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Some people are excited about the charts aimed at showing a central bank that owns more money than the US. Even Mohamed El-Erian, a contributing editor for FT, recirculated it on LinkedIn.
Can this indicate the inflection point of the post-Bretton Woods world?
We were initially skeptical of the truth behind the data. And when Matt King, a clever jamming of Satori Insight, couldn’t replicate it, our skepticism was turbocharged. So I thought we’d take a closer look.
The IMF examines Central Banks quarterly to create a widely cited currency composition of the official Forex Reserve Report. Also, from the latest release of this report, we can see that the 11.6TN global allocated FX reserve amount consisted of 6.7TN. Is the case closed? no.
The IMF COFER report breaks down currency allocations rather than asset class allocations. Not all of 6.7TN is in the US Treasury. Central banks know that they also own lot agency bonds and other US dollar obligations. The 6.7tn number captures these others, even if it excludes money built in dollars.
The US Treasury International Capital Report at the end of June shows that foreigners own 9.1 tons of US Treasury bills and bonds.
So how do these numbers compare to central bank gold holdings?
The IMF discloses the number of troy ounces held by central banks. There is also a series of total reserves, including gold. Grasp the market price of gold and increase it, but it won’t reach the 28% shown on the virus chart. But it wins us a 22% gold share:
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The official foreigner TIC number of 3.92 tons is still greater than the 3.86 tons of gold held as calculated at the end of June.
However, since the end of June, gold prices have risen by another 10.5%. The World Gold Council estimates that the central bank continues to buy the purchase, but even if not, changes in price will make the international reserve worth 4.2 tons.
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Until October 17th, when the next official data was released, we don’t know if the two lines actually intersect. But unless the reserve managers have bought the cool $20 billion US Treasury in July and August, that seems very likely.
But how important is this actually? Perhaps not as much as some people would want it.
First, we need to note that the central bank’s story of escaping the financial market is overkill. The intersection of these two lines is primarily the result of a 38% jump in gold prices in 2025. This is caused at least in part by the central banks buying the region.
Gold’s central bank holdings fell to a bottom in March 2009, but have been adding quite steadily ever since. While it cannot detect acceleration in official data, it may be that even a sudden price rise does not bring any further additions to the stomping halt.
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Furthermore, financial prices have risen over the past year, but the value of US government debt has not yet recovered to where it was five years ago, before inflation wreaked havoc.
This is a chart showing the performance of ETFs tracking long-term Treasury bonds that make up a decent chunk of central bank reserves.
In other words, this central bank reserves the phenomenon, primarily concerning recent price action rather than a fundamental, dramatic shift from the Treasury to yellow metal.
Secondly, it is important to remember that the central bank preliminary data is a bit obscure. Therefore, it should be taken with a single grain of salt.
When it comes to TIC data, the US Treasury faces all sorts of issues facing all sorts of issues, with foreign central banks emergingly obscuring their direct ownership through intermediate custodians such as Belgian Euroclear and Clearstream. Therefore, the number may be high.
COFER data is not so good as they are primarily self-reported. Furthermore, agents’ debts should really be considered US government debt, and perhaps look very different to the original chart. It is unlikely to account for the entire gap between the 3.9 tons held by the US Treasury and 6.7 tons held in US dollars.
Finally, enjoy de facto foreign preparations that go far beyond what has been publicly reported in some countries – coughing in China. Instead, it’s just in state-owned banks, insurance companies and pension systems. And there’s a chunk of this in the Ministry of Finance.
Will the spare manager move from the Ministry of Finance to money? surely. The fear of the Trump administration’s economic policy decisions is now combined naturally with long-term concerns about the weaponization of the US dollar. However, the underlying reality is not as dramatic as it looks like a chart.
Read more:
– Book your judgement at Gold Rally (FTAV)
– Gold overtakes the euro as a global reserve asset, says the ECB (Mainft)
– Gold: What is the “ultimate safe haven asset”? (ftav)
