By Ernst Knacke, head of research at Shard Capital
The most revealing stories in finance are rarely told in press conferences. They are told in balance sheets.
The chart below (World Gold Council vs the US Federal Reserve) traces two quiet but profound trends: foreign official institutions’ holdings of US Treasuries have plateaued for more than a decade, despite US Treasury issuance more than doubling since the end of 2010, from c $13trn to over $30trn today. At the same time, gold reserves held by central banks outside the US have surged and in recent years the value has ballooned as gold has rallied.
This is not portfolio rebalancing. It is a regime signal.
In the old world, Treasuries were the unquestioned reserve asset: deep, liquid, and “risk-free.” In the new world, a world defined by fiscal dominance, strategic competition, and the weaponisation of finance, reserve management is no longer just about yield and duration. It is about sovereignty and sovereign risk management.
A Treasury is a claim on a system. Gold is an asset outside the system. And while both are underpinned by belief, Treasuries are a belief in a system underpinned by trust, gold is a belief in the exact opposite.
See also: Gold hits $5,000 as geopolitics defines global markets
That distinction matters when government deficits are structurally large, issuance is relentless, and central bank balance sheets are increasingly seen as tools of national policy. It matters when sanctions remind policymakers that reserve assets can become bargaining chips. It matters when geopolitics makes “trusted” as important as “liquid.”
In the chart, I’m using the latest available data in foreign official Treasury holdings and tonnes of central bank gold held in official reserves. At a price of $5,000, gold now exceed the value of treasury holdings outside the US as official reserves.
This is not as a forecast, but a stress-test of direction: if the quantity is steady and the value rises, the message is clear. Even without “de-dollarisation” headlines, the marginal reserve preference is shifting.
Gold isn’t returning because the world is nostalgic. It’s returning because trust is breaking down. In the Fiscal Age, security is the organising principle, and gold is the ultimate security asset: no counterparty, no coupon, no permission required.
