- Central Bank Demand
- Strong purchasing from Chinese, Asian, and Eastern European central banks
- China reduced U.S. Treasury holdings by over $250 billion while increasing gold reserves proportionally
- Private Sector Dynamics
- Substantial surge in Chinese private sector demand during H1 2024
- Driven by concerns over real estate decline, stock market weakness, and banking sector stability
Other Precious Metals Performance
- Silver: +20.6% (second only to the Kenya shilling among all tracked currencies)
- Platinum: -10.2%
- Palladium: -17.1%
Long-term Performance Metrics (1999-2024)
25-Year Returns
- Gold: +812.4%
- Silver: +434.9%
- NASDAQ: +374.6%
- Russell 2000: +341.8%
- S&P 500: +300.3%
- Dow Jones Industrial Average: +270.0%
Notable mention: Brazil’s Bovespa index showed a 603.7% gain, but adjusting for the Brazilian real’s 71.1% decline against the dollar significantly diminishes this performance.
Historical Perspective
Since August 15, 1971, when President Nixon ended the gold standard:
- Initial gold price: $43.15
- One dollar’s worth in gold: 0.023175 ounces (1971)
- One dollar’s worth in gold: 0.00038 ounces (end of 2024)
- Total decline in dollar’s gold value: 98.4%
Future Outlook
Market forecasters broadly anticipate gold’s continued strong performance against fiat currencies, including the U.S. dollar, through 2025. This projection aligns with the historical trend of gold serving as a reliable store of value against currency depreciation.