One thing is becoming clear: The rest of the world isn’t turning to the U.S. in its search for investment safety. Instead, it’s loading up on gold as a hedge. The gap between foreign gold reserves and Treasury holdings has shrunk to roughly $162 billion from around $1.23 trillion in the second quarter of 2025, according to Ned Davis Research. The firm used current gold prices to calculate the difference. The common thread in this big gold adoption is Donald Trump. The U.S. president’s trade policies — more recently, increasing tensions over Greenland — have led overseas trading partners to move away from U.S. Treasurys as a safe haven. This dynamic can be seen in Tuesday’s moves. Stock futures tumbled after Trump threatened to place new tariffs on eight NATO countries if Greenland isn’t sold to the U.S. Treasury prices slid, sending yields higher (yields move inversely to prices). Gold futures jumped 3% to trade above $4,700 per ounce, hitting another record high. The dollar index also dropped nearly 1% against a basket of six leading currencies, including the euro. @GC.1 5D mountain Gold futures 5-day chart Billionaire investor Ray Dalio raised concern over the move away from U.S. assets. “On the other side of trade deficits and trade wars, there are capital and capital wars,” Dalio told CNBC’s “Squawk Box” at the World Economic Forum in Davos, Switzerland. “If you take the conflicts, you can’t ignore the possibility of the capital wars. In other words, maybe there’s not the same inclination to buy … U.S. debt and so on.” Whether the global shunning of the dollar and U.S. Treasurys will lead to prolonged selling in equities is unclear, however. Jeff Kilburg, CEO of KKM Financial, told CNBC the market’s reaction to the latest tariff escalation is “presenting a buying opportunity as focus will shift away from Davos and back to Q4 earnings season midweek.” ‘Unlikely to change’ Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, noted: “Our conviction remains that political headlines are very unlikely to change the positive fundamental trends already in place. We believe the global economy is set to grow faster in 2026, especially in the U.S.” Ned Davis Research chief macro strategist Joe Kalish also acknowledged that demand for U.S. stocks and bonds remains strong. “Over the past 12 months, net foreign purchases of U.S. bonds and stocks hit a record high of nearly $1.6 trillion. In November, the net capital inflow was the third largest on record at $220 billion. Equities accounted for nearly half of the inflow,” he said. However, if trade and geopolitical tensions continue to escalate, more selling of U.S. equities and Treasurys could lie in store.
Gold is displacing Treasurys as preferred global asset as Trump sows chaos
