You may have seen the news yesterday that gold has now overtaken US Treasuries as the world’s top reserve asset. According to the European Central Bank, gold now accounts for 27% of global central bank reserves, compared with 22% for US Treasuries.
Central banks have been net buyers of physical gold for many years now, and now hold more than 36,000 tonnes of gold, the highest level since the Bretton Woods era. In this excerpt from our monthly webinar, Stephen Flood and I speak to Jan Skoyles and discuss why central banks are turning towards physical gold, why trust in the dollar system is eroding, and why dollar swap lines are increasingly becoming a political tool rather than a purely financial safeguard.
As we discuss, this is not simply a “pro-gold” story, ‘nor is it a “not-dollar” story. Central banks are not buying gold because they have suddenly become sentimental about shiny metal. They are buying it because, in a world of declining trust, physical gold offers the shortest distance between a country and its wealth.
This is one of the most important conversations we have had recently because it goes beyond the gold price. It gets to the plumbing of the global financial system, the politicisation of dollar liquidity and the reason physical gold is quietly returning to the centre of monetary strategy.
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