Gold is regaining the status it once lost.

A new research report released by Deutsche Bank this week pointed out that the conditions that supported the hegemony of the dollar in the 90s (such as unipolar hegemony, free trade, economic stability, etc.) have now quietly reversed.

The change in data is very intuitive: the share of the US dollar in global central bank reserves has plummeted from more than 60% at its peak to 40%; At the same time, the share of gold has almost doubled in the past four years, rising to nearly 30%. The gap between the two has narrowed to only 10 percentage points.

Deutsche Bank believes that the share lost by the US dollar does not go to the currencies of other countries (such as the euro and yen), but almost all of it goes to gold.

The dollar is giving way to gold

Deutsche Bank defines the current situation as a "return of history", which means that the history of "dollar absolute dominance" in the late 80s is being reversed.

Recall that in the 90s of the last century, the United States established its undisputed global hegemony, and globalization developed rapidly. At that time, central banks in developed countries were busy selling gold, while emerging market countries were desperately accumulating dollar foreign exchange reserves. The report pointed out that the decline in the proportion of gold in central bank reserves did not begin with the collapse of the Bretton Woods system in 1971, but after the full establishment of US hegemony in the 90s.

At that time, U.S. inflation was stable, there was a fiscal surplus, and U.S. Treasury bonds were both safe and profitable. In contrast, gold not only has no interest, but also costs money, so it is naturally unpopular. As a result, the central banks of many European countries such as the United Kingdom and Switzerland even reached a special agreement in 1999 to coordinate the reduction of gold holdings. At the same time, the foreign exchange reserves of emerging market countries soared about 9 times between the 90s and 2007, but the vast majority were in US dollars, which led to a significant dilution of the share of gold.

Today, this logic is running in reverse. The report has identified three core drivers:

The main force of gold purchases has appeared, and the global reserve structure is being reshuffled

Emerging market countries are now definitely the absolute protagonists in the reshuffle of global gold reserves.

Data shows that by the end of 2025, emerging market central banks have reached 367 million ounces of physical gold. Although this figure is about half that of the central banks of advanced economies (712 million ounces), it is important to note that before the 2008 financial crisis, this proportion was only about 20%, and the growth was very rapid.

If you look at the proportion of gold in total reserves, the gap is even more obvious. Central banks in advanced economies account for an average of 34% of gold reserves, while emerging markets currently account for only 16%. The report believes that this huge "gap" just shows that emerging market countries still have a lot of room to increase their holdings in the future.

From the perspective of specific gold buying areas, this trend is accelerating. While the three major economies of China, Russia, and India, account for nearly half of emerging market gold holdings, medium-sized powerhouses such as Turkey, Kazakhstan, and Saudi Arabia are also significant buyers.

Of particular concern are the regions of Eastern Europe and the Middle East and North Africa. Since the outbreak of the Russia-Ukraine conflict, the Czech Republic and Poland have bought more than half of their gold reserves in the past four years; Qatar, Egypt, the United Arab Emirates and other Middle East and North African countries have also bought 25% to 50% of their total holdings in recent years.

Deutsche Bank's research also found an interesting geopolitical pattern: emerging market countries that are more closely related to Western defense systems tend to have a lower proportion of gold reserves; The deeper the defense relationship with China and Russia, the higher the proportion of gold. According to the data, countries that import more than one-third of their weapons and equipment from the "Eastern camp" (China and Russia) account for twice as much gold reserves as countries with low defense ties.

The report concludes that if more countries choose to diversify their defense dependence on the United States in the future, logically, they will reduce their dollar reserves and buy more gold instead.

Geopolitics reshapes the logic of reserves: when the dollar becomes a "weapon"

Deutsche Bank believes that the freezing of Russia's foreign exchange reserves by about $300 billion in 2022 is an absolute historical watershed. This incident has caused central banks around the world to wake up and begin to re-examine the risks of putting large amounts of assets in the dollar.

In contrast, physical gold can be stored within the home country, completely unaffected by sanctions or asset freezes. This "absolute security" characteristic has become the core consideration of emerging market central banks. At present, both Russia and China have kept all their gold reserves in their own countries.

From the perspective of the macro environment, the era of "great easing" of global price stability and economic stability in the past is over. Inflation in the United States has remained high for the past five years, and the independence of its monetary policy and fiscal position have also worried the market.

At the same time, the United States is gradually withdrawing from free trade and the traditional alliance system. The old logic of the past was that the United States was willing to accept goods from emerging markets (manufacturing outsourcing), and emerging markets were willing to hand over national security and the task of saving money (security and savings outsourcing) to the United States. But now, this pattern is reversing. Countries in Asia and the Gulf region are increasingly valuing energy and defense independence, which means they may need to use previously saved dollar reserves to build their own defense and capabilities.

A signal to watch is that the UAE has applied for currency swap arrangements with the US Treasury, indicating that their liquidity needs for the US dollar are emerging. In the future, the huge wealth accumulated by the Gulf countries may be mobilized more for their own defense construction and post-war economic reconstruction.

"De-dollarization" has entered a substantive stage

When the total value of gold surpassed U.S. bonds for the first time, it was not just a simple digital cross, but a metaphor for an era.

Over the past few decades, we have become accustomed to the dollar as a global asset. But now, with geopolitical tears and the end of the era of "great détente", central banks are voting with real money to find new safe havens.

In the short term, the central bank's continuous buying and the return of ETF funds are injecting a steady stream of upward momentum into gold prices; In the long run, gold is evolving from a "crisis hedge" to a "cornerstone of the new monetary order".

Focus 1: Gold and precious metals sector

Against the backdrop of global central banks' continued gold purchases and the weakening of the US dollar's creditworthiness, the value of gold as a core strategic asset will continue to be highlighted. Investors can focus on gold mining companies with high-quality mineral resources, as well as investment targets such as gold ETFs that benefit from rising gold prices.

Focus 2: Non-US currencies and diversified reserve assets

As countries seek to diversify their reserve assets, in addition to gold, other resource assets with strategic value (such as energy, critical minerals) and related emerging market currencies are also expected to usher in opportunities for revaluation opportunities.