Since late 2022, the People's Bank of China (PBoC) has significantly accelerated its gold purchases, officially amassing 2,299 metric tons as of June 2025. Market speculation suggests actual holdings may be even higher due to potential undisclosed acquisitions. This trend signals a deepening effort by China and other non-Western nations to diversify away from the U.S. dollar, particularly in response to the perceived “weaponization” of dollar-based financial systems. The implications for global currency dynamics, central bank reserve strategies, and inflation hedging assets like gold are profound.
1. Macro Context: Weaponization of the Dollar and a Shift in Monetary Trust
⦁In 2022, Western sanctions froze over $300 billion in Russian central bank reserves. This marked an unprecedented move that reframed the U.S. dollar as not merely a financial tool but a geopolitical lever.
⦁The act catalyzed a reevaluation among central banks worldwide, especially in emerging markets and U.S. adversaries.
⦁China's response — increasing gold reserves and potentially obscuring the full scale — suggests a broader strategy to hedge against future sanctions risk and monetary dominance of the U.S.
Key Quote:
“That was the moment the dollar was weaponized in a way never seen before, which scared foreign central banks and spurred them to buy record amounts of gold.” — Jan Nieuwenhuijs, Money Metals
2. China’s Gold Accumulation – Data and Discrepancies
Year Reported Gold Purchases (metric tons) Cumulative Holdings
2022 62 2,000
2023 225 2,235
2024 45 2,280
2025 YTD 19 (reported through June) 2,299
⦁Disclosure Gaps: According to the World Gold Council (WGC), data from China may be incomplete or delayed. Actual holdings may exceed reported figures.
⦁Strategic Timing: Notably, China paused reported purchases between April and November 2024 — suggesting either a tactical delay in disclosure or off-market accumulation.
3. The Dollar’s Diminishing Role
⦁DXY Performance: The U.S. Dollar Index has declined more than 9% year-to-date, undercutting its role as a global safe haven.
⦁Macro Drivers:
⦁$37 trillion U.S. national debt and rising fiscal deficit.
⦁Heightened political interference in Fed policy.
⦁Shrinking global trust post-tariff wars and sanctions regime.
⦁Reserve Diversification: Gold now accounts for 20% of global central bank reserves — the highest since the Bretton Woods system collapsed in 1971.
⦁China’s Current FX Reserves: ~$3.3 trillion
Gold’s Share: ~6.7%
Target Share (Speculative): 15%–20%, implying potential future purchases of 1,000–2,000 metric tons.
4. Investment Implications
A. Gold: Strategic Allocation Reaffirmed
⦁Current Price: ~$3,490/oz (Comex intraday high April 2025)
⦁Drivers for Upside:
⦁Rising global reserve demand.
⦁Elevated geopolitical uncertainty.
⦁U.S. rate cut cycle (2025H2–2026H1 projected).
⦁Deterioration in equity and bond market performance.
Risk Consideration: Fed’s delay in rate cuts has temporarily capped upside momentum, providing a technical consolidation zone for accumulation.
B. USD Assets: Cautious Outlook
⦁Increasing structural headwinds for U.S. Treasuries and USD-denominated debt.
⦁Foreign central banks potentially reducing U.S. dollar exposure in future auctions.
⦁Long-term implications for U.S. borrowing costs and international capital flows.
C. EM & BRICS+: Currency Realignment and Commodity Strategy
⦁Gold and energy-backed trade arrangements gaining momentum (e.g., BRICS currency discussions).
⦁Increased bilateral trade bypassing USD (e.g., China-Russia, China-Brazil in CNY).
5. Strategic Recommendations
⦁Gold (Spot/Futures)
⦁Accumulate on pullbacks. Consider 8–12% portfolio weight for macro hedge.
⦁USD Index (DXY)
⦁Underweight. Monitor for Fed policy dovish pivot.
⦁U.S. Treasuries
⦁Avoid long-duration bonds. Focus on short-term T-bills as cash alternatives.
⦁Emerging Market FX
⦁Favor CNY, INR, BRL where gold reserves and trade independence increase.
⦁Commodities Basket
⦁Look for increased allocation to tangible reserve assets (gold, energy, rare metals).
China’s ongoing — and possibly covert — stockpiling of gold marks a strategic realignment in global monetary policy, rooted in a post-sanctions era distrust of the dollar-centric system. This trend reflects a broader structural shift: from fiat to intrinsic-value reserves, from U.S.-led trust to multi-polar financial hedging.
For long-term investors and sovereign allocators, the writing is on the wall — the next chapter of global reserve currency evolution may not be digital, but elemental.