The Dollar Is Losing Credibility: Why Central Banks Are Racing to Hoard Gold

 

Central banks around the world are quietly preparing for financial turbulence — and their weapon of choice is gold.

Not long after a plane carrying millions of dollars’ worth of bullion took off from Switzerland, Serbian officials received a panicked call: the gold had been left behind on the runway. Perishable goods had been prioritized over precious metal. It was an expensive lesson — and a sign of just how desperate countries have become to secure their reserves.

Serbia is far from alone.

From Asia to Europe, central banks are rapidly building massive gold stockpiles, reversing decades of conventional financial thinking. As geopolitical tensions rise and confidence in the US dollar weakens, gold prices have surged to record levels — recently topping $4,600 an ounce — with some analysts predicting $5,000 soon.

At the heart of the rush is a growing fear: the global financial system is becoming unstable.

Over the past decade, gold’s share of central bank reserves has doubled, reaching its highest level in nearly 30 years. Today, more than a quarter of official reserves are held in bullion. At the same time, countries are cutting their exposure to the dollar and bringing gold stored overseas back home.

“We’ve moved from global stability to geopolitical chaos,” says economist Raphaël Gallardo. “Many governments now believe their dollar-based reserves can be frozen or seized overnight. The dollar is losing its role as the world’s anchor currency.”

For decades, the US dollar dominated global finance. It powered trade, stabilized currencies, and served as the backbone of central bank reserves. Even after the gold standard ended in the 1970s, the dollar remained supreme.

But that dominance is slowly eroding.

Political pressure on the Federal Reserve, rising US debt, and Washington’s growing use of financial sanctions — including freezing Russia’s reserves after the Ukraine invasion — have shaken confidence. Countries are now questioning whether their money is truly safe in American-controlled systems.

While the dollar still accounts for about 57% of global reserves, down from 66% ten years ago, there is no clear replacement. The euro, yen, pound, and yuan all lack the scale and trust to fully take its place.

So central banks are turning to something older than any modern currency: gold.

“Gold is nobody’s liability,” Gallardo explains. “It isn’t tied to any government. When trust disappears, people return to it.”

In June last year, gold overtook the euro to become the world’s second-largest reserve asset after the dollar. A survey by Invesco found that half of central banks plan to buy more gold, while two-thirds want to bring foreign-held reserves back to domestic vaults.

This repatriation trend is accelerating.

For decades, countries stored gold in financial hubs like London, New York, and Switzerland. The Bank of England alone holds around 400,000 bars worth over $500 billion. But recent political disputes have exposed the risks.

Venezuela, for example, cannot access $2 billion worth of gold held in London due to diplomatic tensions. Russia’s reserves in Europe remain frozen. These cases have sent shockwaves through central banks worldwide.

As a result, nations like India, Hungary, Turkey, Poland, and Germany have moved tons of gold back home. China has gone even further, stockpiling more than 2,000 tonnes in its drive to challenge US financial dominance.

Meanwhile, the United States still claims the world’s largest reserve at over 8,000 tonnes — although Fort Knox hasn’t been officially audited since 1953.

Not everyone is buying.

The UK famously sold much of its gold in the early 2000s at historically low prices — a move now widely criticized. Some economists also argue that cryptocurrencies could one day compete with gold and fiat currencies as reserve assets.

So far, central banks remain skeptical. Crypto is volatile, untested at scale, and often still tied to the dollar.

For now, gold remains the ultimate fallback.

“Whenever political uncertainty rises, central banks turn to gold,” says Invesco’s Rod Ringrow. “It’s the last line of defense if paper money fails.”

Despite gold’s rise, experts say the dollar isn’t collapsing — yet.

“There’s no real successor,” says economist Jonathan Fortun. “If we ever end up settling trade in gold again, the dollar won’t be the main problem. We’ll already be in serious trouble.”

But the message from central banks is clear:

In a world of sanctions, debt, and geopolitical rivalry, trust is fading. And when trust disappears, nations don’t turn to promises — they turn to metal.