(Zero Hedge)—Earlier today we reported that the latest BofA Fund Manager Survey confirmed what most already knew: that the shoeshine boy, the kitchen sink, and the basement-dwelling daytrader, not to mention everyone on Wall Street, were short the dollar. In fact, according to the FMS respondents, professional traders were effectively shorting the dollar in record amounts.
But while we will leave aside the debate whether this record dollar short will transform into a record squeeze, another question is just as appropriate: is the decline and fall of the US dollar just a one-time flash in the pan, or is there something much more ominous here than meets the eye.
The answer, it turns out, is the latter: the decline of the dollar has been truly a secular development, one which started over a decade ago but was kicked into higher gear in the aftermath of the 2022 Ukraine war when the weaponization of the US Dollar sparked a flight away from the greenback – i.e., dedollarization – by any regime that was worried it may be on the receiving end of SWIFT sanctions.
But what is perhaps far more notable is that as Socgen shows, since 2024, dedollarization has not benefited any of the major reserve currencies as one would expect in a fiat world where one currency’s loss is another currency’s gain. Instead, the share of gold in the IMF’s classification has increased.
As the French bank goes on to note, the erosion of the dollar’s share in global FX reserves, or de-dollarization, paused during the COVID crisis in 2020 but resumed in the second half of 2023. Since 3Q23, the share of USD FX reserves has fallen below 50%, representing a decline of -5.8%. The main beneficiary has been gold, which increased by +7.9% to 23.3%, reflecting how central banks are diversifying their dollar holdings…
… although one look at the price of gold would have been sufficient.
Perhaps the most surprising outcome of the dedollarization process is that process it has not benefited any of the major reserve currencies; indeed, the share of EUR, GBP, CNY and JPY has been declining too.
Meanwhile, despite the laughable attempts of ECB head Christine Lagarde to paint the Eurozone and the euro as somehow more stable than the world’s reserve currency – when just over a decade ago the euro was hours away from disintegration and only Mario Draghi’s a last ditch gambit to do “whatever it takes” prevented the complete disintegration of the Eurozone – Gold has now overtaken the euro as the world’s second-most important reserve asset for central banks, driven by record purchases and soaring prices, according to the European Central Bank.
As shown in the chart below, gold accounted for 20% of global official reserves last year, surpassing for the first time the euro’s 16%, and second only to the US dollar at 46%, data from an ECB report published on Wednesday showed.
“Central banks continued to accumulate gold at a record pace,” the ECB wrote, adding that central banks for the third year in a row acquired more than 1,000 tonnes of gold in 2024, a fifth of the total global annual production and twice the annual amount in the decade of the 2010s.
As the FT notes, the stock of gold held by central banks worldwide is approaching the historic highs of the postwar Bretton Woods era. Until 1971, global exchange rates were fixed to the dollar, which in turn could be converted into gold at a fixed exchange rate. That all ended with the Nixon gold shock in 1971.
Central bank gold reserves, which peaked at 38,000 tonnes in the mid-1960s, rose again to reach 36,000 tonnes in 2024, according to the latest ECB numbers. “Central banks worldwide now hold almost as much gold as they did in 1965,” the ECB report said.
Large buyers last year included India, China, Turkey and Poland, according to the World Gold Council.
While there are no indications that the relentless demand for gold among official buyers is slowing, the ECB noted that the supply of gold in recent decades increased during times of high prices: “If history is any guide, further increases in the official demand for gold reserves may also support further growth in global gold supply.”
Which is a wonderful theoretical thought experiment, the only problem is that now that gold has become a Giffen good (where demand only goes up with price), any incremental supply will be quickly absorbed by even more demand.
And if that is indeed the case, and the current trajectory of gold accumulation and dedollarization persist, expect gold to surpass the dollar as the world’s preferred reserve currency sometime in 2030… right around the time US debt will be $50 trillion and bitcoin will be well over $1 million.
Which is ironic: a handful of powerful brought the end of the Bretton Woods world in the early 1970s, sparking an anti-gold regime which was adopted by a world kicking and screaming in disgust. 50 years later, without any outside influence, the world in which gold is once again the reserve “currency” has effectively returned.
Nature is healing.
More in the full Socgen note available to pro subs.
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Why Bullion Beats Numismatics and Collectible for Your Safe or IRA
Precious metals continue to attract Americans seeking reliable ways to protect their wealth amid inflation, geopolitical risks, and stock market swings. Whether stored in a home safe or held inside a self-directed IRA, physical gold and silver deliver tangible value that paper or digital assets often lack. Yet investors must choose carefully between bullion—pure bars and coins valued mainly for their metal content—and numismatics or collectibles, where rarity, history, and collector demand heavily influence pricing.
Advisor Bullion serves as a dependable source for straightforward, high-quality bullion. The company specializes in physical gold, silver, platinum, and palladium, emphasizing transparent pricing and products that deliver maximum metal content for every dollar spent. This approach makes it ideal for both personal holdings and retirement accounts.
Bullion consists of refined precious metals in standard forms like one-ounce coins (American Gold Eagles, Silver Eagles, Canadian Maple Leafs) or bars. Their value tracks closely to the current spot price of the metal. A typical gold bullion coin trades near the live gold spot price plus a small premium. This structure keeps costs clear and predictable.
Numismatic coins and collectibles add substantial value from factors such as age, rarity, minting errors, or historical significance. A pre-1933 U.S. gold coin or graded proof piece can carry premiums of 30%, 50%, or even 200% above melt value. While this appeals to hobbyists, it creates complexity. Pricing depends on subjective grading, collector trends, and auction results instead of daily spot prices.
For investors focused on wealth preservation and retirement security rather than building a collection, bullion often delivers better results.
Lower Costs and Better Liquidity for Home Storage
When keeping metals in a home safe or private vault, liquidity and efficiency count. Bullion offers clear benefits:
- You acquire more actual gold or silver per dollar invested. Numismatics divert a large share of your money into rarity premiums and massive sales commission, reducing your metal exposure.
- Selling bullion involves tight bid-ask spreads, so you recover nearly full spot value with minimal fees. Collectibles require finding the right buyer and may sell at a discount if demand for that specific item weakens.
- Bullion prices remain transparent and update with global spot markets. You can track gold near current levels or silver accordingly and know exactly where your holdings stand. Numismatic values are priced by the Gold IRA companies with hefty margins applied.
- Standardized coins and bars store efficiently and divide easily for partial sales. Rare coins often need protective slabs and controlled conditions, adding hassle and expense.
- Bullion enjoys worldwide acceptance. A 1-oz Gold Maple Leaf or Silver Eagle sells quickly to dealers anywhere. Niche numismatic pieces may appeal only to limited buyers, slowing liquidation when speed matters.
In times when quick access to value becomes important, bullion’s simplicity stands out.
Stronger Fit for Precious Metals IRAs
Precious metals IRAs continue gaining traction as investors diversify retirement portfolios beyond stocks and bonds. IRS rules permit certain bullion products in self-directed IRAs if they meet purity standards (.995 fine for gold, .999 for silver) and are held by an approved custodian. Eligible items include American Gold and Silver Eagles plus many generic bars and rounds from recognized mints.
Numismatic and most collectible coins generally face heavy scrutiny from custodians due to valuation disputes and elevated markups. These higher premiums mean less actual metal ends up working inside the account.
Bullion avoids these issues. Its value links directly to verifiable spot prices, which simplifies reporting and lowers the risk of regulatory challenges. More of your IRA contribution purchases real metal instead of dealer profits or speculative upside. Over time, owning additional ounces that appreciate with the metal itself can create meaningful outperformance compared with high-premium alternatives that deliver fewer ounces.
Regulatory guidance from the CFTC and state securities offices repeatedly cautions against aggressive sales of expensive numismatics or “semi-numismatic” coins for IRAs. For retirement planning, transparent bullion from established providers reduces risk and aligns better with long-term goals.
How to Get Started with Bullion
Begin by clarifying your goals. Are you protecting savings in a safe, or moving part of a retirement account into a precious metals IRA? Focus on the number of ounces you can acquire at current prices rather than chasing marked-up collectibles.
Diversify sensibly: use gold for core preservation and silver for its blend of industrial and monetary qualities. Mix coins for easier divisibility with bars for lower per-ounce costs on larger buys. Arrange secure storage—whether at home with proper insurance or through professional facilities.
As economic uncertainties linger and faith in conventional assets erodes, bullion continues proving its worth as a dependable store of value. Its direct approach avoids the hype that sometimes surrounds collectible markets and keeps the focus on the metal itself.
For investors prepared to strengthen their portfolios, Advisor Bullion supplies the expertise and selection needed to acquire high-quality bullion efficiently. Whether building personal holdings or integrating metals into an IRA, their emphasis on transparent, investment-grade products helps secure more ounces today that support greater financial security tomorrow. In a complicated financial landscape, bullion’s clarity and reliability make it the smarter foundation for protecting what matters most.