Gold Reserves Surpass U.S. Treasuries for First Time Since 1996 ...

Gold Reserves Surpass U.S. Treasuries for First Time Since 1996
A watershed moment in global finance has arrived. For the first time in nearly three decades, foreign central banks now hold more gold than U.S. Treasury securities in their reserves, marking a fundamental shift away from dollar-centric monetary policies and toward hard assets. This crossover represents the most significant realignment in reserve composition since the breakdown of the Bretton Woods system.

Historic Reversal in Reserve Management
The milestone occurred in late 2025 amid persistent central bank gold accumulation and rising concerns about U.S. fiscal sustainability. According to data from Crescat Capital macro strategist Tavi Costa, central bank gold holdings now exceed their U.S. Treasury positions for the first time since 1996. This development signals what Costa describes as "likely the beginning of one of the most significant global rebalancings we've experienced in recent history”.

Central bank gold reserves have reached approximately 36,000 tonnes globally, with their market value now estimated at $4.5 trillion compared to roughly $3.5 trillion in Treasury holdings. The International Monetary Fund reports that gold's share of global reserves has climbed to approximately 18% in 2024, representing a sharp increase from mid-2010s levels.

Unprecedented Buying Momentum
The pace of official sector gold purchases has accelerated dramatically since 2022. Central banks acquired a record 1,136 tonnes in 2022, followed by 1,037 tonnes in 2023 and 1,045 tonnes in 2024. This represents more than double the 473-tonne annual average between 2010-2021. The sustained buying has continued into 2025, with central banks adding 244 tonnes in the first quarter alone.

China has emerged as the most significant purchaser, with the People's Bank of China adding gold for consecutive months and reaching total holdings of 2,280 tonnes by end-2024. Other major buyers include Poland, which added 90 tonnes in 2024, India with 73 tonnes, and Turkey maintaining its 27-month consecutive buying streak.
The World Gold Council's 2025 survey reveals that 29% of central bank respondents plan to increase their gold reserves over the next twelve months, while 81% expect global central bank holdings to rise—the highest proportion recorded since the survey began in 2018.

Driving Forces Behind the Shift
Several fundamental factors are propelling this historic rebalancing:
De-dollarization and Sanctions Risk: The weaponization of the dollar through sanctions, particularly following Russia's 2022 invasion of Ukraine, has heightened concerns about vulnerability to financial exclusion. Central banks increasingly view gold as protection against potential asset freezes or restrictions, with many opting to store physical gold domestically rather than in Western jurisdictions.

Fiscal Sustainability Concerns: 
The U.S. national debt trajectory and persistent fiscal deficits have raised questions about the long-term stability of Treasury securities as safe assets. Current U.S. Treasury gold reserves account for merely 2% of total outstanding government debt, one of the lowest levels in history.

Monetary Policy Divergence: 
Federal Reserve independence concerns and expectations of continued rate cuts have reduced the opportunity cost of holding non-yielding gold. Real interest rates on Treasuries have declined, making gold relatively more attractive to reserve managers.

Geopolitical Fragmentation: 
Rising tensions between major powers and increasing global multipolarity have reinforced gold's appeal as a neutral reserve asset free from counterparty risk.

Market Impact and Price Dynamics
The structural shift in central bank demand has provided fundamental support for gold prices, which surpassed $4,000 per ounce for the first time in October 2025. Gold has gained approximately 50% year-to-date, making it one of the best-performing assets of 2025.

Central bank purchases now account for approximately 20% of annual physical gold demand, establishing a durable price floor despite volatile market conditions. The sustained institutional buying has occurred despite record-high prices, indicating that reserve managers are prioritizing diversification over cost considerations.

Major investment banks have dramatically revised their gold price forecasts upward. Goldman Sachs now projects $4,900 per ounce by December 2026, while Deutsche Bank raised its 2026 average forecast to $4,000. These projections assume continued central bank accumulation at elevated levels.

Dollar's Declining Reserve Status
The crossover in gold versus Treasury holdings reflects a broader erosion in the dollar's reserve currency dominance. The dollar's share of global foreign exchange reserves has declined to 57.7% in the first quarter of 2025, down from over 70% in the early 2000s. When gold is included in total reserve calculations, the dollar's share falls to approximately 48%.

European Central Bank analysis shows that since Q3 2023, the dollar's share of foreign exchange reserves has fallen below 50%, with gold being the primary beneficiary of this diversification. The euro has also gained ground, increasing its share to 20.06% in Q1 2025.

Strategic Implications
This historic reversal carries profound implications for the global monetary system. Central banks are effectively signaling reduced confidence in the sustainability of current fiscal and monetary policies in developed markets, particularly the United States. The shift toward gold represents a return to more traditional concepts of monetary sovereignty and independence from digital financial systems.

The trend appears structural rather than cyclical. Unlike previous gold rallies driven by retail investor panic, current accumulation reflects deliberate institutional strategy. Central banks are integrating gold into quantitative reserve management models that balance diversification, liquidity requirements, and geopolitical risk mitigation.

Regional Dynamics
Emerging market central banks have led the gold accumulation trend, with particularly aggressive strategies from China, Russia, Turkey, and several Eastern European nations. These countries are using gold accumulation to reduce vulnerability to Western sanctions and dollar-based financial systems.

Advanced economy central banks have also increased their gold focus, though from higher baseline allocations. Countries like Germany and France maintain gold shares of 60-70% of their reserves, while emerging markets typically hold much lower percentages, suggesting potential for continued catch-up buying.

The crossover of central bank gold holdings above Treasury positions marks more than a statistical milestone—it represents a fundamental reassessment of monetary assets in an era of heightened geopolitical tensions and fiscal uncertainty. As reserve managers prioritize durability and neutrality over yield, gold's role as the ultimate monetary asset appears to be experiencing a historic renaissance.