Rush to get more gold is a new phenomenon gripping the attention of many countries. At the same time, what to do with the gold reserves parked with the Fed is also emerging as critical issue. France escaped the Dracula Teeth. However, Germany is still within the claws. Details below:
How it began
Gold reserves has officially taken over the covetous position as top global reserves recently. At the time of writing, gold reserves as a safeguard amounts to more than USD 4 Trillion whereas US Treasury (UST) is around USD 3.9 Trillion. Out of the entire global reserves, Gold ranges between 27 to 28% while UST is dipping below 22%. During the years 2020 to 2025 raking up gold has increased phenomenally mainly due to Chinese geoeconomics strategy of creating gold backed Yuan. By the same token, demand for UST is at best static or at worst declining.
Why the gold run
Central banks around the world are hedging on gold
as the single most reserve asset in comparison to UST which is being gradually
phased out. Attractiveness of gold as reserve asset is anchored on the following pluses:
1. It is a physical asset and not a fiat currency
2. After convertibility of dollar to gold was terminated by President Richard Nixon on 5/8/1971, US Dollar was reduced to fiat currency
3. Incidentally, a gold run that followed after Nixon announcement prompted him to suspend the operation of gold window where foreigners could buy gold using dollars
4. Gold is minted from several mines spread across the globe whereas USD is printed by the US Treasury which also issue Treasury bills and bonds.
Risk profile
Of late, US Administration started to issue
Executive Orders in seizing gold reserves either held within USA or elsewhere. Here
are two instances:
1. President Joe Biden issued an Executive Order barring transactions of Russian Central Bank gold reserves held in USA amounting to USD 130 Billion in consequent to Ukraine invasion
2. Recently, in March 2026, Donald Trump issued an Executive Order seizing sizeable portion of gold reserves owned and held by Venezuela and repatriated it to USA.
Who escaped?
France was the only country that nipped this seizure in bud. During July 2025 to January 2026 she transferred more than 2,430 tonnes of gold back to France. As a simulation for this exercise France agreed to sell part of her gold reserves amounting to 129 tonnes of gold to the Fed. A successful geoeconomics tactics indeed!
Who is trapped?
Germany is one of the innocent parties in deep trouble with gold reserves held in USA. She is considered to hold second largest gold reserves after USA at 3,350 tonnes. Deutsche Bundesbank has parked around 57% of her international gold reserves amounting to 1,236 tonnes in New York alone. This high risk position makes Germany susceptible for a gold seizure. Unpredictable nature of the current US president is the key issue in determining what to do with the German gold reserves in America.
Solution
Germany must either decide to bring back the entire
quantum of gold reserves held in New York to the home soil or park it with the Shanghai Gold Exchange
where she has the freedom to buy and sell gold either in Euro or Yuan.
Navigating strategy amid geoeconomics, therefore
endorses that Germany remove her gold reserves held in USA to safe haven!
Cheers!
Muthu Ashraff
Strategy Adviser
Mobile: + 94 777 265677
E-mail: cosmicgems@gmail.com
Blog: Strategy Adviser
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