During the Japanese occupation in World War 2, food was very scarce in the capital city of Manila.

My mother would tell us stories about the environment during the war. While there was food in the provinces, the same could not be said of Manila.

Getting the food to Manila was difficult as the Japanese army would seize the supplies entering the city for their own use. Hunger was everywhere.

In such a grave situation, an opportunity arises for smugglers. Think of Hans Solo and Chewbacca trying to do the Kessel Run in 12 parsecs except finishing in days.

Smuggling rice from the nearby provinces became a necessity despite the massive risk involved. To compensate for this risk, an equal amount of return must be offered in exchange. What is an acceptable equivalent exchange during such dire times?

Gold. More specifically, gold jewelry. When faced with starvation, the weight of gold is undermined but its value increases. This story emphasizes that in uncertain times, gold is the most exchangeable or most liquid asset one can own. This “liquidity” as a “store of value” and convertibility is the most desirable characteristic of the metal.

Gold prices achieved record highs, breaching the $4,000 an ounce level last week. It is one of the best performing financial assets in the global markets for 2025.

What is driving gold prices higher? Most investors would point to the uncertainties facing the world today, from tariff hikes to recession fears, imminent conflict in Europe, etc. As a secure store of value, gold is a preferred hedge in uncertain times. This makes sense given the historical experience with the metal.

But who are the buyers of gold these days? It has been reported that the central banks of China, India, Türkiye, Russia and Poland have been buying.

Why do central banks need gold? Gold forms part of a country’s international reserves. International reserves represent the financial assets of a country that can back its trade and investment transactions with the rest of the world. More importantly, these are “liquid” assets, which means these are readily acceptable by any nation.

Gold is a bit special among the different types of reserve assets. Unlike, say US Treasuries, gold is a natural resource and apart from its market value, a country can increase its reserves via extraction. It is natural wealth, which is in high demand these days. Given the fiscal and trade deficit widening in the US, it makes sense for central banks to acquire more gold, which is not tied to the macroeconomic issues of a country.

As Filipinos, we need to appreciate that our untapped natural resources are extremely valuable. As our natural assets, they can help fund the future of the nation. We need to have the option to extract, process, and monetize these assets sustainably.

Whether in times of desperation or abundance, in terms of trade and capital, our gold, other metals and minerals are what will keep us connected to the world. And the golden rule is to use these strategically and conscientiously to benefit future generations.