Why Central Banks Are STILL Dumping Dollars for Gold

In late February 2022, days after Russia invaded Ukraine, the United States responded by freezing billions of dollars of assets owned by the Russian government.

Whether or not that action was justified is beyond the point. US government bonds had long been considered the safest asset on earth. But every central banker on the planet learned an important lesson that day– US Treasury bonds were only safe as long as their country stayed on America’s good side.

Consequently, foreign governments and central banks began quietly moving a portion of their strategic financial reserves into assets that Washington could not freeze or sanction. And the most important of those assets was physical gold.

Within months, the collective buying of foreign central banks was running faster than at any point in modern history.

Compared to a previous baseline of about 650 metric tons per year in 2018 and 2019, central bank gold purchases jumped to over 1,000 tons starting in 2022. 

It stayed there through 2023. It hit a record 1,100 tons in 2024. Even in 2025, when gold went parabolic to $4,500 an ounce and they could have paused or even taken profits, they were still net buyers of roughly 800 tons.

Holding Treasury bonds requires trusting that the US government  will not freeze their assets, will not weaponize the dollar, and will not run deficits large enough to force the debasement of the dollar itself.

None of those three conditions holds anymore.

The United States ran a $2 trillion deficit last year— no recession, no economic crisis, no war, no bailouts. It was just business as usual. Congress won’t lift a finger to cut even the most blatant fraud and graft.

Consequently, the national debt is now pushing $40 trillion, with interest costs eating $1.2 trillion per year— nearly a quarter of total tax revenue. And foreigners are rapidly losing confidence.

In the first quarter of 2026, the dollar’s share of global foreign exchange reserves fell 2.3 points, a quarter of the previous decade’s entire decline in ninety days. Non-dollar transactions gained ground quickly on the SWIFT payment network, rising from 18% to 31% in the Middle East and from 35% to 42% in Asia.

And for the first time since 1996, the world’s central banks now hold more gold than they hold US Treasury securities.

The big picture is that foreign governments are setting up for a new monetary order, one in which physical reserves matter more than paper promises from Washington.

So governments are securing as many physical reserves as they can. 

It’s not just gold, either. Energy, fertilizer, industrial metals, and shipping are all getting the same treatment as gold: repatriated, stockpiled, or rerouted to suppliers inside friendly borders.

Countries across the Western Hemisphere are rebuilding domestic production for fuel, uranium, copper, and food, because they can no longer count on the old, postwar order to deliver the goods on schedule at a price they can live with.

We can already see the early signs– the same loss of trust that has driven central banks to buy so much gold is starting to lead to bulk buying of other real assets… which means that the prices of these strategic resources will likely rocket higher.

This means that the companies which produce those real assets (as well as their shareholders) are likely set to make a LOT of money in the future. 

With assets like gold or silver, you could buy the metals outright. But today that means paying near all-time highs. 

In our analysis it’s a much better deal to own the companies that produce them. As real asset prices rise, margins expand and profits multiply. 

For example, gold has roughly tripled in three years. But one mining company we featured in Strategic Assets (Schiff Sovereign’s monthly investment research service), is up 5x in the same period. And a silver miner we featured went up nearly 10x.

Energy, industrial metals, and shipping can offer the same leverage.

We look for profitable, well-managed real asset businesses with clean balance sheets and clear catalysts, trading at a low multiple of free cash flow, positioned to benefit from the exact shift central banks are already executing.

None of this makes us permabulls on gold, silver, or anything else. The environment is too volatile for certainty, and our edge is not in calling the next move. Our edge is applying the same disciplined criteria to very well run businesses and adjusting when the facts shift. 

We chase returns, not attachment to any particular company or commodity.

And our approach has worked. Out of 20+ companies we have featured, one we sold at 10x and another at 6x, several current positions are up 2-4x, and only three are in the red. However we think those three have substantial upside from here.

If you would like to see the specific companies behind these examples, and the rest of our featured research, click here to try Strategic Assets risk-free with a 30-day, no-questions-asked money-back guarantee.

Source

Simon Black is an international investor, entrepreneur and permanent traveler. His daily letter is both educational and entertaining, and we suggest that those who want unbiased, actionable information about global opportunities sign up for Sovereign Man’s free, actionable newsletter at http://www.SovereignMan.com.

From Simon Black of SovereignMan.com

Source: https://www.schiffsovereign.com/trends/why-central-banks-are-still-dumping-dollars-for-gold-155053/