Every country keeps savings (reserves) to protect its economy.
These savings are kept in:
US Dollar 💵
Gold 🪙
Euro, Yen, etc.
Think of it like family savings kept in:
Cash
Gold
Fixed deposits
Today, only ~25% of global reserves are in Gold
But in the 1970s–80s, countries kept 60–70% of their reserves in Gold
👉 That means Gold is still under-owned by central banks
Earlier, Dollar was only 20% of global reserves
By the 2000s, Dollar became 60% of global reserves
Now Dollar’s share is slowly falling
👉 Countries are reducing dependence on the US Dollar
Because of:
Debasement → Printing too much money reduces value
De-dollarisation → Less trust in only the US Dollar
Diversification → Don’t keep all eggs in one basket
De-risking → Gold has no default risk
Gold has:
No government risk
No credit risk
No printing risk
It means:
Things usually go back to their long-term average
If Gold earlier was 60–70% of reserves, and today it’s 25%,
👉 There is a long way to go if history repeats.
This could be a 50-year trend, not a 6-month rally.
Even if Gold looks expensive today:
Central banks don’t buy for trading
They buy for safety and reserves
If many countries start buying together → supply can’t match demand
👉 Price can break all previous ceilings
Gold is not in a bubble — it is possibly in the early phase of a multi-decade cycle, driven by central banks losing faith in paper money.