Central Banks Shift Reserves to Gold Over US Treasuries

Global central banks have increased gold reserves to 27 percent of their international holdings, now surpassing their holdings of euro-denominated assets and US Treasury bonds. This shift follows a decline in foreign confidence in US Treasuries, driven by erratic import tariff policies and the weaponization of financial policy, including the freezing of Iranian and Russian deposits.

Scott Bessent, the US Treasury Secretary, faces a volatile fiscal environment as he attempts to raise 2 trillion dollars annually to cover deficits and roll over 3 trillion dollars in maturing debt every quarter. The Congressional Budget Office projected a US budget deficit exceeding 6 percent of GDP, with public debt expected to reach World War II levels by 2029.

Concrete evidence of this divestment includes the central banks of France and Curaçao and Sint Maarten moving gold deposits out of New York. Additionally, the central banks of China and Japan have reduced Treasury holdings by 120 billion dollars, while the Government Pension Fund of Norway plans to cut its US Treasury bond holdings by 80 billion dollars. This trend occurs as other major economies, including Italy, France, and Japan, also struggle with compromised public finances.