Gold soars leaving Treasurys, Yen and Franc in the dust

Gold has wiped the floor with every other so-called safe haven this year. Since January, it has surged over 30%, shooting past $3,403 after briefly topping $3,500 in April.

That’s a rejection of Treasurys, the yen, and the Swiss franc. Investors and central banks are piling into gold, not because it’s shiny, but because the old safety nets are unraveling in real time.

According to CNBC, every corner of the financial world is now watching bullion claim the throne as the new crisis asset of choice.

At the annual Asia Pacific Precious Metals Conference, Metals Focus managing director Nikos Kavalis explained why this is happening: “Gold’s key advantage is that it is no one else’s liability.” 

Holding bonds or fiat currencies means trusting the governments behind them. That trust is evaporating fast, especially in 2025, as fiscal policies from Washington to Tokyo turn unhinged.

Treasurys fall, dollar weakens, central banks dump risk

The US dollar index is down nearly 10% this year. The Japanese yen and Swiss franc gained 8% and 10% respectively, but that hasn’t saved their reputation. The yield on 10-year Treasurys dropped 19 basis points, signaling investor nervousness, not confidence.

But none of that compares to gold, which keeps pushing record highs as chaos spreads. Shaokai Fan, global head of central banks at the World Gold Council, said the fear runs deep: “There’s a growing sense of just not being sure what the future of the US dollar and US Treasury market is going to be.”

In April, President Donald Trump rolled out his “reciprocal” tariff policy. Treasurys got hammered. Then in May, Moody’s downgraded the US credit rating. Trump’s new tax bill followed, triggering another exit from long-term debt. The 30-year Treasury yield busted through 5%, and the damage stuck.

The recovery in demand for US bonds hasn’t restored faith. Japan didn’t escape the selloff either. Yields on 10-year Japanese bonds are up 39 basis points since January. That means investors are walking away.

The Bank of Japan hasn’t done much to fix that—keeping interest rates at 0.5% during both its May and June meetings. That interest rate differential makes the yen less attractive: people just don’t want to park their money in a place where they’ll earn nothing.

Swiss franc gets less sexy, gold pulls in record central bank buyers

The Swiss franc is up, but it’s not enough. The Swiss National Bank cut its policy rate to 0.25% in March. Consumer prices dropped in May for the first time in over four years, and that’s raised expectations of negative interest rates returning. That alone kills the franc’s appeal. Bart Melek, head of commodity strategy at TD Securities, said: “If the Swiss now have negative rates, and if I buy a franc, I’m not getting a lot of returns.”

That’s why central banks are going heavy on gold. In 2024, they added 1,044.6 tons of it to their reserves—the third straight year they crossed the 1,000-ton line. By the end of that year, the European Central Bank confirmed that gold overtook the euro to become the second-largest reserve asset globally. It now makes up 20% of all official reserves.

This year, it’s not slowing down. A fresh survey by the World Gold Council shows 95% of central banks expect to increase gold holdings in the next 12 months—the highest reading since the survey started in 2018. Meanwhile, three-quarters of them think their US dollar holdings will shrink over the next five years.

Geopolitical tension is also changing storage behavior. Central banks no longer feel safe keeping all their bullion in New York or London. In February, Trump publicly questioned whether gold had gone missing from Fort Knox, making foreign officials even more nervous. The Federal Reserve Bank of New York holds bullion on behalf of foreign central banks—but trust is wearing thin.

India repatriated over 100 tons from the Bank of England in 2024. Nigeria followed suit. In the same WGC survey, 7% of respondents said they were planning to store more gold locally—the most since the pandemic. The goal? Make sure the asset is actually reachable during a crisis or in case of sanctions.

The reasons they’re buying are clear. In the survey, central banks said gold’s reliability during crises, its zero default risk, and its ability to hedge against inflation were the main factors behind the buying spree. Ever since the US went after Russia’s access to the global financial system after the Ukraine invasion, more countries started looking for financial insurance.

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