Gold is the global reserve currency...

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Gold Is The Global Reserve Currency

Of course, everyone knows that the U.S. dollar is the global reserve currency. Yet a new analysis by Jan Nieuwenhuijs shows that gold is actually the money that every central bank wants to hold.

I’m out to dispel some commonly accepted truths in this issue.

First, let’s look at the widely-held, almost unanimous, belief among analysts that gold remains in a correction.
 

Up until the metal opened for trading in New York today, I would’ve agreed with that sentiment. But, as you can see below, gold is gaining good ground so far today.

It’s too early to call the correction over with, but a positive day is just what we’ve needed. Consider a longer-term chart:

Looking at the decline in the last half of May, it’s easy to understand the dour outlook amongst gold bulls and bugs.
 

But also notice that we recovered well from the previous short-term correction and — especially if today’s gains hold — we’re setting both higher highs and higher lows.

Now let’s move on and gore another ox....

Gold Is Historically The Reserve Asset Of Choice

It is a universally held truth that that U.S. dollar is the global reserve currency, a status that conveys numerous advantages and privileges.
 

But a new report out by Jan Nieuwenhuijs, who as you know I regard as today’s top analyst of global gold flows, shows that gold has historically been the most preferred reserve asset. (Hat tip to Jim Grant, who pointed me to this latest report out by Jan.)

The chart above shows the historical preference for gold clearly. In fact, it wasn’t until the 1990s that the dollar overtook gold as a percentage of international reserves.

The chart also shows that the percentage holdings of the dollar are rapidly decreasing while those of gold are quickly increasing.

This is the result of the America’s weaponization of the dollar generally and specifically in the wake of Russia’s invasion of Ukraine in 2022. Central bank gold buying has been one of the biggest factors driving the current gold bull market.
 

In other words, times change...and they’re changing right now as gold is trending to reclaim its status as the most widely held reserve asset.
 

(Note: View this X post to watch a fascinating animation of the trends outlined in Jan’s report.)

All the best,

Brien Lundin
Publisher, Gold Newsletter
CEO, the New Orleans Investment Conference

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