Foreign Central Banks Now Hold More Gold Than US Treasuries

Here's the chart:

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The chart says "first time since 1996", but the gold on the central banks balance sheets back then was legacy gold, from when everyone was on the Breton Woods Standard (where all currencies were pegged to the dollar and the dollar was pegged to gold, and central banks around the world held gold to maintain the peg).

The end of the Breton Woods System happened in 1971, when President Nixon unilaterally terminated the dollar's peg to gold. But central banks around the world held onto their gold till the mid 1990's when they felt safe enough to sell their gold and switched to holding US Treasuries, German bunds and other fiat-based government securities.

Central bank holdings of gold started to rise after the invasion of Ukraine in 2022. They were spooked by the weaponisation of the dollar in 2022 (where Russia was booted out of SWIFT and the Russian central bank's assets held outside of Russia were seized). Global tariffs by Trump deepened their distrust of the USA.

As of July 2025, China's gold reserves had risen for nine consecutive months. Here is the chart:

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China isn't the only central bank buying gold. Here are the biggest increases of gold reserves in Q2 2025:

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What's happening here is that when foreign govts earn dollars (by selling Americans raw materials and finished goods), they're buying gold with those dollars instead of buying US Treasuries. As yet they arn't selling the Treasuries they already own. But when those Treasuries mature, the money will get placed into gold too.

As this trend continues, US Treasuries' share of central bank reserves should continue to drop.