As President Donald Trump intensifies the trade war with a proposed 50% tariff on European imports, a Washington-based think tank cautions that such aggressive policies could accelerate a global shift toward gold.
In a recent opinion article, Kimberly Donovan, Director of the Economic Statecraft Initiative, and Maia Nikoladze, Associate Director at the Atlantic Council, highlighted that countries—especially emerging markets—are increasingly turning to gold as an alternative global currency to bypass potential U.S. sanctions.
They also observed that governments wary of provoking the U.S. are adopting gold-linked technologies to protect their economies.
“Countries are experimenting with gold-backed digital assets and trading systems that bypass the dollar-based financial system,” they wrote. “While many of these efforts are economically motivated, gold is also being used by U.S. adversaries to evade sanctions and finance activities threatening U.S. national security. The rise of gold-backed currencies, coupled with sanctioned regimes’ growing use of alternative payment systems, could create major blind spots for U.S. financial intelligence and sanctions enforcement.”
This analysis comes amid strong central bank demand for gold, which has dominated the market for the past three years. Since 2022, central banks have increased their gold reserves by over 1,000 tonnes. Although the pace slowed in 2025, data from the World Gold Council shows central banks purchased 243.7 tonnes in Q1—24% above the five-year average.
Donovan and Nikoladze singled out Russia as a prime example. Facing heavy Western sanctions after its invasion of Ukraine, Russia has fully embraced gold. While official reserves have remained steady since 2020, the Finance Ministry is believed to be buying gold domestically off the books. In 2021, Russia doubled gold’s share in its National Wealth Fund to 40%.
“Gold also plays a major role in Russia’s illicit trade,” they added. “The UAE—a BRICS+ member and global gold hub—and Turkey have exchanged cash for Russian gold. Russian banks like Lanta Bank and Vitabank received 21 shipments totaling $82 million from the UAE and Turkey in exchange for gold.”
But the concern extends beyond gold as a reserve asset. Donovan and Nikoladze emphasize that technological innovation is increasing gold’s influence in global finance.
Governments are now adopting strategies similar to crypto firms. For instance, Kyrgyzstan’s Finance Ministry recently announced plans to launch USDKG, a gold-backed stablecoin, in the third quarter of 2025. Backed by $500 million in gold reserves with plans to expand to $2 billion, USDKG will be pegged to the U.S. dollar but fully backed by gold. Unlike stablecoins such as Paxos Gold or Tether Gold, USDKG will not track gold’s price but allow holders to redeem it for gold, other cryptocurrencies, or fiat currency.
The stablecoin aims to simplify cross-border remittances, which account for about one-third of Kyrgyzstan’s GDP.
Kyrgyzstan’s initiative follows sanctions for facilitating transactions linked to the Russian bank Promsvyazbank. Donovan and Nikoladze warn that USDKG will operate outside U.S. financial oversight.
“Given Russian interest in exploiting Kyrgyzstan’s financial system to import restricted technologies, USDKG will likely appeal to sanctioned actors seeking to bypass U.S. banking entirely,” they said.
To preserve its leadership in global finance, the economists argue the U.S. must shift course.
“That means reducing reliance on tariffs and economic pressure that push countries toward alternatives like gold,” they concluded. “Simultaneously, the U.S. should promote dollarization in vulnerable economies like Kyrgyzstan’s through financial support and deeper trade and investment ties.”
