In recent years, we’ve witnessed a so-called “gold arms race”—a surge in gold reserve accumulation by several countries. For centuries, gold has played a key role in the global financial system, serving not only as a symbol of wealth but also as a hedge against economic and political uncertainty. Central banks view gold as a crucial safety net and continue to stockpile it as part of their reserve strategy.
Gold is considered a safe haven asset during periods of economic and geopolitical turbulence because its value tends to remain relatively stable compared to currencies or equities. For central banks, gold is a tool for diversifying foreign exchange reserves, which helps reduce exposure to currency fluctuations and inflation. Furthermore, holding significant gold reserves can boost a country’s credibility on the global stage and strengthen investor confidence.
According to the World Gold Council, as of the end of 2024, the United States remained the world’s largest holder of gold reserves (over 8,000 metric tons), followed by Germany (over 3,300 tons) and Italy (over 2,400 tons). In recent years, interest in gold has been growing among developing countries. One standout example is Poland, which increased its gold reserves from approximately 100 tons a decade ago to 448 tons by the end of Q4 2024. On April 25, 2025, Poland’s central bank (NBP) announced that national gold reserves had reached 500 tons. This rapid accumulation places Poland among the top ten gold-holding countries and makes it the global leader in terms of growth rate in gold reserves.
In the U.S., most gold reserves are held at Fort Knox in Kentucky, according to fiscaldata.treasury.gov. Other storage sites include West Point in New York, Denver in Colorado, and smaller facilities across the country. Poland, like many nations, diversifies its gold storage locations. By the end of 2024, the National Bank of Poland reported that about 75% of the country’s reserves were stored abroad—in the Bank of England in London and the Federal Reserve Bank of New York. The main purpose of such diversification is to increase security and ensure liquidity if needed.
Several key factors are driving this gold accumulation trend. First, rising global economic uncertainty—spurred by the COVID-19 pandemic, inflation, and geopolitical tensions—is pushing central banks to seek safe assets. Second, some countries are working to reduce their dependence on the U.S. dollar, which has long served as the world’s primary reserve currency. Expanding gold reserves is seen as a way to limit exposure to U.S. monetary policy and to strengthen national sovereignty. Third, persistently low interest rates and quantitative easing programs (such as those by the European Central Bank) have made holding cash less attractive, leading many to shift toward alternative assets like gold.
Donald Trump’s policies also played a role in reshaping the gold market. His imposition of tariffs and initiation of trade disputes increased demand for gold as a safe-haven investment. Announcements of new tariffs on precious metal imports to the U.S. triggered a surge in physical gold buying, especially in bar form. According to the World Gold Council, large quantities of gold were relocated to New York vaults from London storage facilities by dealers and investment banks. Experts estimate that in the first two months of this year alone, 12.2 million ounces of gold were delivered to COMEX warehouses in New York—an increase of 70% in local inventory.
Demand has also been strong for “paper” gold through gold exchange-traded funds (ETFs). In March 2025 alone, gold ETFs recorded inflows of $8.6 billion. After four consecutive months of inflows, global gold ETFs reached a record $345 billion in assets under management.
In recent days, gold prices have soared to nearly $3,500 per troy ounce, coinciding with a sharp depreciation of the U.S. dollar. Many analysts believe this is not the end of the rally. Over the past year, gold has gained more than 40% in value. For all central banks that decided to expand their gold holdings, this move has proven to be a wise strategy.
The “gold arms race” could have various implications for the global economy. First, increased demand from central banks may continue to drive gold prices higher, potentially contributing to inflation. Second, the move by some countries to reduce reliance on the U.S. dollar may weaken its dominance as the world’s primary reserve currency, possibly reshaping the global financial system. Third, central bank gold hoarding could limit the amount of gold available to private investors, impacting its liquidity and accessibility.
Author: Krzysztof Borecki
The author is an independent financial markets expert and a member of the Polish Economic Society.
Source: ceo.com.pl
