Central banks want to fill their vaults with gold.

Four out of 10 central banks will hold a larger share of their reserves in gold, according to an annual survey of monetary authorities and sovereign funds commissioned by US asset manager Invesco. Rising inflation, global turmoil and the ever-growing US national debt are among the reasons for interest in gold.

It's about having physical gold in your own country, explains FD journalist Maren Jongsma. There are all sorts of alternatives that mimic owning gold. They don't want that. Just like keeping gold in other countries. “They want to fill their vaults with more gold.”

This choice is primarily due to economic instability, which creates a need for certainty. Gold is known as a safe investment. Although the development, according to Jongsma, also shows a growing distrust of the United States, especially among monetary authorities in Asia. “There is a growing minority that expects the role of the dollar to diminish in the coming years.” Jongsma attributes this in part to the policies pursued by the United States in recent years, including high national debt and the use of the dollar in all forms of conflict. For example, freezing bank reserves, as in the case of Russia.

yuan

There is currently no currency that can replace the dollar, Jongsma says. Investments are mainly made in multiple currencies. “The most logical candidate is the Chinese yuan, but it’s not really ready for that yet,” Jongsma says. To replace the dollar, people need to be able to move in and out freely, he explains. “In China, it’s still very regulated.”