Central Banks Quietly Accumulate Gold as Monetary Anchor

Gold is no longer just a store of value but is increasingly being used as collateral in the monetary system. Since the US severed the dollar's convertibility to gold in 1971, fiat currencies have dominated. However, with the rise of debt and deficits, central banks are turning to gold to reduce their reliance on sovereign credit.

The world's largest central banks have been quietly accumulating gold over the past few years, with the International Monetary Fund (IMF) data showing that gold surpassed US Treasuries as a share of official reserves in 2025. This is not a new wave of buying but rather a valuation effect driven by rising prices.

The Bundesbank's President Joachim Nagel has stated that the bank would not consider selling its 3,350t of gold to shore up its balance sheet, highlighting the growing importance of gold as a monetary anchor. Poland's central bank has also lifted its gold target from 20% to 30% of reserves, citing balance-sheet protection.

The infrastructure for trading and holding gold is still in its infancy, with over 90% of interbank precious-metals trading clearing through unallocated 'Loco London' accounts. This counterparty-risk layer sits underneath an asset that institutions increasingly value because they believe it can reduce counterparty risk.