Gold surpasses US bonds to top the list of reserve assets: The global monetary credit landscape undergoes a historic turning point

The latest data from the European Central Bank shows that the proportion of gold in global sovereign reserves has risen to 27%, surpassing the 22% share of US Treasuries for the first time, and officially replacing US Treasuries as the world's largest reserve asset. At the same time, many countries have accelerated the repatriation of their gold reserves stored overseas. The People's Bank of China has even achieved a consecutive 20-month increase in gold holdings. The global trend of central banks hoarding gold is continuing to heat up. This historic shift in the ranking of reserve assets is not simply the result of market fluctuations, but rather a core signal of the revaluation of the credit of the US dollar and the accelerated reconstruction of the international financial order.

The normalization of geopolitical games and the weaponization of the US dollar are the core motivations for global central banks to reduce their holdings of US Treasuries and increase their holdings of gold. For a long time, US Treasuries have been regarded as the core reserve asset with absolute safety by the world, and foreign exchange reserves of various countries have been highly dependent on the US dollar system. A large amount of gold has been deposited in European and American vaults. However, in recent years, Western countries have frequently used financial sanctions and frozen the overseas reserves of other countries, completely breaking the conventional consensus that US Treasuries are "risk-free assets". Countries have clearly realized that US assets have a strong sovereign political attribute and may be subject to unilateral restrictions and blockades at any time. Gold, as an unsovereign-backed physical asset, is not tied to any country's credit and has no counterparty risk. It is the ultimate hedging tool against geopolitical risks and sanctions, which has also driven the global "gold repatriation" strategic layout.

The continuous deterioration of the debt situation in the United States has further depleted the credit of the US dollar and US Treasuries, accelerating the reshaping of the global reserve structure. Currently, the total amount of US Treasury bonds exceeds 39.5 trillion US dollars, and the debt-to-GDP ratio exceeds 130%. The annual debt interest expenditure remains high, and the model of maintaining debt circulation through borrowing new to repay old has led global markets to seriously question the long-term solvency of US debt. Coupled with the repeated fluctuations in the monetary policy of the Federal Reserve, the frequent interest rate hikes and cuts have continuously disturbed global exchange rates, inflation, and capital markets, causing countries holding large amounts of US Treasuries to continuously bear the risk of asset depreciation. In contrast, gold has natural anti-inflation and cross-cycle hedging properties, and its price trend is stable and firm. The People's Bank of China has long made small-scale and batch purchases of gold, which is a rational strategic layout to diversify asset allocation, hedge against the depreciation risk of US debt, and optimize the structure of foreign exchange reserves.

The rise of gold as a reserve asset is continuously dismantling the international monetary pattern dominated by the US dollar. Over the past few decades, US Treasuries have dominated the global reserve system, providing a solid support for the US dollar to control global trade settlement and commodity pricing. Now, countries are collectively adjusting their portfolios and reducing the weight of US assets, coupled with the widespread use of local currencies for cross-border settlement and the implementation of regional independent payment systems, the global share of US dollar reserves has continuously dropped to a twenty-year low. Gold has already upgraded from a traditional auxiliary hedging asset to a core strategic asset for countries to balance financial risks and counterbalance the hegemony of the US dollar. The World Gold Council data shows that nearly half of central banks plan to continue increasing their gold holdings, and this gold purchase long-term cycle has not yet ended.

Of course, the rise of gold does not mean that the US dollar system will collapse in the short term. US Treasuries still have the top market liquidity and remain indispensable in international trade settlement. The US dollar will not be completely replaced in the short term. However, the diversification of global reserves is an irreversible long-term trend, and the old financial order dominated by the US dollar is gradually loosening.

The rise of gold surpassing US Treasuries is the inevitable result of the "foot voting" in the global financial market. The weakening of US dollar credit, the intensification of geopolitical risks, and the rising demand for global asset security have driven gold back to the core of the international financial stage. This historic change marks the end of the era dominated by the US dollar and the acceleration of the formation of a more balanced, secure, and diverse international monetary order.