The Overtaking That Was Mostly Arithmetic

The European Central Bank published its annual review of the international role of the euro in June, and one line in it travelled further than the rest. At the end of 2025, measured at market value, gold accounted for 27 percent of total official foreign reserves worldwide. United States Treasuries accounted for 22 percent. The euro accounted for 15 percent. Gold had passed both.

The ECB then said the part that did not travel. The move is predominantly a valuation effect rather than a reallocation. Gold rose roughly 60 percent in 2025 after roughly 30 percent in 2024, which mechanically lifts its share of any portfolio it sits in. Held at the previous year's gold price, gold's share would have been closer to 23 percent, and it would not have passed Treasuries at all. The same report a year earlier had gold at 20 percent and the euro at 16 percent. Dollar denominated assets in aggregate still make up 42 percent of official reserves.

The Historical Echo

The official sector's posture toward gold is not a structural constant. It is a policy stance, and the cleanest documented case of one reversing under pressure is the London Gold Pool.

Eight central banks formed it on the sixth of November 1961 to hold the price at thirty five dollars an ounce, with the United States carrying half the burden and West Germany, Britain, France, Italy, Belgium, the Netherlands and Switzerland splitting the rest. For its first three years it worked, and it worked in the buying direction. From the establishment of the buying syndicate in February 1962 to the end of 1964 the Pool ran a cumulative surplus of 1,437 million dollars, which at the official price is something on the order of 1,270 tonnes absorbed rather than sold.

Then it inverted. From the end of 1965 to March 1968 the Pool ran a cumulative deficit of 3,692 million dollars, roughly 3,280 tonnes at the same official price. Sterling devalued in November 1967 and Gold Pool intervention accounted for about three quarters of the decline in American gold reserves in that quarter alone. The members raised the Pool's resource limit in February 1968 and bought themselves one month. On the fourteenth of March 1968 the Pool lost 372 million dollars in a single day, and at one in the morning on the fifteenth the British government closed the London gold market at Washington's request. Within two days the members agreed a two tier arrangement: they would transact with each other at thirty five dollars and simply stop transacting with everyone else.

The same institutions that accumulated for three years disgorged for three more and then withdrew from the market entirely. Nothing about the metal changed.

Where Patient Capital Is Positioning

Set the stated intention against the observed flow, because they are currently pointing in different directions. The World Gold Council's survey published in June, with a record seventy six central bank respondents, found 45 percent expecting their own gold holdings to rise over the next twelve months, also a record, and 89 percent expecting global official gold reserves to rise. Seventy four percent expect a smaller dollar share of global reserves over a five year horizon.

The flow says something more measured. Net central bank demand was 1,092 tonnes in 2024 and 863 tonnes in 2025, a fall of 21 percent. The first half of this year came to 345 tonnes, the weakest first half since 2022, though the second quarter's 289 tonnes was itself a record for a second quarter after a very thin first. Poland took 51 tonnes in that quarter and China 33, while Russia sold 22, Turkey four and the Bundesbank one. Meanwhile the International Monetary Fund's latest reserve composition data has the dollar's share of allocated foreign exchange reserves at 57.1 percent, slightly higher than the quarter before, against roughly 71 percent in 2000 and 65 percent in 2015.

Official institutions hold about 38,600 tonnes, which is roughly seventeen percent of all the gold ever mined. The other 83 percent is held by people. For anyone in that second group the practical lesson is narrow and worth keeping. A share of reserves is a ratio, and yours rose last year without anyone buying anything, purely because the numerator was repriced. It can fall the same way, and the price that moved it is down about a quarter from its January high. What did not change across either move is the tonnage. Own the ounces. The statistic will do whatever the market tells it to.

The Capital Memo