As the price of gold shattered the $5,500 per ounce barrier in early 2026, a seismic shift in the foundation of global finance became impossible to ignore. This 27.3% surge in mere weeks, atop a 65% gain in 2025, is more than a commodity boom; it is a stark referendum on the stability of traditional fiat currencies and the strategic calculus of the world’s most powerful financial institutions. At the heart of this turbulence lies a critical question for international investors and policymakers alike: When will central banks stop hoarding gold? Their answer will define the next era of the global reserve system, potentially heralding a move towards a gold/美元 mixed standard (gold/US dollar mixed standard). The actions of institutions like the People’s Bank of China (中国人民银行) and the U.S. Federal Reserve are no longer just about diversification but about preparing for a fundamental reordering of monetary trust.
Executive Summary: The Core Thesis
- Gold’s Meteoric Rise is Structural: The rally to over $5,500/oz is driven by profound fiscal fears (soaring U.S. debt), geopolitical instability, and a loss of confidence in purely fiat-based reserve systems, not transient market sentiment.
- The Central Bank Tipping Point Nears: Deutsche Bank research indicates that at approximately $5,790/oz, the value of central bank gold holdings will surpass their U.S. dollar reserves, making gold the primary global reserve asset de facto.
- A Two-Tiered Gold Market Emerges: Western central banks (U.S., EU) hold over 51% of official gold, with it constituting 65-75% of their reserves. In contrast, BRICS nations hold a much smaller share (16.8%), signaling massive potential for continued buying to rebalance global financial power.
- The Ultimate Driver: Hedging the Unhedgeable: Central banks are acquiring gold to hedge against a structural risk unseen since 1971—the potential erosion of the U.S. dollar’s privileged status as the world’s paramount settlement and store of value.
- The Path Forward is a Choice of Belief: The international community faces a choice between faith in central bank-managed fiat currency and faith in gold’s historical role. The current accumulation phase is the market preparing for this decision.
The Unstoppable Ascent: What’s Fueling Gold’s Record Run?
The opening months of 2026 have provided a textbook case of gold-positive catalysts converging. Geopolitical flare-ups, from military interventions to sovereign threats, have combined with deep-seated fiscal anxieties to create a perfect storm for the precious metal. However, to view this as a short-term safe-haven rush is to miss the larger, more enduring trend.
Geopolitics and Fiscal Fears as Accelerants
The specific events mentioned—tension over Greenland, investigations into Fed Chair Powell, and U.S. fiscal policy—are symptoms of a broader disorder. They create immediate uncertainty, but the underlying driver is the market’s long-term assessment of U.S. dollar risk. The proposal under the Trump administration to permanently extend tax cuts and dramatically ramp up defense spending to $1.5 trillion by 2027 presents a staggering fiscal outlook. Analysis suggests such policies could balloon U.S. federal debt to between 172% and 190% of GDP. For global reserve managers, this isn’t just an American problem; it’s a direct threat to the value of their largest reserve asset. As author and analyst Andrew Sheng (沈联涛) notes, “Trump’s policy vacillations and growing government debt mean the dollar carries a risk investors cannot ascertain.”
The Data Tells a Deeper Story
The numbers reveal a strategic, not speculative, move. In 2024, gold rose 27%. In 2025, it exploded by 65%. Central banks have been net buyers for over three consecutive years, adding more than 1,000 tonnes annually. This isn’t reactionary trading; it’s a deliberate portfolio restructuring. With global foreign exchange reserves totaling approximately $13 trillion and official gold holdings at 36,000 tonnes, gold now represents nearly 33% of total central bank reserve assets by value. This massive repositioning underscores a collective move towards what experts are calling a gold/美元混合本位的回归 (return to a gold/US dollar mixed standard).
Central Bank Motivations: Beyond Diversification
For decades, the standard explanation for central bank gold buying was “portfolio diversification.” While still valid, the motivations have evolved into something more profound and defensive. Central banks are now hoarding gold to insure against systemic monetary failure and to assert financial sovereignty.
Gold as “Liquid Cash” for Giants
A critical insight from market analysts is that for large institutional players like sovereign wealth funds and central banks, gold has transcended its commodity label. With trading liquidity now surpassing that of many sovereign debt markets, gold functions as a form of “high-value cash.” This is pivotal for understanding the behavior of entities like the Norwegian Government Pension Fund Global (NBIM), which holds over $2.1 trillion. With 53.2% of its portfolio in U.S. assets and minimal gold, it exemplifies the concentrated dollar risk that others are now scrambling to avoid. Gold provides a non-correlated, highly liquid asset that can be mobilized in a crisis without relying on the banking system of a potential adversary.
The Great Divergence: West vs. The Rest
The global gold landscape is strikingly uneven, which itself is a key driver of future demand. Western central banks, as issuers of major reserve currencies (USD, EUR), are already heavily endowed. They hold 18,899 tonnes (51.7% of the total), with gold comprising 65-75% of their reserves. Their buying has been modest; they are sitting on their strategic stockpiles.
In stark contrast, the BRICS bloc holds only 6,133 tonnes (16.8%). China’s official holdings are just 2,305 tonnes—a mere 9% of its $3.5 trillion in total reserves. Compare this to the U.S. Treasury’s 8,133 tonnes. This disparity highlights a massive potential demand pool. If BRICS nations wish to match the West’s financial hedging power or to back any future multilateral currency initiatives, they must buy aggressively. With an estimated $5 trillion in collective foreign exchange reserves, they have ample firepower to convert paper currencies into metal. This structural imbalance ensures that the question of when central banks will stop hoarding gold is, for a significant part of the world, far from being answered.
The Tipping Point: When Gold Becomes “Primary”
The journey from a supporting asset to the main act is quantified. Research from institutions like Deutsche Bank provides a clear milestone: when gold reaches approximately $5,790 per ounce, the total market value of central bank gold holdings will eclipse the value of their U.S. dollar-denominated reserves.
The Psychology of a New Benchmark
Crossing this threshold is more than a statistical curiosity; it would represent a psychological and practical watershed. Gold would transition from being the ultimate hedge to being the baseline store of value against which other assets are measured. It would formalize the gold/美元混合本位的回归 (return to a gold/US dollar mixed standard) in market architecture. Central bank balance sheets would, in aggregate, be more exposed to the price of gold than to U.S. Treasury rates. This could fundamentally alter global liquidity conditions and interest rate dynamics, as the monetary metal reclaims a central role it hasn’t held in over half a century.
Could Technology Reduce the Need to Hoard?
An intriguing counter-narrative exists. The current need for massive foreign exchange reserves stems from the Real-Time Gross Settlement (RTGS) system for cross-border transactions, which requires immediate, full payment in a settlement currency (usually dollars). However, as Andrew Sheng (沈联涛) points out, “If a BRICS currency unit backed by gold were used for net settlement, technically the size of foreign exchange reserves could be cut by 70 to 80 percent at most.” The development of a gold-backed settlement unit or the widespread use of Central Bank Digital Currencies (CBDCs) for international trade could theoretically reduce the need for both dollar and gold hoarding. Yet, this technological future presupposes a level of geopolitical trust that is currently in short supply, making tangible gold accumulation the preferred near-term strategy.
Implications for the Global Financial Architecture
The relentless accumulation of gold by central banks is not happening in a vacuum. It is actively reshaping the contours of global finance, with direct consequences for currency markets, asset allocation, and geopolitical power.
De-Dollarization by Another Name
The shift towards gold is the most tangible form of de-dollarization. It is not about abandoning the dollar for the euro or renminbi as the primary reserve asset; it is about reverting to a historical antecedent. Every tonne of gold purchased by a non-Western central bank is effectively a sale of U.S. Treasuries or dollar deposits. This slowly erodes the dollar’s “exorbitant privilege” and increases borrowing costs for the United States over the long term. The market is voting for a system where value is not solely decreed by a central bank’s interest rate policy but is also anchored in a physical asset with a 5,000-year track record.
Investment Strategy in a Hybrid System
For institutional investors, this transition demands a rethink. The traditional 60/40 stock/bond portfolio may offer inadequate protection. Gold is re-establishing itself as a core, non-discretionary holding for capital preservation. The volatility of gold, once a deterrent, is now seen as a feature—a necessary attribute of an asset repricing to reflect new systemic realities. As one portfolio manager framed it, “Why hold bonds yielding 4% with currency and default risk when gold is delivering these returns?” The gold/美元混合本位的回归 (return to a gold/US dollar mixed standard) suggests that asset allocators must now consider a strategic, permanent allocation to gold, much like the central banks they often follow.
A Glimpse Into the New Reserve Architecture
The path forward is, as the author eloquently states, a “mission impossible” fraught with complexity. The current phase of aggressive gold accumulation is unlikely to cease abruptly. It will continue until one of several conditions is met: either the price reaches a level where the market perceives extreme overvaluation (a distant prospect given the fundamentals), a credible new global monetary accord is reached, or the fiscal and geopolitical pressures on the dollar begin to recede meaningfully. None of these appear imminent.
The international community stands at a crossroads of belief. The choice is between unwavering faith in the managed fiat systems overseen by institutions like the Federal Reserve and the European Central Bank, and a renewed faith in the immutable properties of gold. Central banks, through their actions, are preparing for either outcome—or more likely, for a hybrid world where both coexist uneasily. When will central banks stop hoarding gold? The answer may be: not until the transition to this new, yet historically familiar, system is complete and the value of paper currencies is once again perceived to be firmly anchored.
Call to Action for Investors: Monitor central bank gold buying reports from the World Gold Council as a leading indicator of monetary stress. Re-evaluate your portfolio’s exposure to both the U.S. dollar and gold, not as tactical trades but as strategic positions for a changing financial era. The great re-anchoring has begun; strategic alignment is no longer optional.