The international monetary system is experiencing significant shifts as countries increasingly explore alternatives to U.S. dollar dominance. This trend, often called de-dollarization, has accelerated in recent years because of geopolitical tensions, sanction concerns, and foreign countries’ desires for greater economic sovereignty. U.S. Money Reserve, one of the nation’s largest private distributors of government-issued precious metals, has examined de-dollarization and its potential implications for global markets and precious metals demand.
According to U.S. Money Reserve President Philip N. Diehl, who served as the 35th Director of the U.S. Mint, one asset countries’ central banks have been turning to as another, perhaps more reliable, option over the U.S. dollar is physical gold—though that hasn’t always been the case. “Central banks were net sellers of gold until 2010, when the Great Financial Crisis caused an abrupt shift in their practices,” says Diehl. “Since January 2010, central banks have added an extraordinary net 7.9 thousand metric tons of gold to their vaults, or 3.6% of all the gold ever mined.”
Central Bank Gold Acquisition Trends
As some nations seek to find ways around the dollar’s dominance in global trade and geopolitics, gold demand continues to rise. The World Gold Council reports that central banks were significant gold buyers in 2024, with global official gold reserves rising by 1,045 metric tons. This strong purchasing activity marks the third consecutive year of central banks buying more than 1,000 metric tons annually and falls just 35 metric tons short of the all-time record set in 2022. By contrast, central banks purchased an average of only 481 metric tons of gold per year between 2010 and 2021.
Poland has emerged as the most active buyer, adding 90 metric tons to its reserves in 2024, representing a nearly 25% increase in its holdings. Other significant purchasers include Turkey, India, and China, with many central banks citing inflation hedging and geopolitical uncertainty as primary motivations regardless of their relationship to the United States and the dollar.
However, the significance of these trends likely extends beyond simple diversification. Nations holding substantial U.S. dollar reserves face potential vulnerability to American policy decisions, sanctions, and monetary policy shifts. This dynamic has intensified interest in gold’s protective characteristics.
“Gold has this long tradition, and it’s not just a long history; it’s a global history. Gold is one of the few assets that has not only held value but has also been a medium of exchange that facilitates commerce,” says Diehl.
Gold’s potential use in trade has brough some members of he BRICS coalition of nations (founded by Brazil, Russia, India, China, and South Africa) suggesting the precious metal as an alternative to the dollar for purposes of international trade. At their 2024 summit in Kazan, Russia, BRICS members continued discussions about creating a potentially gold-backed currency known as the “Unit.” This development represents a substantial challenge to dollar hegemony, particularly as the economic bloc expanded in 2024 to include Iran, Egypt, Ethiopia, and the United Arab Emirates.
The movement has gained momentum as BRICS is also reportedly developing a blockchain-based payment system referred to as the “BRICS Bridge,” which would connect member countries’ financial systems using payment gateways for settlements in central bank digital currencies rather than U.S. dollars.
Gold’s central role in this process is highlighted by accelerating central bank accumulations by some BRICS members. These purchases suggest strategic positioning for a new international monetary system.
Supply Limitations Enhance Gold’s Appeal
Adding to gold’s attraction as a reserve asset is its inherently limited supply. Unlike currencies like the dollar that can be created through monetary policy decisions, gold is a scarce and finite resource that can’t be manufactured or replicated.
“The easy-to-mine gold — the high-quality veins — have been found all over the world,” says Diehl. “That gold is largely out of the ground. On the supply side, the big factor is just how much more difficult it is to find gold and then to mine it.”
The technical challenges of gold extraction further complicate supply growth. Even with higher prices, production cannot easily surge because of the limited number of viable gold deposits and lengthy development timelines for new mines.
As central banks continue their purchasing trends, this supply-demand imbalance could potentially drive gold prices higher, enhancing its attractiveness as both a reserve asset and a tool for financial independence from dollar-dominated systems.
Implications for Individual Portfolio Holders
The current environment of geopolitical tension, monetary policy shifts, and potential currency realignments has prompted increased interest in diversification strategies beyond traditional paper assets. As nations continue building their gold reserves in response to these pressures, individuals may benefit from taking a similar approach for their own portfolios.
U.S. Money Reserve reviews by clients frequently highlight gold’s protective quality as a motivating factor in their precious metals acquisitions. Many express satisfaction with their decision to include physical gold and silver in their portfolios as a counterbalance to paper-based assets like cash and stocks.
For those interested in learning more about how global currency trends might affect precious metals markets, U.S. Money Reserve offers informational resources through their website or by calling 833-845-1748 and speaking with a knowledgeable Account Executive.
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