I was reading about official foreign exchange reserve composition. It’s boring stuff normally. Currency percentages. Reserve holdings. The kind of thing only central bankers care about.
But it’s actually revealing something profound.
The U.S. dollar is declining as a reserve currency. Not collapsing. Not dramatically. But measurably declining.
The currency composition data from the IMF shows that the dollar’s share of official reserves has been slowly slipping. 2024 ended at 57.8%. Down from 58.4% the year before. Down from 58.6% before that.
Now, these are tiny percentage point moves. Easy to dismiss.
But here’s what matters. Central banks globally manage trillions of dollars. So when the dollar’s share drops by even 0.6 percentage points, that’s billions of dollars flowing into alternative reserves.
And gold is the obvious alternative.
Why? Because it’s not denominated in any country’s currency. It’s not dependent on any central bank’s monetary policy. It doesn’t yield interest (so it doesn’t get hurt by rising rates). It’s just… gold. It’s been valuable for 5,000 years. And it’ll probably still be valuable in 5,000 more.
From a central banker’s perspective, gold is boring. Which is exactly why it works as a reserve asset during uncertain times.
J.P. Morgan’s analysis shows that central banks hold 36,200 tonnes of gold globally. That’s 20% of their official reserves. Up from 15% in late 2023. So in just over a year, central banks increased gold’s share of their portfolios by a third (from 15% to 20%).
And they’re not done. Many central banks still have less than 10% of their reserves in gold. Brazil, for instance, bought 15 tonnes in September and another 16 tonnes in October 2025. The Bank of Korea is publicly discussing plans for additional gold purchases.
Here’s the math that’s mind-blowing. If central banks with under 10% gold reserves moved to 10%, they’d need to buy 2,600 tonnes. Even at the current high prices ($4,000/oz), that’s around $335 billion of purchasing.
That’s not a small number. That’s an ocean of demand.
And that’s if central banks just move to 10%. Many emerging market central banks should hold more. According to a 2020 BIS study, central banks in emerging markets benefit from holding 20%+ of their reserves in gold for currency protection.
So the long-term potential? Central banks could easily double or triple their gold holdings over the next 5-10 years.
The structural trend is clear. The dollar is slowly becoming less dominant. Gold is slowly becoming more important.
This isn’t conspiracy theory. It’s not speculation. It’s just slow, boring, institutional capital reallocation happening in real-time.
And it’s one of the biggest reasons gold keeps rallying.