Gold-Producing Nations Hoard Metal to Counter Dollar Decline

For decades, gold mined in emerging markets typically left those countries in raw form, flowing into Western financial hubs like London and New York for refinement and trade. However, a shift is underway as gold-producing nations in Asia and beyond are now refining domestically, taxing exports, and stockpiling gold in central bank reserves. This trend, described as a new form of resource nationalism, could push gold prices higher over time. The primary drivers are declining confidence in the US dollar as the global reserve currency and the freezing of dollar assets under sanctions.

Laos, Indonesia, and China are among the countries leading this change. Laos, which produced about 12 tons of gold in 2025, has established the Lao Bullion Bank to refine gold locally and increase its share in the country's foreign exchange reserves. Indonesia, the world's 10th-largest gold producer, plans to impose a 15% export tax on gold starting in 2026, aiming to meet domestic investment demand. China, the largest producer with over 380 tons annually, restricts gold exports, further contributing to the trend.

This shift is not limited to Asia. Madagascar and Ghana are also taking steps to retain more of their gold domestically, with central banks buying locally produced gold to diversify reserves. Analysts note that this trend will impact the ability of major international refiners to source gold, reversing historical patterns where gold from colonies supported Western financial systems.

The broader context involves geopolitical factors, particularly the freezing of Russia's foreign exchange reserves, which has underscored the vulnerability of dollar-denominated assets. Central banks are increasingly turning to gold as a hedge against political risks. Data shows the dollar's share of global foreign exchange reserves fell to 57% in 2025, while 84% of reserve managers expect gold to play a larger role in their reserves.