Central Banks Shift Gold Reserves as U.S. Safe-Haven Status Faces Scrutiny

Global central banks are increasingly questioning the United States’ reliability as a financial safe haven, a shift underscored by the Netherlands’ recent decision to transfer gold reserves from New York to London. This move comes amid a series of aggressive economic and military actions by President Donald Trump, raising concerns among international institutions about asset security and policy unpredictability.

Steven Blitz, chief U.S. economist at GlobalData TS Lombard, attributed the trend to what he termed the “irrationality of the president,” pointing to Trump’s recent threat to restrict trade with nations that do not comply with Federal Reserve interest rate cuts. “Who’s to say he can’t suddenly decide that this gold [in New York] can’t leave?” Blitz noted, adding that while the likelihood is low, central banks are prudently hedging against uncertainty until the political landscape clarifies after Trump’s term ends in January 2029.

The Netherlands is following France’s earlier example of liquidating its New York-held gold. France recently sold its remaining bars at the Federal Reserve Bank of New York, realizing a gain equivalent to $15 billion. During Trump’s first term, Germany also executed significant gold transfers. Max Baecker, president of American Hartford Gold, argued that these moves are driven more by a desire for control than geographic proximity. “Central banks want to know they can access and mobilize their gold when they need it,” Baecker said.

These developments occur against a backdrop of intensified geopolitical tension, including the January capture of Venezuelan leader Nicolás Maduro, the U.S.-Iran war initiated in February, and plans to control over 65 billion barrels of Venezuelan oil. Additional friction includes Trump’s antagonism toward NATO allies, proposals to acquire Greenland, and an escalating trade dispute with Canada.

While the U.S. remains the world’s largest holder of gold reserves with over 8,000 metric tons, the precious metal’s price has surged dramatically. After hitting a record approximately $5,600 an ounce in January, gold has stabilized around $4,477. Jim Baird, chief investment officer at Plante Moran Investment Advisors, advised investors to maintain some gold exposure for stability, though he cautioned against allocating all capital to the metal.

Baird maintained that U.S. Treasurys remain the “best house in a bad neighborhood,” despite the national debt surpassing $40 trillion this summer. He emphasized that no other market offers comparable depth or liquidity. However, rising yields reflect growing anxiety; the 10-year Treasury yield climbed to roughly 4.8% in September from 4% in March, fueled by inflation fears linked to higher oil prices from the Iran conflict.

Stephanie Link of Hightower Advisors warned that if the 10-year yield breaches 5% and sustains it for more than a week, it could signal deeper issues regarding buyer confidence in U.S. debt. Foreign ownership of Treasurys has declined from a post-2008 peak of nearly 56% to approximately 31% last year. As long-term rates rise, some analysts predict increased demand for gold, though others suggest the current tarnish to U.S. standing may be temporary, potentially shifting again after the November midterm elections.