In 2025, global official gold reserves surpass U.S. Treasury bonds for the first time, but Federal Reserve economists insist that U.S. Treasuries remain the core of reserves

Huitong Network, September 7— Federal Reserve’s Colin Weiss points out that the market value of gold reserves surpassing US Treasuries is a "digital illusion". The market value surge is driven by private capital pushing up prices and historical holdings, rather than a strategic shift by central banks. Although official gold purchases accelerated after 2022, US Treasuries remain the core of reserves. Even excluding traditional gold-holding countries, the remaining countries' holdings of US Treasuries still exceed those of gold, and foreign official net purchases of US Treasuries continue, highlighting their irreplaceability.

In recent years, as central banks around the world have continued to increase their gold holdings, a striking data point has attracted widespread global market attention: in 2025, the book value of global official gold reserves surpassed the amount of US Treasuries held by foreign official institutions for the first time. This milestone shift has been interpreted by some media as “gold is overtaking US Treasuries as the new reserve favorite,” even suggesting the dominance of the dollar is being shaken.

However, Colin Weiss, Chief Economist for Global Capital Flows at the Federal Reserve, throws cold water on this idea. In a research note published in the Eastern Eighth Time Zone last Friday (September 4), he points out that this simple comparison is highly misleading; the soaring value of gold is not the result of a strategic shift by central banks but rather the enthusiasm of private capital and an inertia tied to historical holdings.

Price Frenzy and Restrained Purchasing: The Illusion and Reality Behind Gold Appreciation

In his research, Weiss directly refutes the notion that "gold's attractiveness has surpassed US Treasuries," and analyzes fundamental logical flaws in this comparison.

Weiss emphasizes that the sharp rise in gold prices is not in sync with the increase in central bank purchases. While central bank gold buying did noticeably increase in 2022 and subsequently remained at a high level, it is far from enough to support the spectacular gold price rally seen in 2025. The real driver is the influx of private investors toward the end of 2024, with demand concentrated in inflows to physically backed gold ETFs. In other words, the expansion in the market value of gold reserves is more a result of market speculation and risk aversion pushing up prices, rather than a fundamental shift in official reserve asset allocation strategies. Weiss states bluntly that without the strong push from private capital, official investors alone would not have been able to trigger such a massive price wave.

Historical Stock and Statistical Methods: The True Story of Reserve Assets Hidden

Apart from price factors, Weiss also reveals distortions in comparison stemming from reserve asset composition and statistical methodology. He points out that the large book value of global gold reserves is largely due to a small number of countries that inherited huge gold stocks from the Bretton Woods era, and these countries have not substantially increased their gold holdings since the 1970s.

Most crucially, the US itself is the world’s largest holder of gold, accounting for 22% of the global total, but the US cannot use its own Treasuries as international reserves, meaning its huge gold holdings are naturally classified as “global gold reserves.” Weiss notes that this counting method severely inflates the data for global gold reserves, thus overestimating the real position of gold relative to US Treasuries in foreign government reserves. Even excluding gold held by the US, by the end of 2025, other countries’ global gold reserves will total about $4 trillion, slightly higher than the $3.9 trillion in US Treasuries held by foreign officials. But by June 2026, with US Treasuries holdings rebounding, this gap reverses.

Weiss further analyzes that the vast majority of central bank gold reserves worldwide are actually historical legacies from before the end of the Bretton Woods system in 1971, rather than recent accumulations based on a de-dollarization strategy. In contrast, most of the US Treasuries held by foreign official institutions were accumulated after 2000. Countries holding large amounts of gold do not often overlap with those holding large foreign exchange reserves, so a simple value comparison obscures the essential differences in liquidity and functions of these reserve assets.

The Foundation of US Treasuries Remains Unshaken: The Real Choices and Strategic Considerations of the Official Market

Although the book value of gold at times approaches or exceeds that of US Treasuries, Weiss emphasizes that if you focus on the countries that truly have the ability to choose their reserve asset allocations, US Treasuries remain the bedrock of international reserve portfolios.

Weiss points out that even after factoring in the extra official gold purchases estimated by the World Gold Council since 2022, if the five traditional gold giants (the US, Germany, France, Italy, and IMF) are excluded, the remaining countries still hold about $60 billion more in US Treasuries than they do in gold. This shows that for the vast majority of countries with significant foreign exchange reserves, US Treasuries remain a more important component of their reserve asset portfolios.

Weiss acknowledges that since 2008, the official sector has indeed been steadily net purchasing gold, and that this pace has accelerated significantly since 2022. Such accumulation may partly reflect geopolitical considerations and concerns over sanction risks. However, this has not weakened the status of US Treasuries. Data shows that from 2022 through April 2026, foreign official investors have still made net purchases of nearly $200 billion in US Treasuries. Weiss concludes that despite various complex factors, foreign official investors continue to buy US Treasuries, which fully demonstrates that they remain one of the world’s most important reserve assets.

Conclusion

In summary, the market value of gold reserves surpassing US Treasuries is more a “digital illusion” created by private capital driving up prices and the way historical stocks are counted, rather than a disruptive shift in the structure of the global reserve system. The Federal Reserve expert’s analysis reveals a deeper logic: the rise of gold is the result of risk aversion and price volatility in the market, while US Treasuries remain the indispensable liquidity cornerstone of official reserves in various countries. Even though the trend of official gold buying does exist, it is more of a supplementary hedge to geopolitical risks than a strategic abandonment of dollar assets. In a complex global economic environment, simply comparing balance sheet numbers is not only misleading, it also conceals the real logic and long-term considerations behind reserve asset allocation.