Doctor Gold and Mister Treasuries
Since the mid-1990s, US sovereign bonds have become the most widely held asset in global reserves, dethroning the previous leader: gold. Paradoxically, it was Europe, in particular, that was responsible for the rise of US debt. As it gradually increased in foreign exchange reserves, the share of gold declined rapidly, with European central banks selling, sometimes massively, their gold reserves to prepare for the advent of the euro[1] . From 60% in the early 1980s, the yellow metal thus fell to 10% of global foreign exchange reserves in the early 2000s. At the same time, US Treasury bonds rose from 10% to 30%. These levels remained broadly stable for two decades. However, the situation is now reversing once again. After overtaking the euro in 2024, gold has been ahead of US debt in global foreign exchange reserves since September 2025. This crossover can be explained by two underlying dynamics.
The first dynamic is the gradual erosion of foreign holdings of US debt since the mid-2010s. China, in particular, has reduced its holdings of US bonds by nearly 40% since 2013. Several central banks in Southeast Asia, increasingly inclined to use the Chinese yuan rather than the dollar as their monetary benchmark, have followed suit. And while Japan, still the largest foreign holder, has broadly maintained the absolute value of its portfolio, its share of holdings has melted away, falling from 10% of total tradable US debt in 2010 to less than 5% today. As for other developed countries, they have broadly maintained their share but without increasing it. Only the United Kingdom has actually increased its holdings of US debt. The other dynamic at work is the sharp acceleration in gold holdings since 2022, against a backdrop of heightened geopolitical uncertainty crystallised by the Russian-Ukrainian conflict. This phenomenon has accelerated in recent months, both mechanically, with the sharp rise in the price of gold (+139% since the end of 2023[2] ), and structurally: the Trump administration’s aggressive trade policy has increased the propensity of central banks and investors to abandon the dollar as their preferred safe-haven asset.
There are good reasons for these two trends to continue. The return to geopolitical conflict and a gradual but powerful trend towards the re-regionalisation of the world favour the use of gold as a reserve asset: gold is not directly dependent on any one country and is virtually the only asset capable of absorbing the outflows from US bonds. Indeed, the gold and US debt markets are comparable in size – approximately $25 trillion and $30 trillion respectively – far ahead of other asset classes. The total volume of Japanese debt tradable on the markets, for example, is three times smaller, and the order of magnitude is similar for eurozone debt, even when all countries are aggregated. The Chinese sovereign debt market is larger, but access to it remains complex for many investors. As for cryptocurrencies, sometimes touted as the ideal solution, they lag far behind, with a market depth of barely $2 trillion.
At the same time, mistrust of US debt is likely to intensify. Donald Trump’s aggressive stance in international relations, particularly towards Greenland, is leading some players to offload their positions in US debt. Last week, two Danish pension funds and one Swedish pension fund announced that they were actively selling US bonds. Although the amounts involved are modest, the symbolism is clear and could inspire others to follow suit. There is also the issue of the health of US public finances, threatened by the sword of Damocles hanging over the Supreme Court, which, if it invalidates “reciprocal” tariffs, would at the same time deprive the Treasury of a significant source of tax revenue. At the same time, Donald Trump’s populist announcements in the run-up to the mid-term elections, such as his intention to give $2,000 to most Americans (thanks to customs revenues), are likely to increase spending. This could weigh on the attractiveness of US debt.
From there, it is only a short step to imagining that the decline in appetite for US debt could cause the dollar to lose its status as a reserve currency, but it would be unwise to take that step. All instruments combined, the dollar remains the world’s leading reserve currency, and even if gold were to dethrone it, it would remain a benchmark. On the other hand, with 30% held outside the United States, the US debt market could become a battleground for geopolitical conflicts. This would allow gold to continue to shine.