The Return of the Golden Rule

United States debt in the form of Treasury bonds used to be the default safe asset. Not anymore. This summer, gold took that crown.

Central banks that hang on to treasuries get paid interest by the U.S. government. Gold can go up (or down) in price, so it can make you a profit if you sell it, but it comes with costs—storage costs, security costs—not income.

Moving to gold is the result of trends that have played out over years. Since the second half of 2022, central banks and other global institutions have generally bought between 220 and 440 tons of gold per quarter. Gold prices spiked at the start of the year, peaking in late January. This led to a slowdown in purchases. In the first quarter of this year, central banks bought only 61 tons. But quarter two made clear this was not the end of the buying spree: Banks bought about 318 tons once prices had come down.

Throughout this time, Russia has aggressively pushed figures in the opposite direction, selling over 44 tons to fund its war in Ukraine. But its sales have been more than made up for by other buyers.

Perhaps the most dramatic vote of no confidence in the U.S. is not the gradual shift from dollars to gold but the rate at which countries are moving their gold out of America.

The Dutch central bank announced earlier this month that it had transferred 95 tons of gold from New York and Ottawa to London. Over the last year, France has sold 142 tons of gold in New York and bought an equivalent amount in Europe. It now has no gold in New York.

In the last decade, Europe has shifted its gold storage locations. After World War ii, the U.S. was the center of the global financial system and New York was much less vulnerable to Soviet invasion than Europe’s capitals.

That era is over. Some countries have brought their gold home; others are spreading it out, not putting all their eggs in one basket. The Dutch relocation, for example, leaves about one third of its gold in North America, a third in London and a third in the Netherlands.

Germany led the way into this new era, announcing on Jan. 16, 2013, that it wanted its gold back. Since 2000, it has brought over 1,670 tons of gold from London, New York and Paris back to Germany. Other countries quickly joined in.

• From 2015 to 2020, Austria brought nearly 110 tons of gold back from London, until it held half of its global reserves on its own soil. It also shifted nearly 55 tons from London to Switzerland.
• In 2017, Turkey withdrew all its gold from the Federal Reserve Bank of New York. The next year, it had reportedly brought home 385 tons of gold previously held abroad.
• In 2019, Poland brought 110 tons of gold bullion home from the Bank of England.
• The same year, the Romanian Parliament passed a bill requiring the National Bank of Romania to have at least 91.5 percent of its gold on Romanian soil. The bill stalled due to opposition from the president.
• Between 2021 and 2025, Serbia brought its entire gold reserves home.
• Italy holds nearly half its gold at the Federal Reserve Bank of New York. Last year, its Parliament began agitating to bring it home.
• This year, disagreements with the U.S. have prompted a major debate within Spain about moving its gold home from the U.S.

For Germany, the location of its gold was less about Cold War fears of Soviet invasion: After World War ii, the Allies kept West Germany’s gold reserves outside of Germany to help guarantee Germany’s good behavior.

For Europe, the gold movement is a quiet declaration of independence from the United States. It got started even before Donald Trump’s first term.

“Gold is a physical commodity that isn’t created or managed by a government in a way that currency or other financial assets are,” said Rick Kanda, managing director of the Gold Bullion Co. “Therefore, when central banks physically hold their own gold, they gain a degree of independence and security, especially in times of geopolitical and financial uncertainty.”

Europe helped demonstrate the need for this after Russia invaded Ukraine in 2022. U.S. and European governments froze every Russian asset they could. These assets are still frozen, though the European Union has debated confiscating them and using the money to fund weapons for Ukraine. European nations want to reduce the risk of the U.S. doing that to them.

There’s been a lot of talk about the divorce between the U.S. and Europe. The reality is that the two have quietly been dividing their assets for more than a decade. The split is happening on a basic, practical level.

When it comes to investing, the golden rule is simple: He who has the gold rules. European nations led by Germany are making sure that’s not the U.S. Their banks own gold, not dollars, and they are making sure they control that gold.

The late Herbert W. Armstrong wrote in 1984 that a massive banking crisis in America “could suddenly result in triggering European nations to unite as a new world power, larger than either the Soviet Union or the U.S.” He explained that such a crisis would hit Europe hard and provide it with the needed push to unite as a superstate under a single strong leader.

By bringing their gold home, European bankers are placing themselves in a much better position to rebuild after that coming financial crisis and part ways with the U.S.

Mr. Armstrong sounded his Bible prophecy-based warning of a wealthy, united Europe that is rising right now. Read more in our article “America’s Banking Crisis Will Unite Europe.”