The price of Gold surged past $5,000 per ounce in early 2026. Over 30 per cent of this gold on the world market comes from Africa. The African mine worker does not benefit from this high price. This high price of the yellow metal marks more than a commodity rally — it signals the fracturing of monetary arrangements that have sustained US military management of the international system since the breakdown of the Bretton Woods Compromise in 1971.
Mainstream financial commentary treats this soar in the price of gold as the market response to inflation fears, geopolitical uncertainty, or central bank diversification strategies. Such explanations obscure the deeper historical reality. International monetary systems have always rested on racialized extraction and imperial violence, from Britain’s nineteenth-century gold standard built on colonial extractivism to the Bretton Woods system dependent on apartheid South Africa’s brutalized mine workers delivering cheap gold at $35 per ounce. When gold prices break free from the ‘gold pool’ — as they did in 1971 when Nixon severed the dollar-gold link, and as they’re doing now through coordinated central bank accumulation — they reveal fundamental crises in the military management of the international system Today’s soar reflects not temporary market volatility but systematic repositioning away from military dollar-denominated assets by states seeking monetary sovereignty outside Western financial architecture. China, Russia, India, and even European allies divest from U.S. Treasuries while accumulating gold precisely because of recent weaponization of everything. The complex series of events including Russia’s 2022 reserve confiscations, the removal or assassination of leaders, and sanctions, combined with unsustainable American fiscal deficits, proves that holding U.S. dollars carries a risk of seizure and that fiat currency systems based on sovereign debt are facing a collapse in legitimacy.
This article examines the role of gold within imperial monetary systems from the classical gold standard to modern crises. It specifically focuses on the colonial and racial violence that mainstream scholarship often ignores, arguing that these factors were essential to making such financial arrangements possible. Books by eminent scholars such as James Lacey’s, on Gold, Blood and War argued that War, is often waged as much with gold as with armies — because the ability to finance conflict, control credit, and sustain debt has repeatedly determined who can fight longer, strike harder, and ultimately win power across history. James Lacey’s book on war on gold is mandatory reading in War colleges. Scholars such as Harold James have linked the Nazi war machine to gold and how war has appeared as a weapon in modern times. Barry Eichengreen, Benjamin Cohen and Eric Helleiner are scholars on currencies but these excellent writers minimized the role of militarism in the ascendancy of finance capital. Both Vladimir Lenin and John Hobson had centralized the role of finance with imperial expansion. Of the more recent scholarship, activists such as Michael Hudson and Samir Amin have added to our knowledge of how financial mechanisms enforce imperial extraction. By integrating W.E.B. Du Bois’s analysis of the roots of World War I in competition over Africa with Samir Amin and Michael Hudson’s frameworks on financial imperialism, this essay reveals monetary systems as structures of racialized accumulation rather than technical coordination problems among great powers.
The fragility of the French military and financial system is now laid bare in their removal from the Sahelian states. In this essay we draw from the body of knowledge that exposed how French franc stability through the 1930s rested on colonial tribute from West and Equatorial Africa, how the Gold Pool defending Bretton Woods’ $35 per ounce price operated only because apartheid delivered cheap South African gold, and how contemporary dollar dominance subsumes rather than replaces these extractive patterns.
The 2026 gold rally thus signals not merely a monetary transition, but the unwinding of a system in which U.S. military hegemony was sustained by reserve-currency privilege — the capacity to issue dollars the world required while enforcing austerity on debtor nations through IMF structural adjustment. As this order fragments, military power increasingly reconnects to direct control over physical resources rather than abstract financial instruments, raising the likelihood of great-power war while rendering sustained U.S. global dominance fiscally untenable. Gold’s price exposes what debt-based fiat currencies obscure: a structural crisis of an imperial system no longer able to reproduce through monetary mechanisms alone. In this context, credit-rating pressure on Afreximbank and military interventions against African states do little to alter the centrality of African resources in the ongoing transition away from U.S. dominance.
Empire, Gold, and Sterling’s Ascendancy
Eric Williams and Walter Rodney both locate the rise of British imperial power in the violent nexus of gold, slavery, and war, arguing that Britain’s economic ascent was inseparable from coerced extraction and human enslavement. In Capitalism and Slavery, Williams shows how profits from the Atlantic slave trade, plantation economies, and the circulation of gold and silver financed Britain’s wars, industrialization, and imperial expansion, making slavery a foundation rather than a byproduct of empire. Thus, gold and enslavement were at the foundation of racial capitalism. Walter Rodney extends this analysis in How Europe Underdeveloped Africa, demonstrating how British domination depended on the systematic removal of African labor and mineral wealth — especially gold — through military coercion and unequal trade, leaving Africa structurally underdeveloped while Britain accumulated capital and global power. Together, they reveal that British supremacy was not built on commerce alone, but on a monetary system sustained by enslavement, violence, and the imperial control of gold.
Their contribution to the understanding of the relations between gold and war is documented extensively in the book by James Lacey. Gold, Blood and War. After the imperial partitioning of Africa in 1885, Britain emerged as the dominant imperial power. Harold James centralized the linkage between gold and war when he argued that, “By the 19th century, it had appeared in the global economic system as a weapon, and war was baked into the assumptions that underpinned the great financial revolution of the late 17th century.”
So much for the barrage of propaganda about British ingenuity and entrepreneurial acumen. It was this military and imperial legacy that rendered Britain as the dominant force in world politics at the moment of the imperial partitioning of Africa and the Opium War against the Chinese people. The discovery of gold in South Africa strengthened British banks and the British Empire by massively expanding Britain’s control over global finance, trade, and monetary power. South African gold flooded into London, reinforcing the British pound sterling’s role at the center of the gold standard and giving British banks greater reserves to support international lending and trade finance. British banks financed the development of mines, railways, and infrastructure in southern Africa, tying the region economically to London and generating large profits through loans, investment, and insurance. The gold discoveries also increased Britain’s strategic interest in the region, justifying deeper imperial control after the Anglo-Boer War and ensuring that gold production remained under British influence. This steady supply of gold enhanced confidence in British financial institutions, strengthened London’s position as the world’s financial hub, and helped the British Empire sustain its global economic and monetary dominance in the late nineteenth and early twentieth centuries. These imperial holdings strengthen the ‘gold standard.’ In simple terms, the gold standard is a monetary system in which a country’s currency is directly tied to a fixed amount of gold, so money can be exchanged for gold, and its supply is limited by gold reserves.
The Imperial Gold Standard
The classical gold standard that emerged in the 1870s and operated until World War I was fundamentally an imperial system, with Britain at its center. Under this arrangement, major currencies maintained convertibility to gold at fixed rates, with the British pound sterling functioning as the dominant international currency alongside gold itself. Britain’s ability to sustain this system rested on several interconnected imperial advantages: the City of London’s financial dominance built on centuries of accumulated capital from slave trade and colonial extraction; a vast territorial empire providing captive markets, raw materials, and investment outlets; and naval supremacy ensuring secure trade routes and enforcing favorable terms of exchange. The gold standard’s apparent stability — prices remained relatively stable, exchange rates fixed, international trade expanded — masked how its operation depended on colonial violence and racialized extraction. India, the ‘jewel in the crown,’ was forced to maintain rupee-sterling convertibility on terms that drained wealth to Britain through what Indian nationalists termed the “home charges” — payments for British administrative costs, pensions, and debt service that functioned as imperial tribute. Britain could run persistent current account deficits because capital exports to the empire and “invisible earnings” from shipping, insurance, and financial services (themselves dependent on imperial networks) balanced accounts.
Control of African minerals and indirect control of corporations via alliances with Belgium and the Netherlands rendered Britain as the preeminent imperial power by 1914. British banks were dominant in this period in the same way that the British navy was dominant on the high seas. British imperialism can be understood as refined at both the financial and military levels in ways that exemplify what Hobson and Lenin described as monopoly capital — the fusion of bank and industrial capital driving overseas expansion. By the late nineteenth century, British banks, industrial firms, and the state were closely intertwined: large banks mobilized surplus capital at home and directed it into foreign investment, especially in colonies and semi-colonies, while industrial monopolies relied on these financial institutions to secure raw materials, protected markets, and profitable outlets abroad.
Military power underwrote this system by enforcing property rights, suppressing resistance, and stabilizing regions crucial to investment and trade, as seen in cases like South Africa, India, and Egypt. Rather than informal trade alone, imperialism increasingly operated through concentrated financial control, long-term investment, and state-backed coercion, aligning closely with Hobson’s view of imperialism as the product of excess capital seeking returns and Lenin’s argument that imperialism represented a new stage of capitalism dominated by monopolies and finance capital. Walter Rodney problematized this received understanding of imperialism by showing that the export of capital was not always the driving force behind imperialism. From the documentation of war and gold it can be said that the gold standard functioned simultaneously as a military standard, because maintaining a currency’s convertibility into gold depended not just on markets, but on a state’s capacity to defend gold reserves, secure trade routes, enforce debts, and use military power to sustain confidence. In practice, only states with strong navies, colonial reach, and coercive power — most notably Britain — could reliably uphold the gold standard, making monetary stability inseparable from military dominance rather than purely economic discipline.
The discovery of gold in South Africa strengthened British banks and the British Empire by massively expanding Britain’s control over global finance, trade, and monetary power. South African gold flooded into London, reinforcing pound sterling’s role at the center of the gold standard and giving British banks greater reserves to support international lending and trade finance. British banks financed the development of mines, railways, and infrastructure in southern Africa, tying the region economically to London and generating large profits through loans, investment, and insurance. The gold discoveries also increased Britain’s strategic interest in the region, justifying deeper imperial control after the Anglo Boer war and ensuring that gold production remained under British influence. Gold from South Africa became crucial for the dominance of the British banking system and the sterling area. This steady supply of gold boosted confidence in British financial institutions, strengthened London’s position as the world’s financial hub, and propped up the British Empire to sustain its global economic and monetary dominance in the late nineteenth and early twentieth centuries.
Africans and the Gold Standard
Internationally, the classical gold standard as a system was solidified in this period, 1870-1914, when most major economies (Germany in 1871-73, the US de facto in 1879, France and others via the Latin Monetary Union) aligned their currencies to gold.
Under a pure gold standard, paper currency represents a legally enforceable claim on gold at a fixed price, which constrains monetary expansion because issuing beyond reserves risks gold outflows and loss of convertibility. By defining national currencies in terms of gold, the system also fixes exchange rates and links monetary conditions across countries. In theory, trade imbalances are said to be self-correcting: deficit countries lose gold, which contracts their money supply and lowers prices to restore competitiveness — but in practice, these adjustments could be slow, uneven, or socially disruptive. Within this framework, the British Empire benefited from integrated overseas markets and stable trade flows, financed by British banks through extensive international branch networks. Because Britain industrialized earlier than most countries, British banks had unmatched experience in trade, finance and international lending.
British banking regulations allowed banks to operate abroad more freely than those in the United States, whose banks faced strong legal restrictions on overseas branching before World War I — constraints that weren’t substantially relaxed until the Federal Reserve Act of 1913. Britain’s extensive imperial network provided the infrastructure, legal frameworks, and captive markets that facilitated banking operations across vast territories, giving the City of London structural advantages that potential rivals like Germany and France could not match despite their own colonial holdings. By 1900 Germany had surpassed Britain in industrial output — particularly in steel production, chemicals, and electrical industries — yet British financial institutions continued to dominate international finance, controlling the largest share of global trade finance, foreign investment flows, and serving as the world’s primary gold and capital market.
This divergence between industrial and financial power reflected how first-mover advantages, established networks, the pound sterling’s reserve currency role, and Britain’s position as the world’s largest creditor nation could persist even as relative industrial capacity declined. German banks were powerful domestically and in Central/Eastern Europe, operating through universal banking models with closer bank-industry integration, but lacked equivalent reach in global financial markets. The resulting inter-imperial economic rivalries — competition over markets, resources, investment opportunities, and colonial territories — formed part of the broader context of mounting tensions among European powers in the early twentieth century. These tensions exploded in World War I.
In his 1915 Atlantic Monthly essay “The African Roots of War,” W.E.B. Du Bois argued that World War I was fundamentally rooted in European competition over colonial exploitation — a process he termed “the rape of Africa.” He contended that the conflict’s origins lay not in European nationalism or militarism, but in imperialist rivalries over the resources and labor left unresolved by the Berlin Conference. Central to this struggle was a system of super-exploitation for gold mining, which Du Bois characterized as a “jealous and avaricious struggle for the largest share in exploiting darker races.” Du Bois was prophetic in linking the war to the color line, arguing that any lasting peace required dismantling colonial systems entirely, not merely redistributing colonies among victors. His analysis anticipated later anti-colonial and dependency theorists who centered imperialism rather than treating it as peripheral to understanding modern warfare and capitalist development.
This analysis of DuBois differed from bourgeois scholars who attributed the outbreak of World War I to complex factors including alliance systems, militarism, nationalist movements, and specific crisis escalation mechanisms that cannot be reduced to financial competition alone. The war would ultimately shatter the prewar gold standard and begin eroding Britain’s financial dominance, though London remained central to international finance through the interwar period.
The United States established the Federal Reserve in 1913, marking a decisive shift away from a fragmented, state-centered banking system that had long restricted large-scale and overseas operations. Before this, U.S. banks faced tight legal limits on branching — both domestically and internationally — which hindered their ability to support an emerging global role. At the same time, U.S. military actions in the late nineteenth century, especially after 1898, provided the country with overseas possessions and an imperial foothold that demanded more centralized financial coordination. American bankers initially maintained financial and commercial ties with both British and German belligerents after 1914, but neutrality persisted in part because the United States was reluctant to enter the war until it became clear that its growing financial exposure — especially loans and bond holdings tied to Britain, France and the Netherlands — was at risk.
It was then that President Woodrow Wilson joined the war in 1917. World War I weakened Britain’s financial position, but the full transfer of global financial dominance did not occur until the 1930s.
Gold was officially priced at $20.67 per ounce under the pre-WWI gold standard, where major currencies maintained convertibility and the price remained stable through international cooperation among central banks. World War I shattered this system as imperial nations suspended convertibility to finance military expenditures through money creation, causing domestic inflation and effectively devaluing currencies against gold. During the war and immediate postwar period, gold trading where it occurred reflected these currency devaluations, though official prices remained nominally frozen. The 1920s saw attempted restoration through the gold exchange standard, where Britain returned to gold at the prewar parity in 1925 — a decision that overvalued sterling, depressed British exports, and contributed to deflationary pressures. The U.S. maintained the $20.67 price through this period, but the restored system proved fragile. German capitalists opposed the imposition of war reparations and supported the rise of German nationalists and fascists to come to power. German industrialists depended on Military Keynesianism to propel the economy, instead of depending on the financial sector.
The exuberance of the capitalist classes in the United States precipitated the great depression. Capitalists like J P Morgan became involved in South Africa while inside the USA, Jim Crow Laws gave political cover to the Ku Klux Klan. Andrew Ross Sorkin in his book 1929: Inside the Greatest Crash in Wall Street History — argued that the Great Depression began not simply because of the stock market crash, but because years of unchecked speculation, easy credit, weak regulation, and collective belief that “this time was different” created a fragile financial system that collapsed once confidence broke in 1929.
The Great Depression destroyed interwar monetary arrangements. Britain abandoned the gold standard in 1931, and in 1933-34, Roosevelt’s administration devalued the dollar by raising gold’s official price to $35 per ounce — a nearly 70% increase that reflected both deflation’s impact and a deliberate strategy to reflate the economy and improve U.S. export competitiveness. This $35 price became the anchor for the Bretton Woods system established in 1944, which made the dollar the world’s reserve currency convertible to gold at this rate.
There are many mainstream scholars, such as Barry Eichengreen, who studied this period. His Golden Fetters: The Gold Standard and the Great Depression, 1919-1939 (1992) fundamentally reshaped understanding of how gold standard orthodoxy transformed the 1929 crash into a prolonged global catastrophe. He demonstrated that countries abandoning gold earlier recovered faster, revealing the standard as a deflationary straitjacket that imposed mass unemployment to “defend the currency” — showing whose discipline gets enforced and who pays the costs. Yet there was no mention of the role of South African and African workers in this international system. His influential book Exorbitant Privilege similarly diminished the importance of Africa for the international monetary order. Benjamin J. Cohen’s work on international monetary power and “currency statecraft” — Currency Power and The Geography of Money — also failed to engage the colonial question, despite providing sophisticated frameworks for understanding how monetary systems structure global hierarchies and the politics of reserve currency competition between core and peripheral economies.
The dominant scholarship on gold and international finance operates primarily within frameworks centered on great power competition and institutional cooperation among advanced industrial economies. Cohen’s “currency pyramid” acknowledges hierarchy but focuses on competition among major currencies (dollar, euro, yen, pound) rather than examining how metropolitan currencies’ strength derives from peripheral extraction. His spatial metaphors could accommodate colonial analysis but he doesn’t pursue it. Eichengreen is marginally better — he acknowledges that Britain’s nineteenth-century gold standard leadership rested on empire and notes colonial sterling arrangements — but treats these as background context rather than constitutive features. He largely ignores how France’s interwar and postwar monetary capacity depended on colonial extraction, analyzing French gold accumulation in the 1920s-30s through Raymond Poincaré’s domestic stabilization and competitive devaluation without examining colonial contributions.
By omitting colonial political economy, mainstream scholars miss how “exorbitant privilege” isn’t unique to the U.S. dollar, but describes a general feature of imperial monetary arrangements — metropolitan powers structure monetary systems to facilitate peripheral resource extraction while avoiding reciprocal obligations. The dollar’s postwar dominance didn’t replace colonial extraction patterns; it subsumed and restructured them, with France maintaining its African monetary zone even while nominally accepting dollar hegemony at the global level.
France and the International System
France’s ability to return to gold in 1928 at a competitive (undervalued) rate — roughly one-fifth of the prewar parity — and subsequently to accumulate gold reserves while much of Europe suffered Depression, was materially enabled by its colonial empire. France suspended gold convertibility during WWI, and the franc depreciated significantly through the 1920s as France struggled with war debts and reconstruction costs. The acquisition of former German colonies after Versailles intensified colonial exploitation, allowing the French banking system to temporarily stabilize. The franc zone — formalized through the CFA franc system after 1945 but operating through colonial monetary arrangements earlier — allowed France to extract resources, control trade flows, and impose monetary discipline on African colonies that subsidized metropolitan stability. French West Africa and French Equatorial Africa were forced to hold reserves in Paris, conduct trade primarily with France at disadvantageous terms, and maintain currency pegs that facilitated extraction while limiting their own monetary sovereignty.
During the interwar period, France leveraged colonial resources (rubber, cocoa, palm oil, minerals) and captive colonial markets to generate export earnings and stabilize its balance of payments. The colonies absorbed French exports even during the Depression, providing counter-cyclical support unavailable to countries without imperial hinterlands. This colonial cushion, combined with the undervalued franc’s competitive export advantages, made France one of the last major powers clinging to gold orthodoxy even as the Depression deepened. France didn’t abandon the gold standard until 1936, years after Britain (1931) and the United States (1933-34), because French political coalitions and central bank orthodoxy resisted devaluation. The delay was economically catastrophic — France endured prolonged deflation, unemployment, and political instability while maintaining the gold link long past when it served any productive purpose. Yet this stubborn adherence was economically survivable for French elites precisely because colonial extraction subsidized metropolitan losses. France’s late departure reflected how gold standard ideology functioned as class politics: defending the franc’s gold value protected rentier wealth and creditor interests while immiserating workers and farmers through deflation.
After WWII, the CFA franc system became explicit neocolonial extraction. African countries under French domination were required to deposit 50-100% of their foreign reserves in the French Treasury (the percentage varied over time, currently 50%), receiving minimal interest while France invested these funds and retained monetary control. This arrangement allowed France to run balance of payments deficits, finance its own development and military operations (including colonial wars in Indochina and Algeria), and maintain great power pretensions despite being economically weaker than the U.S., Soviet Union, or even West Germany. The CFA system also meant France could oppose dollar hegemony from a stronger position — de Gaulle’s famous 1960s challenges to Bretton Woods, including demanding gold for dollars and advocating return to gold standards, were enabled by France’s ability to extract resources and monetary tribute from Africa. France wasn’t genuinely advocating “neutral” monetary systems; it was defending its own neo-imperial arrangements against American encroachment. Ndongo Samba Sylla and Fanny Pigeaud, in their book Africa’s Last Colonial Currency: The CFA Franc Story, offer a clear explanation of how French militarism is closely tied to the CFA franc currency regime in Africa.
The Bretton Woods Compromise Gold at $35 per ounce
As in the First World War, the United States emerged out of World War II as the strongest industrial power. From the declaration of the Atlantic Charter in 1941, there had been negotiations between the British and US bankers about the post war financial system. Britain entered these negotiations from a position of profound weakness. Even before the end of the war, Franklin Roosevelt had outlined the post war imperial order dominated by the United States. The USA would support anti colonial elements so that these former colonies could be dominated by US banks and corporations. Financially exhausted by the war, heavily indebted to the United States, and facing the imminent collapse of its imperial economic system from massive anti colonial revolts such as that of India and Africa, the British was trapped under the Lend Lease system.
By the time of the landing in Normandy when the future of the war was clear, a compromise emerged from negotiations between the U.S. and Britain in 1944, primarily shaped by the competing visions of Harry Dexter White (U.S. Treasury) and John Maynard Keynes (British Treasury). Keynes proposed an ambitious International Clearing Union with a new reserve currency (the “bancor”) that would penalize both surplus and deficit countries, preventing the deflationary bias of the old gold standard while maintaining multilateralism. The U.S., holding roughly two-thirds of the world’s monetary gold and positioned as the dominant creditor nation, rejected this symmetrical arrangement. Harry Dexter White’s plan prevailed: the dollar would serve as the world’s reserve currency, convertible to gold at a fixed rate, while other currencies pegged to the dollar. This gave the U.S. enormous advantages — it could run deficits by providing dollars the world needed for reserves and trade, effectively exporting inflation and financing its own imperial expansion through seigniorage.
The $35 per ounce price was inherited directly from Roosevelt’s 1934 devaluation, which had raised gold from $20.67 to $35 — a level chosen partly to reflate the Depression economy and partly to improve U.S. export competitiveness. By 1944, this price had been in effect for a decade, and changing it would have required complex revaluations of existing gold holdings and debts. More fundamentally, maintaining the $35per ounce price served U.S. interests: it preserved the real value of America’s massive gold reserves while establishing the dollar-gold link at a rate that reflected interwar adjustments rather than pre-WWI parities. For other countries, especially Britain and France, accepting this arrangement meant subordinating their monetary sovereignty to American hegemony, but they had little choice — they needed U.S. loans for reconstruction and access to American markets. The compromise also depended materially on South African gold production continuing to flow at volumes that could sustain the system, meaning Bretton Woods was structurally dependent on apartheid’s super-exploitation of Black mine workers from its inception. The $35 price wasn’t economically “optimal” — it was a political settlement that institutionalized U.S. monetary dominance while creating the contradictions (the Triffin Dilemma) that would eventually destroy the system. The price reflected American power to dictate terms while maintaining continuity with its own previous devaluation, papering over the fundamental tension between using the dollar as both national currency and global reserve.
When the International Monetary Fund (IMF) was launched in 1945, there were four independent African territories, Egypt, Ethiopia, Liberia and South Africa. Notwithstanding the absence of independent countries, the intelligentsia and social movements were clear on the centrality of militarism in the currency systems. Unlike the more technical or institutional analyses of Bretton Woods, scholars such as Norman Girvan and Samir Amin emphasized structural inequalities, showing how Caribbean and African economies were systematically subordinated to the interests of industrialized powers through debt, unequal trade, and monetary rules.
The Gold Pool and the Super Exploitation of African Workers
Between 1945 and 1960, colonial peoples across Asia, Africa, the Middle East, and the Caribbean struggled for political independence. The United States increasingly opposed these movements for national self-determination, labeling nearly every leader seeking economic control as communist. Through covert and overt interventions — including government overthrows in Iran and Guatemala and support for authoritarian forces in Europe — the United States relied heavily on its military and intelligence services. As the ‘Cold War’ expanded, the United States established a worldwide network of military bases and became deeply involved in wars in Korea, Vietnam, and the Congo. By the late 1950s, this global posture produced persistent balance of payments deficits, driven by overseas military expenditures, interventions against liberation movements, and the expansion of U.S. multinational corporations.
These deficits created a growing dollar overhang, as foreign governments and central banks accumulated more dollars than the U.S. Treasury could redeem for gold at the official price. As confidence weakened, gold demand rose, particularly in London, where the market price increasingly exceeded the official $35dollars an ounce. This gap fueled speculation that the United States would be forced to devalue the dollar or suspend gold convertibility.
The mounting pressure on dollar-gold convertibility at the fixed price threatened the Bretton Woods system’s stability — the immediate problem that led to creating the Gold Pool in 1961.
As confidence in the dollar weakened, demand for gold increased — especially in the London gold market — pushing the market price above the official $35 level and encouraging speculation that the U.S. would be forced to devalue or suspend convertibility.
The Gold Pool was a cooperative arrangement established in 1961 among eight central banks (the U.S. Federal Reserve, Bank of England, and central banks of West Germany, France, Italy, Belgium, the Netherlands, and Switzerland) to maintain gold’s official price at $35 per ounce by intervening in the London gold market. Pool members would collectively buy or sell gold to stabilize its market price around the official Bretton Woods peg, with the U.S. providing 50% of the gold supply for sales.
The Gold Pool’s operation depended fundamentally on South African gold production, which by the 1960s accounted for roughly 70-80% of Western world supply. This gold was extracted under apartheid’s system of racialized super-exploitation, where Black miners worked in extraordinarily dangerous conditions for wages deliberately suppressed through pass laws, compound systems, and violent labor repression. The price stability Western central banks were defending at $35/ounce was artificially maintained not just through monetary policy coordination, but through the structural violence of apartheid labor regimes that kept production costs brutally low.
In short, the Gold Pool was a stopgap response to the structural contradiction of Bretton Woods: a dollar-based international system backed by a finite U.S. gold stock. Michael Hudson, in a little-known article entitled “Sieve of Gold”, connected monetary imperialism to military imperialism, showing how the international financial architecture served American geopolitical strategy. The U.S. used its monetary leverage to discipline nations pursuing independent economic development, while the Pentagon’s global presence enforced this economic order. This analysis reveals how monetary mechanisms function as instruments of imperial extraction and control.
The collapse of the Gold Pool in 1961 reflected a deeper contradiction: the system required cheap South African gold to function, but as anti-apartheid movements intensified globally and production costs rose despite wage repression, the gap between artificially suppressed extraction costs and gold’s actual value widened. Western banks and governments were essentially trying to defend a price structure built on racialized exploitation while simultaneously facing the Triffin Dilemma and U.S. imperial overreach through Vietnam. The beneficiaries were not just American policymakers financing deficits, but the entire network of mining capital, financial intermediaries, and central banks whose gold reserves represented accumulated value extracted from Black South African labor. The Gold Pool’s demise wasn’t merely a technical monetary failure — it was the breakdown of a system whose stability depended on maintaining both apartheid’s labor controls and dollar hegemony, neither of which proved sustainable.
The more dollars circulated globally, the less credible became the promise that they could all be redeemed for gold at $35/ounce.
Several pressures accumulated to break the system. U.S. fiscal deficits from Vietnam War spending and Great Society programs created inflationary pressures that made gold undervalued at $35, while European skepticism grew about subsidizing American imperial adventures. France determined that this system extended an exorbitant privilege to the United States. France under de Gaulle withdrew from the Pool in 1967, viewing Bretton Woods as allowing the U.S. to export inflation and finance militarism. Speculation accelerated as private actors recognized the system’s unsustainability, and in early 1968, massive gold buying overwhelmed the Pool, which lost over 1,000 tons in three months. The Pool suspended operations in March 1968, creating a temporary two-tier system, but by 1971, Nixon closed the gold window entirely. The collapse revealed that monetary systems based on commodity standards couldn’t accommodate the contradictions between national policy autonomy, fixed exchange rates, and capital mobility — particularly when the reserve currency issuer was financing imperial military operations that other members opposed.
The collapse of Bretton Woods in 1971 inaugurated a volatile period of gold price discovery freed from official constraints. Gold, which Nixon had unpegged from the dollar at $35 per ounce, surged dramatically through the 1970s, reaching approximately $850 by January 1980 amid stagflation, oil shocks, the Iranian Revolution, and deteriorating confidence in fiat currencies. This spike represented not merely monetary disorder but the unraveling of postwar accumulation regimes and the beginning of financialization as the answer to declining industrial profitability in core capitalist economies. The 1980s and 1990s saw gold enter a prolonged bear market as neoliberal restructuring, central bank gold sales, and the apparent triumph of dollar hegemony following the Soviet Union’s collapse created two decades where gold seemed relegated to relic status — prices languished between $250-$450 through much of the period, prior to the Iranian revolution.
Under pressures from the intellectuals of the Bretton Woods system some central banks actively divested gold reserves in favor of dollar-denominated assets, particularly U.S. Treasuries. This complacency shattered with the 2008 financial crisis, which revealed the fragility of a global system built on securitized debt, shadow banking, and dollar dominance without gold backing. Gold prices, which had begun recovering in the early 2000s as China and other emerging markets accelerated accumulation, broke through $1,000 per ounce in 2008 and continued climbing to nearly $1,900 by 2011 as quantitative easing programs raised fundamental questions about fiat currency stability. The 2008 crisis thus marked an inflection point — not a return to gold standards, but recognition that monetary arrangements built purely on sovereign debt and central bank credibility faced structural legitimacy challenges, particularly as U.S. financial hegemony’s costs became more visible to emerging economies funding American deficits while experiencing the disciplinary violence of dollarized debt crises.
The 2025-2026 Gold Rally and African Political Economy
Gold’s price rise past $5,000 per ounce in early 2026 marks a fundamental repudiation of the dollar system, as the metal’s structural “rebasing” responds to the waning military and economic power of the United States and the convergent pressures this decline generates within the international monetary order. This rally, building on gold’s rise from $2,063 at end-2023, reflects not transient speculation but systematic repositioning toward “hard assets” amid escalating doubts about fiat currency stability and sovereign debt sustainability. Central banks — particularly from emerging markets — have sustained price-invariant demand since Russia’s 2022 reserve freezing demonstrated that dollar-denominated assets carry political risk despite their liquidity. China, India, Poland, and other states accelerated gold acquisitions explicitly to reduce dollar dependence, adding over 1,000 tons to official reserves in 2025 alone, with projections indicating continued accumulation targeting 15-25% portfolio allocations. This represents the first period since the 1990s where gold’s share of global reserves rivals U.S. Treasuries, marking a fundamental shift in reserve management philosophy toward assets with no counterparty risk.
The rally operates within multiple reinforcing dynamics. Japanese financial volatility — intensifying since the Bank of Japan abandoned ultra-low rates in March 2024 — threatens the structural foundations of U.S. debt financing, as rising Japanese yields disrupt the $7.3 trillion government bond market that has historically recycled capital into Treasury purchases. With U.S. debt at $38 trillion and military budgets reaching $1.5 trillion, tremors in Japanese markets function as pressure points within dollar hegemony’s architecture. Gulf petrostates pursue what might be termed “monetary multi-alignment”: Saudi Arabia’s June 2024 decision not to renew its petrodollar agreement allows oil sales in yuan and euros while maintaining dollar reserves, hedging against dollar dependence without wholesale abandonment. The UAE operates as a renminbi trading hub while Iraq utilizes yuan for Iranian energy imports, exploiting contradictions between formal dollar pegs and practical sanctions-circumvention needs. European divestment from Treasuries — Sweden’s Alecta pension fund liquidating $7.7-8.8 billion, Denmark’s AkademikerPension selling $100 million — though materially modest, signals eroding confidence in U.S. fiscal sustainability amid Trump administration geopolitical aggression and budget deficits.
Geopolitical fragmentation itself has become a permanent pricing feature rather than episodic shock. Trade weaponization through escalating tariffs, ongoing war in Ukraine and Israeli genocide in Palestine, and “tail risks” of multipolarity drive gold as portfolio insurance. Traditional inverse correlations between gold and interest rates have weakened: even nominal rate volatility hasn’t suppressed prices because real yields remain compressed by anticipated Federal Reserve easing and inflation expectations. The fundamental driver is currency debasement anxiety — record fiscal deficits raise questions about long-term debt sustainability, positioning gold as a hedge against fiat currency deterioration. Supply constraints amplify these pressures: stagnant mine production due to regulatory barriers and lack of major new discoveries coincides with record ETF inflows ($90 billion in 2025) and surging Asian retail demand, creating persistent supply-demand imbalances.
For African gold-producing states, the price surge generates contradictory effects reflecting their subordinate integration into global extractive circuits. Ghana and Mali experience currency stabilization as dollar receipts rebuild foreign reserves — Ghana’s recovery from the 2022 default earned a Moody’s upgrade, while South Africa’s rand strengthened unusually as mining generates massive tax revenues providing “fiscal breathing room.” There were contradictory responses from other credit rating agencies as the Fitch rating agency downgraded Afriexim bank in January 2026. For Fitch, the appreciation of the Ghanaian currency to assist the balance of payments position of Ghana was not good for Wall Street and for Washington.
Profit margins exceed $3,000 per ounce against all-in sustaining costs around $1,672, making previously unviable mines profitable and spurring capital expenditure in Tanzania and Guinea for mine-life extensions. Yet South Africa’s gains are tempered by the reality that remaining gold lies kilometers deep, where high electricity costs and infrastructure decay limit even $5,000/ounce profitability.
The rally’s darker dimensions reveal how high prices intensify extractive violence. Artisanal small-scale mining explodes as informal miners bypass official channels — an estimated $30 billion in gold leaves Africa illegally annually, likely increased by 2026 prices. The $30 billion figure is from mid-2010s estimates. For updated 2026 projections, researchers will now need to study recent reports from GFI, UNECA, or specialized mining governance organizations like the Extractive Industries Transparency Initiative (EITI).
Ghana’s “galamsey” crisis reaches catastrophic levels as mercury-based extraction poisons river basins, including the Pra and Ankobra, rural desperation making toxic mining economically rational. African states respond with strategic reorientation: accelerating domestic refining capacity (Ghana’s GoldBod initiative) to capture processing margins typically extracted by Switzerland and the UAE, while central banks increasingly “hoard” production for reserve backing rather than immediate export, mirroring global trends toward gold-backed monetary sovereignty. Recently, at a conference of African economists in Dakar, this author argued that it is now time for the Pan-African Gold Council.
A Pan-African Gold Council would function as a continental institution challenging extractive imperialism by monitoring illicit gold flows and corporate exploitation, supporting artisanal miners against criminalization and displacement, and promoting resource sovereignty through transparent revenue tracking and renegotiation of predatory mining contracts. It would be the opposing end of the World Gold Council that serves the interests of imperial states.
The Council would advance monetary independence by facilitating gold-backed regional currencies and intra-African trade settlements to reduce dollar dependence, while coordinating continental bargaining power against multinational corporations and exposing smuggling networks that drain an estimated $30 billion annually from Africa. By harmonizing mining regulations across Africa, protecting small-scale mining communities, and documenting the environmental and social violence of industrial extraction, the institution would represent a Pan-Africanist intervention reclaiming gold as an instrument of African development rather than continued wealth transfer to former colonial powers and global capital.
The proposal is inextricably linked to the common currency for Africa to accelerate African social and economic integration.
Struggling Against Gold and War
The 2026 rally thus illuminates contradictions within contemporary imperialism. Rising prices simultaneously provide African states modest fiscal autonomy while intensifying ecological devastation and illicit flows that reproduce subordination. Central bank accumulation challenges dollar hegemony structurally, yet occurs within frameworks where emerging markets still hold massive Treasury portfolios and conduct the majority of petroleum transactions in dollars. Gold’s resurgence doesn’t herald a return to commodity standards but reflects deepening legitimacy crises of debt-based fiat systems and permanent geopolitical fragmentation. The metal’s “strategic importance” grows precisely because monetary arrangements built on sovereign credibility and American military-financial dominance face mounting contradictions — massive debt loads, weaponized trade, and emerging market refusal to indefinitely subsidize U.S. deficits through Treasury purchases.
For Africa, this creates advantages (currency stability, revenue growth). To turn these advantages into a permanent advantage requires a new class alliance inside of Africa where the comprador elements are no longer in control and sending billions of dollars out of Africa. Imagine a society such as Tanzania where there are tons of gold that can be refined, yet Tony Blair is advising the government to get rid of its gold reserves.
Critical Approach Needed to Understand Gold Soar: Fiscal Strain on U.S. Military Hegemony
Gold’s rise to $5,000+ per ounce signals deteriorating confidence in the dollar-Treasury system that has financed American military dominance since WWII. The U.S. currently projects $1.5 trillion in military spending amid $38 trillion national debt, depending on continuous foreign willingness to hold Treasuries. As central banks diversify into gold and away from dollar assets — particularly after Russia’s 2022 reserve freezing demonstrated that dollar holdings carry political confiscation risk — the “exorbitant privilege” that allowed America to finance global military operations by printing the world’s reserve currency erodes. If Treasury demand weakens substantially, the U.S. faces impossible choices: either accept dramatically reduced military capacity, impose genuine austerity domestically to maintain defense budgets, or monetize debt in ways that accelerate dollar decline. The Pentagon’s forward-deployed global posture — 800+ overseas bases, carrier battle groups, continuous operations across multiple theaters — requires the very fiscal mechanisms that gold’s rally indicates are under structural stress.
For countries like China, Russia, India, and even middle powers like Turkey, gold accumulation represents “sanction-proofing” that enables greater military autonomy. States holding substantial gold reserves can sustain military operations even under Western financial sanctions, as gold provides internationally accepted payment means outside dollar-clearing systems. Russia’s ability to continue its Ukraine operations despite unprecedented sanctions partially reflects its gold stockpiling prior to 2022. China’s massive gold purchases (official and likely undisclosed) position it to finance technological and industrial diversification without dollar dependence. This fundamentally alters great power conflict calculus — where previously U.S. financial dominance provided leverage to constrain adversary military actions through sanctions threats, gold-backed monetary autonomy reduces this coercive capacity. The military implication isn’t just fiscal but strategic: multipolar military competition becomes materially possible when challengers aren’t financially subordinated through dollar dependency.
Resource Conflicts and African Militarization
The price surge intensifies militarization around gold-producing regions, particularly in Africa. As the preceding analysis noted, high prices make previously unviable deposits profitable, spurring both corporate expansion and artisanal mining explosions. This generates multiple military dynamics: increased private military company deployments protecting mining operations; state military forces securing extraction zones against insurgencies or rival claimants; cross-border conflicts over gold-rich territories (DRC-Rwanda dynamics intensify when gold values soar); and armed groups financing operations through illicit gold trade. The estimated $30 billion in gold leaving Africa illegally annually funds various military actors — from jihadist groups in the Sahel to militia networks in eastern DRC. French and U.S. military presences in Africa, officially justified through “counterterrorism,” also function to secure extraction networks and maintain access to strategic minerals. As gold prices rise, the military premium on controlling production zones increases proportionally.
Gold has operated as a weapon in the international financial system. With clarity on African gold and labor’s centrality in the 21st century, financial barons are attempting to shift toward digital and crypto currencies — but this transition moves too slowly against gold’s soaring price.
Gold’s rise signals the unwinding of the post-1971 arrangement where American military hegemony was financed through monetary mechanisms (reserve currency status, Treasury recycling, sanctions leverage) rather than direct resource control. As this system fragments — indicated by central bank gold hoarding, Treasury divestment, and sanctions circumvention through alternative payment systems — military power becomes more directly tied to physical resource control and productive capacity than financial instruments. This breakdown engenders recklessness and abrogation of the rules-based system that supposedly anchored Bretton Woods. The 2026 kidnapping of Venezuela’s president exemplifies this push to militarily control Global South resources.
This transition away from financial management of the international system makes war more probable by removing financial interdependence constraints, while simultaneously making sustained U.S. global military dominance fiscally untenable without imposing costs (austerity, inflation) that the American political economy may not tolerate. The question isn’t whether military implications follow from monetary transition, but whether transition occurs through negotiated multipolarity or catastrophic confrontation. Gold’s movement toward historic highs suggest that capital markets are pricing increased probability of the latter — not because gold causes conflict, but because the monetary arrangements it represents (physical assets over fiat claims, national sovereignty over financial integration) reflect and enable geopolitical fragmentation that makes military competition between great powers increasingly unconstrained by the economic logic that previously imposed caution.
Read more on Pambazuka Newsletter
