Gold has reached record highs in 2026 and is up over 71% from March 2025. One key driver behind gold’s rise is de-dollarization, which is the global shift away from the U.S. dollar. This article explains what’s happening and why it matters for your savings.
What is de-dollarization?
De-dollarization is when other countries and international trading partners reduce how much they rely on the U.S. dollar. It can mean trading in other currencies, holding less dollar-denominated reserves, or building alternatives to dollar-based financial systems.
After the U.S. froze Russia’s dollar reserves following the 2022 invasion of Ukraine, other countries noticed and began moving away from the world’s primary reserve currency. Examples include:
- China: The country has pushed the yuan as a trade currency, striking deals with partners across Asia, the Middle East, and South America to settle transactions outside the dollar.
- Gulf states: Saudi Arabia and others have explored pricing oil in currencies other than the dollar, including talks around yuan-denominated contracts.
- Central banks: Many have been adding gold to their reserves while cutting dollar holdings, a trend that accelerated sharply after 2022.
How the U.S. dollar became the world’s reserve currency
The dollar’s dominance started at the Bretton Woods Conference in 1944, when 44 allied nations agreed to peg their currencies to the dollar, which was backed by gold at that time. The U.S. came out of World War II with the strongest economy and most of the world’s gold reserves, so the dollar was the logical anchor.
When President Nixon ended the gold standard in 1971, the US dollar still kept its reserve currency status. This was due to the global economy’s trust in the dollar, oil contracts priced in dollars, and the massive size of U.S. financial markets.
That position comes with what French economist Valéry Giscard d’Estaing called an “exorbitant privilege,” meaning the U.S. can borrow money cheaply because the rest of the world needs dollars and keeps buying U.S. debt to get them.
Foreign governments and central banks usually hold their dollar reserves in U.S. Treasury bonds. The more countries rely on the US dollar, the steadier foreign demand is.
What is driving de-dollarization?
Several factors are driving countries away from the dollar:
| Driver | What’s happening |
|---|---|
| U.S. sanctions | Russia’s frozen reserves pushed countries to seek alternatives |
| Trade policy | 2025 tariffs disrupted stable trade relationships |
| Emerging markets | China, India, and BRICS building non-dollar payment systems |
| Central bank buying | 1,000+ tonnes of gold purchased annually since 2022 |
| Treasury selling | Brazil, India, and China reducing U.S. debt holdings |
U.S. policy risks
United States sanctions on Russia were the starting point, but there are other policy decisions that have made countries look at alternatives to the U.S. dollar:
- Political instability: Repeated debt ceiling standoffs and questions about Federal Reserve independence have made some foreign holders of U.S. Treasuries less confident in the dollar’s reliability.
- Shifting trade policy: The sweeping tariffs introduced in 2025 disrupted trade relationships that had been stable for decades, pushing several partners to accelerate talks around alternative payment systems.
- Unpredictability: When countries can’t predict U.S. trade policy from one year to the next, pricing their trade in dollars seems like an unnecessary risk.
Emerging markets push
China and India have both been active in building alternatives to dollar-based trade. China has expanded yuan-denominated contracts with partners across Asia, Africa, and the Middle East.
India has been settling trade with certain countries in rupees, including oil purchases from Russia. Beyond those two, there’s a broader change happening across emerging markets:
- Reserve diversification: Countries across Latin America, Asia, and the Middle East have been reducing their share of dollar reserves and adding gold, euros, and yuan.
- Bilateral currency trades: Many countries have formed agreements to trade directly in each other’s currencies, cutting the dollar out of transactions entirely.
- BRICS: This bloc of major emerging economies now includes Saudi Arabia, the UAE, Egypt, and others, working on a shared payment system outside the dollar.
Global trade
The share of international transactions settled in alternative currencies continues to grow, including:
- Energy invoicing: Russia now sells oil and gas to China and India in yuan and rupees. Saudi Arabia has explored yuan-denominated contracts with Chinese buyers as well.
- Commodities: Brazil and China began settling soy and iron ore transactions in yuan. Several African nations have done the same with their own currency for commodity exports.
- General trade: India, Malaysia, and Indonesia have been settling trade agreements in local currencies, cutting the dollar out entirely.
Signs of de-dollarization
Indicators to watch for challenges to the US dollar’s dominance.
Global reserves and foreign exchange holdings
The dollar’s share of global reserves has been declining for decades. It peaked at 72% in 2001 and has since dropped to around 56% as of mid-2025.
There isn’t one currency filling this gap. Instead, foreign reserves include:
- Euro: Holds about 20% of global reserves.
- Japanese yen: Accounts for around 6% of reserve currency.
- British pound: About 5% of foreign reserves.
- Chinese renminbi: 2%, with China pushing hard for in global markets for wider adoption.
The bigger story is gold. Central banks bought more than 1,000 tonnes of gold per year in 2022, 2023, and 2024. This is more than double the pace of purchases from 2014 to 2016.
In a mid-2025 survey by the World Gold Council, 95% of central bankers polled expect global gold reserves to keep growing over the next 12 months through June of 2026.
| Currency | 2025 reserve share | Trend |
|---|---|---|
| U.S. Dollar | 56% | ↓ Down from 72% in 2001 |
| Euro | 21% | Stable |
| Japanese Yen | 6% | Stable |
| British Pound | 5% | ↓ Declining |
| Chinese Renminbi | 2% | ↑ Up from 0% pre-2016 |
Who is buying and selling US debt?
Foreign governments and institutions own about 30% of all publicly held U.S. Treasury debt, totaling around $8.5 trillion as of late 2024. The composition of who owns it is changing. Several major countries have been reducing their exposure:
- Brazil: Dropped from $229 billion in November 2024 to $168 billion by November 2025. This is roughly a 27% cut, but holdings rebound slightly to around $206 billion by December 2025.
- India: Fell 20% from $234 billion to $186.5 billion over the same period.
- China: Has $682.6 billion as of late 2025. This is the lowest since 2008 and very far from its 2013 peak of $1.32 trillion.
When large holders reduce their Treasury exposure, prices fall, and yields rise. Higher yields cost the U.S. government more to borrow money, which impacts areas like mortgage rates and the broader cost of credit.
It’s also a signal of declining confidence since investors require more compensation to hold U.S. debt.
We recently discussed this on our podcast:
Foreign exchange volumes and trade invoicing
As of April 2025, the dollar remains involved in 89.2% of all foreign exchange trading according to the BIS Triennial Survey. Other major currencies by share:
- U.S. dollar: 89.2%
- Euro: 28.9%, down from 30.6% in 2022
- Japanese yen: 16.8%
- Chinese renminbi: 8.5%, up from 7% in 2022
- British pound: 10.2%, down from 13% in prior surveys
The dollar also accounts for about 54% of global trade invoicing, a number that hasn’t changed much. Where dollar use has fallen most is energy. Russian oil sold to China, India, and Turkey is now settled in local currencies, and Saudi Arabia has looked at yuan-denominated oil contracts, though progress has been slow.
Policy responses and alternatives
Central banks managing reserves today are focused on spreading risk. The three main foreign currencies as alternatives to the dollar are:
- Euro: This is the most established alternative with the largest share at 20% of global reserves. But, the eurozone’s lack of a unified fiscal policy makes it not a complete substitute.
- Chinese renminbi: The Yuan holds only 2% of global reserves despite China being the world’s largest exporter. China’s restrictions on yuan flows make it impractical for most central banks to hold.
- Currency baskets: Some countries are settling trade in a mix of currencies to reduce dollar exposure without picking a single alternative.
| Alternative | Reserve share | Key limitation |
|---|---|---|
| Euro | 20% | No unified eurozone fiscal policy |
| Chinese Renminbi | 2% | China restricts yuan flows |
| Currency Baskets | Varies | No single standard |
Two alternatives to Worldwide Interbank Financial Telecommunications (SWIFT) have emerged as part of the broader move away from dollar-based systems. Beyond currencies, some countries are also building new payment rails to bypass the dollar entirely:
- CIPS: China’s payment system for yuan transactions, now used by banks in over 100 countries.
- SPFS: Russia’s system, built after it was cut off from SWIFT in 2022.
Neither matches SWIFT’s scale yet.
De-dollarization and precious metals
For individual investors, the same logic driving central bank gold purchases applies to your own portfolio. Gold has no issuing country and can’t be frozen by another government, which is exactly why countries are buying it.
Most financial advisors recommend keeping 5-15% of a portfolio in precious metals. The best allocation for you depends on your concerns about dollar weakness and your overall risk tolerance.
Be aware that physical gold and silver are less liquid than currency since it can take few days to sell. That’s why physical metals work best as a long-term hold.
Scenarios and timeline
De-dollarization is likely to be slow rather than sudden. The dollar is deeply embedded in world trade, debt markets, and financial systems that took decades to build. Most economists expect a gradual process where the dollar loses ground over years, not months. Potential scenarios:
- Baseline scenario: Countries continue diversifying reserves, bilateral trade in local currencies keeps growing, and the dollar’s share of global reserves drifts lower. Global demand for gold stays elevated. This is already happening and is likely to continue regardless of U.S. economic and political reforms.
- Fast-shift scenario: A major U.S. policy decision accelerates the timeline. Another round of aggressive sanctions, a debt crisis, or a large loss of confidence in U.S. fiscal management could cause countries to move faster.
Things to watch over the next 1-3 years:
- International Monetary Fund COFER data: The quarterly report on global reserve composition. Watch the dollar’s share and whether the renminbi or gold are gaining in global reserves.
- Central bank gold purchases: Watch if buying stays above 800-1,000 tonnes.
- U.S. Treasury foreign holdings: Monthly TIC data shows whether major holders like Japan and China are adding or reducing exposure to the US dollar.
- CIPS transaction volume: Growing yuan payment volumes signal that alternative payment structures are gaining traction.
Adding gold to protect your wealth
Central banks are buying physical gold because no government can freeze it, devalue it, or print more of it. Individual investors have the same options, and they’re more accessible than most people expect.
Physical gold and silver
This is the most direct option. Coins and bars are tangible assets that no financial institution can freeze, default on, or dilute. That’s the same reason central banks have been adding bullion to their reserves at record levels. The tradeoff is liquidity. Selling physical metal takes a few days, which is why it’s best as a long-term hold rather than a trading position.
Gold ETFs
Gold exchange-traded funds like GLD or IAU track the gold price and trade on major exchanges like any stock. You can buy through a brokerage account and sell quickly when needed. That said, you don’t own the metal directly. You own shares in a fund that holds it on your behalf, which introduces counterparty risk that physical ownership avoids.
Gold mining stocks
Mining stocks give you exposure to gold prices with added leverage. When gold rises, mining companies may see larger percentage gains because their profit margins expand. The reverse is also true. Mining stocks carry company-specific risk, including operational costs, management decisions, and geopolitical exposure depending on where the mines are located.
Most financial advisors recommend keeping 5 to 15% of a portfolio in precious metals. What works for you depends on how concerned you are about dollar weakness and how much short-term volatility you’re willing to accept.
Final thoughts on de-dollarization
The best thing you can do as an investor is stay informed and diversify your portfolio with tangible assets like gold to hedge against future uncertainty. Even if the U.S. doesn’t lose economic power, it’s better to hold some of your wealth outside dollar-denominated assets than to wish you had.
To learn more about gold investing and how precious metals can fit into your portfolio, connect with the Swiss America team today.
De-dollarization: FAQs
Is BRICS a real threat to the U.S. dollar?
BRICS has grown beyond its original five members and is actively working on alternatives to dollar-based systems, but a true replacement for the U.S. dollar is still a long way off.
- Membership: BRICS now has 11 members and 10 partner countries, with more states seeking affiliation.
- Progress: Discussions around a shared payment system and settling trade in local currencies are ongoing, but moving slowly.
- Limitations: There’s no single BRICS currency, and member countries have very different economic interests, which makes coordination difficult.
Will the U.S. dollar be replaced as world currency?
The dollar losing its reserve currency status entirely is unlikely in the near term. No other currency has the depth, liquidity, or global infrastructure to replace it, and these things take decades to build.
- History: The British pound took about 30 years to lose its reserve currency status to the dollar, and that transition happened under extraordinary circumstances after two world wars.
- Alternative currencies: The euro holds 20% of global reserves, and the renminbi just 2%. Neither is close to replacing the dollar.
- The trend: The dollar is losing ground gradually, not collapsing. Its share of global reserves has dropped from 72% in 2001 to around 56% today, and that decline is likely to continue slowly.
Where should I put my money if the U.S. dollar collapses?
A full collapse of the dollar is an extreme scenario, but holding some of your wealth outside dollar-denominated assets is a good way to protect yourself regardless of how things play out.
- Gold and silver: Physical precious metals hold value across currencies and can be sold anywhere in the world, which is why central banks have been buying them at record levels.
- Diversified assets: Real estate, foreign equities, and digital currencies like Bitcoin give you another alternative asset outside the dollar.
- Avoid overreaction: Moving everything out of dollars based on short-term concerns is rarely a good idea. Consider allocating 5-15% to precious metals to cover most scenarios without taking on unnecessary risk.
What asset thrives in a downturn?
Gold has historically held its value better than most assets during economic downturns. While stocks dropped 30% during the COVID-19 crisis in 2020, gold barely moved. During the 2008 financial crisis, gold ultimately rose while most other assets fell.
- Gold: Tends to stay steady or increase in value during times of economic uncertainty.
- Silver: Follows a similar pattern to gold, except it can be more volatile.
- Foreign assets: Investments in other countries with stronger fiscal positions can also provide protection when the dollar weakens.
What resources does Swiss America provide on understanding de-dollarization?
Swiss America has been helping investors protect their wealth with gold and silver for over 40 years. The company provides resources and market data on what de-dollarization can mean for your savings.
- Education: Look for in-depth guides on gold investing, economic trends, and how precious metals fit into a broader portfolio.
- Market updates: Regular gold market updates and a podcast covering economic developments and their impact on investors.
- Personalized guidance: You can connect directly with the Swiss America team to talk through your options and decide what makes sense for your portfolio.
The information in this post is for informational purposes only and should not be considered tax or legal advice. Please consult with your own tax professionals before making any decisions or taking action based on this information.
