Gold Is Gaining Importance Again
Across the world, gold is becoming important once more. Today, gold makes up around 25% of global reserves. At the same time, the share of the US dollar in world reserves has fallen from about 65% to nearly 40%. This kind of change does not happen often. It is a rare shift that usually comes once in many decades, and it is not easy to stop.
Central Banks Are Buying More Gold
Many central banks are slowly increasing their gold holdings. At the same time, they are reducing how much they depend on the US dollar. In the past, gold used to be a very large part of global reserves. Then it fell sharply to nearly 10%. Now it has moved back to around 25%, and it may rise even more in the coming years.
Countries Are Reducing Dollar Dependence
Most countries do not want to keep increasing their dollar reserves anymore. If they already hold dollar bonds, they may keep them only until they expire. But they are not keen to add more. This shows a clear change in thinking, where holding too much of one currency is seen as risky.
An Old System Is Breaking Down
Since 1971, the world followed a system where the US printed dollars and other countries supplied goods and services in return. Those dollars were then invested back into US assets. This cycle worked for many years, but now it is breaking. Countries are no longer comfortable funding this system.
Fewer Buyers for US Debt
Earlier, large countries used to buy a lot of US debt. China reduced this after 2014, Russia stopped completely, and even India is buying less now. With fewer buyers left, the US may have to buy its own debt. This can weaken the currency and push interest rates higher, which is not attractive for investors.
Why Gold Matters for Everyone
Short-term market ups and downs will always continue. But the bigger picture shows that the world is moving toward higher gold reserves. Because of this long-term trend, it makes sense for individuals too to keep some gold as part of their overall investment mix. Gold can help balance risk in uncertain times.
