Gold Overtakes U.S. Bonds as World’s Favorite Investment

You can’t ignore the numbers. Gold has reclaimed its top spot once again and the forces driving it higher are just getting going.

Here is the story from The London Daily Telegraph (The Telegraph online):

Gold has overtaken US bonds to become central banks’ favourite investment, as Donald Trump rattles faith in America’s political stability and public finances.

The share of gold in central banks’ official holdings of foreign currencies climbed to 27 percent  last year, surpassing US Treasuries at 22 percent,  according to a report from the European Central Bank (ECB)

U.S. debt and the weaponization of the U.S. dollar are two of the primary reasons behind the flight to gold, according to the report:

• The US government’s debt is growing faster than demand for its bonds and faster than the American economy. The debt-to-GDP ratio has risen from just over 100percent in the 2010s to more than 120 percent today.
• Some central banks are wary about the potential weaponizing of those reserves after Russia’s central bank had its US assets frozen. A UBS survey last year found 49 percent of reserve managers held this concern, up from 14 percent in 2023.

• The value of US Treasuries held in custody by central banks and other official institutions at the New York Federal Reserve declined by $82bn in March to $2.7tn, the lowest level since 2012.

Here at Republic Monetary Exchange, we have long identified the move away from the U.S. dollar as the world’s most important monetary megatrend.  The dollar has been the world’s de facto reserve currency since the end of World War II, but the Telegraph’s report is more confirmation that dedollarization is well underway.

This megatrend will mean reduced dollar purchasing power, higher interest rates as Washington has to pay more to fund its debt, and higher gold prices.  

You can de-dollarize as well.  To learn more, call or stop by Republic Monetary Exchange for a personal and confidential consultation.