I don’t usually send these more than once a week—unless I come across something timely or compelling enough to share right away. This is one of those times, not least because we just put out our latest gold-focused issue of Crisis Investing.
As I mentioned there, for three consecutive years now, central banks have purchased over 1,000 tons of gold annually. For context, the average annual buying in the decade before 2022 was just 400-500 tons. In other words, they’ve more than doubled their accumulation rate.
Take a look at today’s chart below. It shows central banks’ gold versus U.S. Treasuries as a percentage of their international reserves—and reveals the result of this buying spree: something that just happened this year for the first time in nearly three decades.
For the first time since 1996, central banks around the world now hold more gold than U.S. Treasuries as a percentage of their reserves.
As of the latest data, gold represents about 28% of global central bank reserves, while U.S. Treasury holdings have fallen to roughly 24%. The gap isn’t huge yet—but the trend is unmistakable.
Of course, this rotation didn’t happen overnight. It’s been building for years, quietly accelerating in the background.
But look closer at the graph above, and you’ll see the yellow line (representing gold’s share) starting its uptrend around 2015—just as the blue line (U.S. Treasuries) began trending down. That’s no coincidence.
After the U.S. weaponized the dollar through sanctions against Russia in 2014, other nations realized that holding dollar reserves meant accepting potential financial subjugation. If Washington decides your foreign policy isn’t aligned with theirs, your reserves can be frozen or seized. Gold can’t be sanctioned away.
(The U.S., of course, doubled down on Russian sanctions in 2022, and the yellow line started climbing at an even steeper trajectory.)
Will gold’s share ever return to the levels seen during the inflationary chaos that followed the 1971 Nixon Shock?
I don’t know—but it’s clearly heading higher, driven by rising prices and expanding central bank holdings feeding into each other. A virtuous cycle, if you will.
And here’s the critical point: this demand is largely price-insensitive. Central banks aren’t momentum traders worried about quarterly returns. They’re accumulating gold as a long-term store of value and hedge against dollar debasement. Whether gold trades at $3,000 or $4,000 matters less to them than whether they hold enough of it before the next crisis hits.
So it’s hardly surprising that in a recent survey, 43% of central bankers said they plan to increase their gold reserves over the next 12 months—up from just 29% a year ago.
As impressive as that figure is, I suspect many more simply weren’t willing to disclose it, because when asked whether they believed global official gold reserves would continue to rise, a stunning 95% said yes.
Think about that for a moment. The institutions that manage trillions in reserves—the most risk-averse financial managers on the planet—are nearly unanimous in believing their gold holdings will keep growing.
Have a great rest of your weekend!
Lau Vegys