Nomi Prins — ECB: Gold Is Now the #1 Reserve Asset

The ECB milestone — gold is now the #1 reserve asset

• For the first time since the dollar's gold link was cut in 1971, gold sits atop the world's official reserves. The ECB confirmed it June 2 in its annual report on the international role of the euro.
• At end-2025, gold was 27% of global official reserves by market value, ahead of U.S. Treasuries at 22% and the euro at 15%.
• Dollar-denominated assets combined still hold the largest overall share (~42%), so the dollar has not been displaced — what changed is gold's standing on its own as the single most-held reserve asset.

Valuation math vs. genuine buying

• The ECB attributed much of gold's larger share to valuation math: gold rose ~60% in 2025 after ~30% in 2024, so its share would climb even without new purchases.
• But that's not the full story — the useful question is why central banks kept buying through the advance instead of taking profits. The share gain is partly mechanical; the net buying is the real signal.

Strategic demand stayed strong through the rally

• Central banks bought 863 tons in 2025 — well above the 473-ton prior-decade average — in a year with 53 record highs, and buying continued into 2026 (including through the spring correction).
• The World Gold Council projects another 750–850 tons of official purchases in 2026: China and India driving momentum, plus Turkey, Poland and Singapore; Saudi Arabia and the UAE exploring new allocations.

Why central banks are accumulating

• Motivation: reducing dollar concentration, managing sanction risk, and anchoring policy in real assets.
• Prinsights made this call in its January commodity forecasts (gold then above $5,000) — that central-bank gold holdings were on course to overtake US Treasuries as the more important reserve anchor; the ECB has now put Europe's official weight behind the shift.
• Rich Checkan (Asset Strategies International): while investors wait on the FOMC and trade headlines, central banks keep accumulating gold and cutting dollar reserves — "central banks know there's peace of mind to be had with a strong allocation to gold."

Oil spiked; gold dipped, then found a range

• When the Iran war began at end-February, oil moved as it always does in a Gulf crisis: with Hormuz effectively closed and ~1/5 of global supply disrupted, Brent jumped from ~$72 pre-conflict to a March average ~$103, spiked to a $138 peak in April, and is back to ~$97 as ceasefire talks remain unresolved.
• Gold took a different path: after a record $5,595 on Jan 29 it sold off hard (a hawkish Fed nominee lifted the dollar; an oil-driven inflation jump stripped rate-cut expectations), bottoming ~$4,098 mid-March (a >25% drop that held above the long-term trend line), recovering to $4,792 by mid-April, and trading a $4,400–4,800 range since (~$4,560 now). Kitco analysts call the zone a strategic accumulation window.

The historical pattern: oil spikes fade, gold steps higher

• The same pattern repeated in past crises — the 1973 embargo, 1979 Iranian revolution, 1990 Gulf War, 2008 crisis, 2022 Russia-Ukraine escalation: every major geopolitical oil disruption produced a crude spike that later faded, while gold moved higher in steps and kept the gains.
• The reason: the forces behind gold (monetary credibility, reserve demand) build on themselves rather than reversing. The 2026 Iran war is the newest entry, the ECB milestone its clearest confirmation.

The Fed bind and the Prinsights call

• The Fed stays caught between containing inflation and the high cost of servicing debt, while fewer central banks buy US Treasuries.
• With demand intact, Prinsights reiterates its $6,000/oz target for this year and continues to treat ~$4,560 as a level to accumulate gold and select gold miners rather than wait on the sidelines.