Why Central Banks Are Quietly Moving Back to Gold — And Why This Could Be a 50-Year Trend

1️⃣ What is Global FX Reserves?

Every country keeps savings (reserves) to protect its economy.
These savings are kept in:

  • US Dollar 💵

  • Gold 🪙

  • Euro, Yen, etc.

Think of it like family savings kept in:

  • Cash

  • Gold

  • Fixed deposits


2️⃣ Current Situation (Important Point)

  • Today, only ~25% of global reserves are in Gold

  • But in the 1970s–80s, countries kept 60–70% of their reserves in Gold

👉 That means Gold is still under-owned by central banks


3️⃣ What Happened with the US Dollar?

  • Earlier, Dollar was only 20% of global reserves

  • By the 2000s, Dollar became 60% of global reserves

  • Now Dollar’s share is slowly falling

👉 Countries are reducing dependence on the US Dollar


4️⃣ Why Are Countries Buying More Gold?

Because of:

  • Debasement → Printing too much money reduces value

  • De-dollarisation → Less trust in only the US Dollar

  • Diversification → Don’t keep all eggs in one basket

  • De-risking → Gold has no default risk

Gold has:

  • No government risk

  • No credit risk

  • No printing risk


5️⃣ What is “Mean Reversion”?

It means:

Things usually go back to their long-term average

If Gold earlier was 60–70% of reserves, and today it’s 25%,
👉 There is a long way to go if history repeats.

This could be a 50-year trend, not a 6-month rally.


6️⃣ Why Gold Can Go Much Higher (Even from $5,000)?

Even if Gold looks expensive today:

  • Central banks don’t buy for trading

  • They buy for safety and reserves

  • If many countries start buying together → supply can’t match demand

👉 Price can break all previous ceilings

🔑 Final Summary (In One Line)

Gold is not in a bubble — it is possibly in the early phase of a multi-decade cycle, driven by central banks losing faith in paper money.