It’s no secret that global central banks have been stockpiling gold. But we just didn’t know how significant the central bank gold buying has been. Demand for gold bullion is so strong that the precious metal has surpassed the euro to become the second-largest asset held by central banks around the world.

For the last three years, global central banks have bought more than 1,000 tons of gold each year. Because of all that gold buying, today, gold is the world’s second-largest global central bank reserve asset, behind the U.S. dollar.

Gold pushed past the euro in 2024, taking second place, according to new data from the European Central Bank. Here’s the breakdown.

Global Central Bank Reserves

Source: European Central Bank, International Monetary Fund, Bloomberg

At the end of 2024, global central bank holdings of gold had climbed to around 36,000 tons, near the all-time high of 38,000 tons set in 1965.

Why are central banks buying gold? It’s simple. It turns out that central banks are buying gold for many of the same reasons that individual investors are piling into the precious metal.

Central banks are buying gold for diversification purposes and also to hedge against geopolitical risk, the European Central Bank report said. Reserve managers also value gold as a portfolio diversifier to hedge against inflation, cyclical downturns, and defaults.

Why does this matter to you? Central banks are long-term investors. They see value in gold at current levels and continue to buy and stockpile the precious metals in their global central bank vaults. If they are increasing their exposure to gold, maybe you should consider it too.

It’s been an epic rally in gold, and precious metals are still climbing.

The price of gold has climbed nearly 62% since the beginning of 2024. Silver is soaring too. Silver just jumped past $36.00 an ounce, and analysts are now pointing to $40 as the next big target. Platinum is also rocketing higher, climbing 35% since the start of the year. In fact, platinum, gold, and silver are the top three best-performing assets of 2025. Precious metals are in a strong uptrend, with huge momentum and are still climbing. A number of Wall Street forecasts point to gold at $4,000 an ounce and beyond.

For centuries, people have turned to precious metals as a store of value and as an asset to protect and grow their wealth. If you’ve been thinking about increasing your allocation to precious metals, don’t wait; the markets are moving, and gold at $4,000 will be here before you know it.

There are growing signs the U.S. economy has entered a slow patch in the first half of the year. From a negative growth reading in the first quarter to a sharp increase in Americans collecting unemployment checks, uncertainty about what lies ahead is showing up in the data. In the midst of it all, gold is the top-performing asset of the year with a 22% year-to-date gain.

The case for gold ownership remains strong, and in a late May report, Goldman Sachs urged investors to buy gold and oil to reduce portfolio risk. “Following the recent failure of U.S. bonds to protect against equity downside and the rapid rise in U.S. borrowing costs, investors seek protection for equity-bond portfolios. During any 12 months when real returns were negative for both stocks and bonds, either oil or gold have delivered positive real returns,” Goldman said.

Let’s dive into the economic picture.

Gross Domestic Product (GDP) Growth

In the first quarter of 2025, the U.S. economy went into reverse. After growing in 2024, economic growth turned negative in the first three months of 2025, shrinking by 0.2%, the Bureau of Economic Analysis said in its revision to the government data. Slowing consumer spending, a downturn in government spending, and an 11.3% decline in corporate profits were to blame. With profits slowing, there is probably little incentive for businesses to boost hiring.

Americans Collecting Unemployment Checks Hit 3 1/2 Year High

The number of Americans filing new applications for jobless benefits increased more than expected in late May. Initial claims for state unemployment benefits rose 14,000 to 240,000 for the week ended May 24, the Labor Department said. The number of Americans collecting unemployment checks in mid-May hit the largest number in 3 1/2 years.

This raises the risk that the overall unemployment rate could tick up to 4.3% in the May employment report, from 4.2% in April.

Spring Home Sales on Ice

Just as the spring home-selling season is supposed to be kicking into high gear, pending home sales dropped by 6.3% in April, the National Association of Realtors reported. Pending home sales fell in all four U.S. regions, NAR said.

“At this critical stage of the housing market, it is all about mortgage rates,” said NAR Chief Economist Lawrence Yun. Despite an increase in housing inventory, we are not seeing higher home sales. Lower mortgage rates are essential to bring home buyers back into the housing market.”

As of May 29, interest rates for a 30-year fixed-rate mortgage stood at 6.89%, the third weekly increase, according to Freddie Mac.

Next Stop: Gold at $4,000

Amid the signs of economic weakness, investors are turning to the safety of gold. For those investors wondering if it’s too late to buy gold given the big jump already this year, the short answer is no. Gold is in a strong bull market, and precious metals continue to climb. Goldman Sachs targets additional gains in gold prices to the $4,000 area by 2026, but the firm said that even a small move away from the U.S. bond market could drive gold far beyond the $4,000 level. Don’t wait to increase your allocation to gold; make your move today.

Photo by Aidan Tottori on Unsplash

America’s credit isn’t as good as it used to be. In a surprise announcement, Moody’s Ratings downgraded the U.S. government’s credit in mid-May. Moody’s Ratings was the last of the three major ratings agency that had given America access to the exclusive Triple-A club. No more.

Moody’s downgraded its credit rating of the United States to “Aa1” from “AAA.” The firm pointed to rising debt and interest “that are significantly higher than similarly rated sovereigns.”

“Successive U.S. administrations and Congress have failed to agree on measures to reverse the trend of large annual fiscal deficits and growing interest costs,” Moody’s said. “We do not believe that material multi-year reductions in mandatory spending and deficits will result from current fiscal proposals under consideration.”

What Is a Credit Rating?

When you apply for a new credit card, the financial institution looks at your credit score. For a nation, a credit rating is an assessment of the government’s ability to repay its debt, like the Treasury bonds and notes that it sells.

The highest rating is AAA, and then ratings move lower indicating default risk from AA to BBB to C and lower. For governments, a high credit rating signals strong fiscal health and a high likelihood of repaying debts on time, while a lower rating suggests increased risk for lenders and investors.

Why Does the U.S. Credit Rating Matter?

The U.S. credit rating is important because it directly impacts the cost of borrowing for the government. When our nation carried an AAA rating, it could borrow money at the lowest possible interest rates, as investors saw our debt as virtually risk-free.

A downgrade signals to investors that lending to the U.S. is slightly riskier, prompting them to demand higher interest rates to compensate for that risk.

Bottom line? A lower credit rating means higher borrowing costs when the U.S. government auctions off Treasury bond and notes to pay our national debt. This can also lead to higher borrowing costs for consumers since U.S. Treasury yields serve as a benchmark for many other interest rates throughout the economy.

What Does a Downgraded Credit Rating Mean for the U.S. Economy and You

Looking ahead, this news could have real-life consequences for our government and everyday Americans including:

Higher Borrowing Costs: The U.S. government may have to pay more to borrow money, which can increase the federal deficit over time

Rising Interest Rates: As Treasury yields rise, so do rates on mortgages, auto loans, and corporate debt, making borrowing more expensive for households and businesses

Market Volatility: Downgrades can unsettle financial markets, causing volatility in stocks, bonds, and currencies as investors reassess risk

The 2011 U.S. Credit Downgrade and Its Impact on Gold

Looking back, the first-ever downgrade of the US credit rating occurred in August 2011, when Standard & Poor’s lowered the U.S. from AAA to AA+

This downgrade unfolded amid intense political standoffs in Congress over the U.S. debt ceiling and sent shockwaves through the stock market and gold soared to record highs. Investors turned to the safety of gold as the U.S. government’s credit-worthiness was questioned, which led to bigger questions about the stability of the U.S. financial system.

What Could the Latest Downgrade Mean for Gold Now?

In August 2023, Fitch lowered its US credit rating from AAA to AA+. And, now Moody’s has also lowered theirs. The news underscores the stability and security of gold in a world racked with government debt.

For gold investors, this helps underscore that gold is in a structural bull market. Analysts at JP Morgan issued a new research note in mid-May outlining a scenario that could take gold 80% higher to $6,000 by 2029. They said this could occur if just 0.5% of U.S. assets held by foreign investors was reallocated gold.

Do You Own Enough?

Never before in history has there been such a strong case for gold ownership. With rising government debt, political brinksmanship, and concerns about fiscal sustainability, gold acts as a safe haven, a store of value and a vehicle to grow your wealth. It’s easy to increase your wealth protection with an increased allocation to gold. Why not do it today?

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When you shop at Target, Walmart, or Costco, you probably don’t think much about the journey the items you buy have taken.

It turns out that things made in China can travel up to 10,000 nautical miles to arrive on U.S. soil. Cargo ships carry everything from laptops, smartphones, furniture, lamps, clothing, toys, sports equipment, shoes, and more to the U.S., eventually landing in your neighborhood stores.

Since early April, when the U.S. added a 145% tariff on goods imported from China, cargo ship traffic has slumped. About 40 cargo ships are en route from China to the U.S., but that number is down by about 40% just before the tariffs were instituted. Those ships carry about 320,000 containers, according to Bloomberg. That’s about a third fewer than just before the 145% tariff was set.

Looking ahead, cargo ship traffic could slow even more. In late April, Hapag-Lloyd AG, the world’s fifth-largest container carrier, stated that approximately 30% of bookings from China to the United States have been cancelled.

While the trade war is still young, and although the U.S. has said the tariff rate on China will come down, trade is slowing now.

What does this mean for you, the economy, and gold?

By the middle of May, thousands of American companies, even giant retailers like Target and Walmart, will need to replenish inventories. Experts predict we may begin seeing empty shelves at some of your favorite stores in a couple of weeks.

The U.S. is a consumer-led economy. By some accounts, consumer spending creates roughly 70% of our gross domestic product. For the economy, the math is simple. Fewer goods to sell means less spending, slowing economic growth.

What about gold? The precious metal has soared almost 30% since the start of the year, at least partly fueled in large part by safe-haven buying amid stock market volatility, concerns over a recession, and the impact of the tariffs on the economy.

The price of gold keeps hitting record after record, recently surpassing $3,400 an ounce, and it’s still climbing. Many on Wall Street, including J.P. Morgan and Goldman Sachs, expect gold to hit $4,000 by 2026. However, given how fast gold has been climbing, $4,000 could come even earlier.

While many Americans haven’t yet seen firsthand the impact of the trade war, it could be coming within a few weeks. Logistics experts warn that springtime is when retailers begin placing orders for back-to-school and Christmas inventory. In a typical year, the first holiday shipments would be hitting the water and starting that journey by mid-May. For now, many of those orders have been canceled or are on hold.

While the jury is still out on any tariff deal between China and the U.S., fewer goods are coming to our country now. While that may put a crimp in back-to-school shopping, it will continue to support the historic climb in gold prices. Do you own enough?

Want to read more? Subscribe to the Blanchard Newsletter and get our tales from the vault, our favorite stories from around the world and the latest tangible assets news delivered to your inbox weekly.

The Federal Reserve kept its key interest rate steady at 4.25-4.50% when it met on Wednesday. Nonetheless, Fed officials issued an unusually frank warning about what could lie ahead.

“Uncertainty about the economic outlook has increased further,” Fed officials said. “The committee… judges that the risk of higher unemployment and higher inflation have risen.”

How markets reacted 

Gold traded sideways following the Fed’s meeting, while stocks traded lower. Gold has climbed over 26% since the start of 2025 as world investors have piled into the safety of gold.

The trend for gold points higher with major banks projecting big gains ahead for the precious metal. In a new research note today, Bank of America said it sees growing potential for gold to hit $4,000 an ounce in the second half of this year because of global trade-induced geopolitical uncertainty.

Quick primer: How the Fed uses interest rate policy 

One of the main tools in the Fed’s toolbox is raising and lowering its key interest rate.

• Lowering interest rates helps boost an economy that is slowing down
• Raising interest rates helps tamp down inflation

• Sixty-five percent say the stock market will suffer a decline of 20% or more.
• Only 26% of money managers are bullish on the stock market over the next 12 months.
• Twenty-four percent say the biggest risk for the stock market over the next 6 months is an economic slowdown
• Nineteen percent say a recession is the biggest risk for the market over the next 6 months