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Thanks to our colleagues at the FT Unhedged newsletter this morning for throwing themselves in front of the discourse and writing about gold. Any readers with strong opinions may be better served by their comment box than ours.
The one footnote we want to add is on central bank buying. As Rob Armstrong writes: “Some will argue that global central banks are moving their reserves away from dollars and into gold, and this is a better measure of debasement than the bond market.”
It’s true, some will. They include Ray Dalio who, speaking at WEF last week, said:
There are big imbalances and there are big interdependencies. The US needs a lot of capital. Countries are worried that the capital they’re owning could be cut off, and there’s a natural dynamic that’s playing an important role. That’s also showing up now, already, in the form of central banks shifting to gold. We’re seeing the central banks building up reserves, as is traditional when great conflicts emerge. [ . . . ]
It’s the beginning of the end of the monetary system as we know it. It’s not just the US dollar, it’s the fiat monetary currencies, so the UK, the euro, Japan, China, all have similar debt problems and are dealing with the same inter-relationships, which is the reason why you’re seeing gold being chosen by the central banks.
Maybe Dalio’s right, but the argument currently lacks evidence.
Whereas ETF flows mean retail demand for gold can be charted almost in real time, central bank demand is much harder to quantify. CBs report reserve data to the IMF as part of an annual health check, known as an Article IV Consultation, and are asked to give more detail when borrowing or asking for access to IMF emergency facilities, but that still leaves reporting delays of up to six months.
For a slightly faster readout, analysts look at HMRC’s overseas trade data. London is the world’s biggest gold trading hub, so the UK’s monthly non-monetary gold export figure is a proxy for central bank buying.
Broadly speaking, exports line up fairly well with what we learn later. Central banks approximately doubled their gold buying to more than 1,000 tonnes a year after Russia’s invasion of Ukraine in 2022, as can be seen on the graph below.
What may be more surprising is that, adjusted for price, UK gold exports have been in fairly steady decline for a year:
Of course, a monthly dataset this volatile comes with a health warning. Nevertheless, when UK exports by weight for November were down more than 80 per cent year-on-year, the argument that central banks are still shifting to gold is on shakier ground.
HMRC also breaks down gold exports by destination. Here’s what November looked like by country:
It’s no surprise to see China as the biggest buyer. China held more than 2,300 tonnes of gold as of December 2025, equivalent at current prices to 8.5 per cent of total reserves, having been buying for 14 consecutive months.
The pace of Chinese gold buying since 2022 is more clearly visible in UK export data than in official figures from the People’s Bank of China, which appears to under-report totals:
However, the implied November total of less than 10 tonnes is well below China’s recent and longer-term averages:
In some ways, it’s rational and predictable for central banks to taper gold purchases when the value of their holdings goes up, as Morgan Stanley analysts wrote in a note last week:
Historically, it has generally been assumed that central banks consider their target gold holdings as a proportion of total reserves. With gold prices rising, this would have resulted in a reduction in purchase requirements over time. For example, Poland’s previous ambition, announced in August, of increasing the share of gold in its reserves from 21% to 30% would have been almost achieved by now at the current price.
However, last week Poland’s Central Bank approved a plan to increase holdings by 150 tons, which would take their total holdings to 700 tons. This shift to a target in absolute tonnage highlights Poland’s intent to continue purchases despite a high price environment. If this shift to an absolute target is replicated across other central banks, this could lead to further growth in purchases in the years ahead, regardless of price.
And sure? Though Poland’s import from the UK of 0.00002 of a tonne for November isn’t suggestive of price blindness.
As for the PBOC, the speculation a few months ago was that it might aim for gold to account for 20 per cent of reserves. At the average purchase rate since 2022 of about 33 tonnes a month, such a target would take almost eight years, so would be a very handy underpinning for the price. Unfortunately, the recent slowdown seen in UK exports to China doesn’t really support that kind of thinking.
For a second opinion, SG Securities analyst Michael Haigh and team check London Bullion Market Association vault holdings data, released shortly after each month-end, which correlates fairly well with HMRC exports.
For December, LMBA data reported an increase of gold in its vaults of 199 tonnes:
Haigh et al write:
Historically, when we have seen such a build in gold vaults, export levels have been very low— sometimes as low as 4 tons for the entire month. Seasonally, we would have expected something closer to 100 tons based on average data from 2022. Indeed, looking at the 10 months with the largest gold inflows into LBMA vaults (lower‑right graphic), we consistently observe low export activity — our proxy for central bank buying — averaging just 12.2 tons. Conversely, when we see net outflows from LBMA vaults, export activity is high (lower‑left graphic), averaging 152 tons over the month.
In sum, based on the data, maybe the sovereign rebalancing trade has run its course. As Rob Armstrong says, momentum-chasing seems to offer the most convincing explanation for gold’s strength in recent months.
Whether all this rampant goldbuggery is rational is another question entirely — and as with any other form of religious fundamentalism, we’d prefer to avoid the argument.
Further reading:
— So you want to talk about gold (FTAV)