Monday, July 20
There’s been a big change in the world’s reserve asset.
In a report earlier this month, the European Central Bank said gold has replaced U.S. Treasurys as the top reserve asset for global central banks. At the end of 2025, gold made up about 27% of central bank reserves, while Treasurys comprised 22%.
The reason for the decrease is America’s debt is out of control. The U.S. is running a roughly $2 trillion annual deficit and the cost of servicing it has reached $1 trillion dollars per year.
The Federal Reserve is trying to trim U.S. debt from its balance sheet. And global central banks are less interested in it too. They’re diversifying. Some are buying other bonds, while others like the European Central Bank are buying gold.
This is a recipe for the world to lose confidence in America.
Worse, the lack of confidence extends to the U.S. dollar as well. If countries aren’t holding American debt, they’re less likely to hold U.S. dollars.
Gold solves problems for global central banks. It’s a hedge against chaos, like the ongoing conflict with Iran. It also cushions the declining value of the U.S. dollar.
Of course, the global central banks know this. So, they’ve been loading up on gold for a while.
Daniel A. White is an investment advisory representative of and provides advisory services through CoreCap Advisors, LLC. Daniel A. White & Associates and CoreCap Advisors are separate and unaffiliated entities.