Reserves Shift from Dollars to Gold
As gold prices continue to reach new all-time highs, central banks across the globe are signaling a clear message: confidence in the U.S. dollar is weakening. Instead, more and more institutions are turning to gold, not just as a hedge, but as a preferred reserve asset.
This global trend has profound implications for the future of the U.S. dollar, global monetary policy, and individuals looking to protect their savings.
The Dollar’s Decline, Gold’s Rise
Gold demand from central banks has surged in recent years. Even as prices have climbed to record levels. In April, gold hit an all-time high of $3,500.05 an ounce. Up a staggering 83% since Russia’s invasion of Ukraine in February 2022. So far in 2025, gold is up approximately 27% year-to-date.1
This dramatic rise in gold has coincided with weakness in the U.S. dollar. The U.S. Dollar Index tracks the dollar against a basket of other major currencies. It has declined by around 10% through mid-June. And now sits at its lowest level in three years.2
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Even with gold offering no yield and carrying storage costs, its appeal continues to grow as faith in the dollar erodes. A World Gold Council (WGC) report stated, “The uncertainty stemming from the tariffs implemented and committed by the USA regarding trade policies… may reduce the interest in USD and USD-denominated assets as a reserve currency.”4
Central Banks Move to Gold, Away from the Dollar
Official sector gold purchases have exceeded 1,000 tons annually for each of the last three years. That is more than double the yearly average of the previous decade. Today, global central bank gold holdings total 36,000 tons. They are inching closer to the 38,000-ton record set in 1965 during the Bretton Woods era.5
At the same time, gold has now become the second-largest reserve currency in the world after the U.S. dollar. A recent report from the European Central Bank revealed that gold now accounts for 20% of global foreign exchange reserves. Compared to only 16% for the euro.
Survey data confirms that this trend isn’t slowing down. A record 95% of central banks surveyed by the WGC said they expect global gold reserves to increase over the next 12 months. Up from 81% the previous year. Moreover, 76% of central banks said they expect their own gold holdings to be higher five years from now, up from 69%.6
The Global South Leads the Gold Rush
Central banks in emerging markets, aka the Global South, are shifting to gold even faster than advanced economies. According to the WGC, roughly every other central bank in the Global South plans to increase gold holdings in the coming year. Just 21% in advanced economies said they would.
Countries like China, India, Brazil, and Turkey are among those boosting gold reserves. They want to reduce exposure to the U.S. dollar amid increasing geopolitical tensions and trade protectionism. For them, gold is more than a store of value. It’s geopolitical insurance.
They are also developing alternative financial systems to bypass the dollar altogether. For example, China’s Cross-Border Interbank Payment System (CIPS) offers a yuan-based alternative to SWIFT. SWIFT is the Western-focused international bank payment system. Banks from across Africa, the Middle East, and Central Asia are quickly joining CIPS.
Sanctions, Tariffs, and the Shrinking Dollar Share
Global events have only accelerated this de-dollarization trend. Sanctions imposed on countries like Russia have shown the risks of holding dollar-based assets. Countries want to prevent assets from being frozen or restricted. Since 1999, five of the ten largest annual increases in central bank gold reserves involved sanctioned countries.
Gold, on the other hand, remains in a vault, often domestic, and outside the reach of foreign political pressure.
Central banks were asked about how much of their reserves would still be in U.S. dollars five years from now. Almost half said they expect a small decrease. What stands out though is the number of banks predicting a big drop in dollar holdings. It jumped from 13 percent last year to 28 percent this year.7
Conclusion
While these shifts are playing out at the government level, the same concerns apply to individual Americans. A declining U.S. dollar poses a potential risk to retirement savings and long-term financial security.
That’s why more Americans are exploring alternatives like physical gold and silver to protect their wealth. Holding precious metals in a tax-advantaged Gold IRA allows you to diversify away from dollar-based assets. You’ll be able to gain the same kind of security central banks are seeking.
Call American Hartford Gold today at 800-462-0071 to learn how a Gold IRA can help protect your savings from currency risk and economic uncertainty.
