Gold Overtakes US Treasuries to Become the World's Second-Largest Reserve Asset
At the end of 2025, something quietly historic happened in the world's official reserves. Gold overtook US Treasuries to become the second-largest reserve asset held by central banks. The last time that was true, the euro did not yet exist. The figure comes from the European Central Bank's latest analysis of global reserves: not a forecast, and not a sales pitch, but a record of what the most conservative institutions on earth actually did with their money.
The numbers
By the ECB's count, the composition of global central bank reserves at the end of 2025 looked like this.
| Reserve asset | Share at end of 2025 | Change on a year earlier |
|---|---|---|
| US dollar (all dollar-denominated assets) | 42% | Still the largest single bloc |
| Gold | 27% | Up from 20% |
| US Treasuries | 22% | Down from 25% |
| Euro | 15% | Broadly steady |
The precise picture matters, because the headlines round it off. The dollar, taken as a whole, is still number one. What has changed is that gold has now passed US Treasuries specifically. By value the gap is real: central banks ended 2025 holding close to $4 trillion in gold against roughly $3.9 trillion in US government bonds.
27% against 22%. Gold has overtaken US Treasuries in central bank reserves for the first time since 1996.
Why it happened
Two forces drove the change, and being honest about both is what separates analysis from marketing.
The first is price. Gold rose sharply across 2024 and 2025. When an asset you already own becomes worth more, its share of your reserves rises on its own, without you buying a single extra ounce. The ECB was explicit that this valuation effect, rather than a wholesale sell-off of Treasuries, did most of the work.
The second is genuine buying. Central banks have been net buyers of gold for years. According to the World Gold Council, they added around 850 tonnes in 2025, easing back after three consecutive years above 1,000 tonnes. The most active buyers included China, Poland, Turkey and India: nations deliberately reducing their dependence on any single currency.
Why central banks keep buying
Gold pays no interest and costs money to store, so why do the world's most sophisticated reserve managers keep adding it? Because it answers a risk that bonds cannot. Gold is no one's promise to pay. It carries no counterparty, so it cannot be defaulted on, and it cannot be frozen. After national reserves were frozen following the 2022 invasion of Ukraine, that quality stopped being academic for any country that might one day fall out with the issuer of its reserve currency.
There is a slower trend underneath it too: a steady diversification away from the US dollar. With US government debt at record levels and finance increasingly used as a geopolitical tool, central banks from Beijing to Warsaw have chosen to spread their reserves into a neutral asset that no government can print.
What it signals for the patient UK investor
Strip away the headline and a simple principle is left. The institutions whose entire purpose is to protect national wealth against currency risk, geopolitical risk and counterparty risk have decided that a meaningful share of that wealth belongs in a tangible asset they hold directly. They are not chasing a quick gain. They are holding something that has kept its purchasing power for 4,000 years.
You cannot buy a central bank's gold. But the reasoning behind it is open to any UK investor, and the UK adds an advantage the central banks themselves do not receive.
UK legal-tender gold coins, among them the Gold Britannia and the Gold Sovereign, are exempt from Capital Gains Tax and carry no VAT on purchase. That is not a loophole. It is a structural feature of UK law, because these coins are legal tender of the Crown. For a UK resident it means that any gain you make is yours to keep, with no CGT to calculate when you sell.
Owning gold versus owning a claim on gold
There is also a difference worth understanding between owning gold and owning a promise about gold. An exchange-traded fund or a pooled online account is a paper position: a claim settled inside the financial system. A graded Royal Mint coin in your hand, or held in an insured vault in your own name, is the asset itself.
For investors who value gold precisely because it sits outside that system, the distinction is the entire point. It is also, quietly, the same logic the central banks are following.
At Bullion Club, this is the case we have always made. As the world's central banks add to their gold, individual UK investors hold a structural advantage those institutions do not: legal-tender coins whose gains fall outside Capital Gains Tax. Whether you are protecting a portfolio against volatility or building a long-term store of value, our specialists can talk it through with you.
