Gold Surpasses US Treasuries as the World's Largest Reserve Asset
The European Central Bank report shows that by the end of 2025, gold will account for 27% of global official reserves, surpassing US Treasuries at 22%.
The share of gold has increased by 7 percentage points from the previous year, while the share of US Treasuries has decreased by 3 percentage points, with the euro remaining at 15%.
Central banks continue to increase gold holdings to hedge against geopolitical risks, shifting funds from US Treasuries to physical gold, with rising prices further amplifying the change in shares.
Source: Public Information
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The European Central Bank has been tracking reserve structures since the 2010s and has previously pointed out that emerging market central banks (China, India, Turkey, Poland) are the main net buyers of gold, following a path similar to Russia's accelerated gold accumulation after 2008 and the shift away from US Treasuries after the 2014 Crimea incident.
Capital is moving out of the US Treasury market and into physical gold, motivated by a desire to reduce exposure to a single sovereign credit while using gold's non-yielding but non-sanctionable attributes as geopolitical insurance; this shift is realized through official gold purchases and price revaluation.
Similar cases can be seen in the brief rise in gold's share after the collapse of the Bretton Woods system in 1971 and the increase in holdings by some central banks after the Asian financial crisis in the late 1990s; the current industry is transitioning from dollar-dominated assets to diversified hedging.
Essentially, this represents a transfer of pricing power: when the value of reserve assets is determined more by market pricing rather than the issuer's credit, gold's non-sovereign attributes regain structural premiums.
ABAB News · Law of Cognition
Price increases themselves are a weapon for share.
Reserve security takes precedence over maximizing returns.
The day sovereign credit is damaged is the time for physical assets to rise.