The active buying of gold by central banks since 2009 and the increase in gold prices have increased the proportion of precious metals in global international reserves, causing disadvantages for traditional currencies.
According to Oilprice, by the end of 2023, gold had surpassed the euro and the next legal currency to be challenged was the USD.
Normally, when financial analysts draw charts of international reserve allocation, they focus on foreign exchange (ignoring gold) and start when the euro was first used in 1999.
Based on the above charts, it can be seen that the share of the USD in total international reserves seems to be decreasing from the peak of 72% in 2001 to 58% in 2023. In addition, it appears that no other currency is competing with the US dollar.
But financial institutions do not match gold when making charts. By combining multiple sources, we get a preliminary look at the ratio of reserves from 1899 to 1935 (both pre- xu and gold) and a full picture starting in 1950.
This painted a completely different story. Instead of just showing a dizzying decline in the US dollar in foreign exchange reserves, the balance between gold and foreign exchange has been revealed.
What typically supports the international monetary system is not the USD but gold. Gold once accounted for the majority of international reserves, even as the British pound was considered the world's reserve currency against the USD.
In a comparison chart for more years with only gold and the US dollar, the share of the greenback is even smaller.
The above chart shows that the share of the US dollar in total reserves has fallen to 48% in 2023, due to declining confidence in the pre- xuat currency, concerns about asset bubbles, escalating war and concerns about inflation - while gold is on the threshold.
Based on calculations of official gold reserves, including secret buybacks, the percentage of total gold reserves will reach 18% in 2023, up from 11% in 2008. Gold has now surpassed the euro, which was stuck at 16%.
As problems affecting legal currencies will persist for a long time, it is likely that gold will also surpass the USD in international foreign exchange reserves in the next decade.
