At my day job, every weekday we send out a short piece with our view on a macroeconomic or geopolitical topic in the current news cycle. I wanted to share this draft—researched and written on November 11, 2025—after we saw a fast gold selloff the final two days of January, 2026. Allow me my quick victory lap before the market inevitably reminds me I don't know everything.

Regardless of where gold goes in 2026, I think it's a well-researched and informative piece. Hope you enjoy.

Note: in our pieces, the bolding is there so that busy readers can get an idea just by skimming.

The Central Bank Gold Rush

For the first time since 1996, gold has overtaken US treasuries as the leading reserve asset of foreign central banks. In the time series chart showing the relative shares of reserves, gold began its upward march in late 2022. After a parabolic climb it finally eclipsed the mighty yield-bearing IOU from the United States government in summer of this year. Journalists have spun that into various storylines: Is China turning the screws in a move of financial warfare? Is the world losing faith in treasuries amidst US debt concerns? A look at the gold and treasury markets reveals a less dramatic truth.

Central banks have been buying significantly more gold in recent years. As the 12-month change in CPI rose above 8 percent in early 2022, Russia began its invasion of Ukraine which helped fuel a 24% drop in the S&P in the first 6 months of that year. The World Gold Council shows central bank buying in aggregate jumping to 1,080 tons in calendar year 2022 after averaging 509 tons over the preceding decade. Central bank demand stayed above 1,000 tons through 2024 and through three quarters of 2025 the number is 634 tons.

As for China’s impact, the PBOC has been making consistent buys throughout this year, but the magnitude has not been significant in the grand scheme of things. Total demand for gold in the first three quarters of 2025 was 3,640 tons. China’s monthly purchases this year have all been 5 tons or less, totaling just 24 tons through the end of September—less than 4 percent of central bank demand and less than 1 percent of total demand.

Central banks’ renewed taste for gold coincides with a long-running shift in the structure of US public debt. In the years following the dot-com bubble the public debt continued to balloon even in the absence of any kind of crisis. This was after the Clinton administration managed to book multiple fiscal year surpluses for the first time since the 1920s. Writers, famous economists, and even congress drew attention to America’s dependence on the “kindness of strangers” to fund its account deficit. We enjoyed this privilege due to being the issuer of the world’s reserve currency. Foreign-held share of US public debt peaked at between 50 and 60 percent just before the Great Financial Crisis. At the end of July of this year that number was 31 percent, or $9.2 trillion of the $30 trillion in circulation. Foreigners funding a smaller share of our deficit is not a new trend.

Given that reality, foreign demand for treasuries is not as weak as the press would have you believe. Consider the period from July 2024 to July 2025. While gold skyrocketed from $2,400 to $3,200 per ounce, foreign governments and central banks sold off or let expire a net $59 billion worth of US bonds and notes. But private foreign buyers took up the slack, adding $581 billion. For reference, net issuance of all types of treasuries during that year was $1.9 trillion and foreign entities bought $730 billion or 38 percent of them. Ownership is shifting, but the marginal buyer is still out there.

It is worth asking what it would take for gold to continue its bull run. What happens when an investor has a portfolio share in mind for an asset, buys to meet that target, and then the price goes up 143 percent? In 2022 we saw a perfect storm of inflation and war force central bankers to diversify into gold. In 2025, the bids have leveled off and may even be slowing; central banks have likely met or exceeded whatever target they had in mind. Every Treasury coupon still pays out and the world continues to measure value against the dollar. Let’s not dig a grave just yet for the deepest pool of capital on earth.