US interest payments alone top $1 trillion, exceeding defense budget
Global central banks net buyers of 345 tonnes in first half of this year
Price target of 3 million won per don by 2030 maintained despite recent dip
"We are at an inflection point where the monetary order is being redesigned," said Jo Gyu-won, chief executive of Stackers. "The era when cash could be considered unconditionally safe is over."
Jo made the remarks Friday at a lecture titled "Understanding Gold — From Outlook to Investment Methods in 40 Minutes," held as part of the Herald Money Festa 2026 at Dongdaemun Design Plaza in Jung-gu, Seoul. He urged the audience to pay close attention to the growth of US national debt and shifting confidence in the dollar, arguing that physical assets such as gold and silver are becoming increasingly important as stores of value as the purchasing power of fiat currencies erodes over the long term.
Jo traced the history of money from ancient Rome's denarius through the gold standard and the Bretton Woods system to the suspension of dollar-gold convertibility in 1971. "The reason humanity has used gold and silver as money and as a store of value for 5,000 years was not a mere historical accident," he said. "Gold is most valuable because of its scarcity — above all, the fact that it cannot be created at will."
He identified US fiscal strain as the central backdrop to the current shift in the monetary order. The US federal government's national debt has surpassed $40 trillion this year. The Congressional Budget Office projects that net interest payments by the US government will exceed $1 trillion in fiscal year 2026.
"When the gold brake was in place, it was difficult to dramatically expand the money supply, but once the link to gold was severed, it became easy to borrow and print money," Jo said. "The US collects about $5 trillion in tax revenue a year, yet now has to spend $1 trillion on interest alone." He noted that the interest burden already exceeds the US Department of Defense's annual budget of $900 billion.
Jo also highlighted a shift in how central banks around the world view the dollar. "In the early 2000s, the dollar accounted for more than 70 percent of global foreign exchange reserves, but that share has now fallen to the 50 percent range," he said. "I am not saying the dollar will collapse on Saturday. What matters is recognizing that the trend is changing."
According to the World Gold Council, global central banks net purchased 345 tonnes of gold in the first half of this year. In a WGC survey of 76 central banks, 45 percent said they planned to increase their own gold holdings over the next year. "Central banks around the world have been buying gold every single year since 2010," Jo said. "To understand why gold purchases are rising, you need to understand the history of money."
Gold trading by domestic investors has also surged. According to Korea Exchange, the total trading value on the KRX gold market from Jan. 2 to Friday came to 19.42 trillion won ($14.3 billion), up 77.2 percent from 10.96 trillion won in the same period last year. Retail investor purchases rose 60.6 percent over the same period, from 5.34 trillion won to 8.58 trillion won.
Gold prices, however, are lower than a year ago. The closing price of the "Gold 99.99_1kg" contract on the KRX gold market stood at 182,770 won per gram on Friday, down 2.4 percent from 187,300 won on Oct. 2 last year. Converted to one don (3.75 grams), the price fell from about 702,000 won to 685,000 won.
Despite the price pullback, Jo maintained his forecast — first presented last year — that gold will reach 3 million won per don by 2030. "There is no asset that keeps rising without interruption," he said. "The current correction does not mean gold's value has been undermined in the long run. If anything, it strengthens the case for gold."
He grounded the 3 million won target in US monetary base and gold reserve figures. "If you divide the US monetary base of $5.2 trillion by the 8,133 tonnes of gold the US holds, you get a gold price of roughly $20,000 per ounce," Jo said. "Taking into account the won-dollar exchange rate and other factors, that translates to around 3 million won per don in domestic gold prices."
His choice of 2030 as the target year rests on gold's supply cycle. "Gold takes a long time from exploration and mining to infrastructure development, so the supply cycle runs about 10 to 15 years," he said. "The upward cycle began in 2019, and when you factor in that past gold price upswings have lasted an average of 10.8 years alongside gold supply figures, domestic gold prices look set to pass 3 million won per don around 2030."
Jo drew a line against the view that rising interest rates are a headwind for gold. "The argument that higher rates hurt gold because gold pays no interest or dividend is only half right," he said. "The most important indicator for gold is not the nominal rate but the real rate." He added that "chronic inflation and declining confidence in US government bonds create a favorable long-term environment for gold prices to rise."
hajun825@heraldcorp.com
