A SUBTLE but significant shift is reshaping the global economic landscape. China’s central bank has been steadily purchasing vast quantities of gold while reducing its holdings of US treasury bonds, signalling more than routine reserve management. It is a political and economic declaration that China is gradually detaching its financial foundations from the dollar. By June 2025, China’s gold reserves had risen to 2,298.55 tonnes, the highest ever recorded. In 2024 alone, the People’s Bank of China added more than 44 tonnes. By February 2025, total reserves stood at 73.61 million fine troy ounces, valued at roughly $208 billion, making gold nearly six per cent of the bank’s reserve portfolio. Investors within China are also following this trajectory. In the first quarter of 2025, they channelled about 16.7 billion yuan into gold-backed exchange-traded funds, equivalent to 23 tonnes of gold, with a further 29 tonnes added in the following quarter. The strategy is unmistakable: strengthen the credibility of the yuan through gold. The Shanghai Gold Exchange now allows BRICS economies to purchase gold directly in yuan, inching the currency closer to the symbolic authority long held by the dollar, because it is visibly tied to tangible assets. From July 2025, international banking regulations have classified gold as a Tier-1 asset, enabling banks to treat it as a highly secure, cash-equivalent holding. If, in the future, gold also qualifies as a High-Quality Liquid Asset, banks could once again use it in international settlements, a shift that would meaningfully challenge the dollar’s dominance.
This reconfiguration of global finance represents more than competitive reserve strategies; it is a contest between two philosophies of value. China’s position is that money should be grounded in something material, stable, and historically trusted: gold. The United States, meanwhile, is advancing a model built on confidence in technology, digital infrastructure, and blockchain-based currency systems, while repatriating parts of its gold reserves from abroad as a strategic hedge. These visions may eventually coexist, but the momentum in many countries suggests a renewed global appetite for assets with physical and enduring value.
Bangladesh is experiencing a smaller, more personal version of this phenomenon. The attraction of gold as a store of value has intensified across the middle class, fuelled by perceptions of stability and the psychological comfort of owning something tangible. Yet many of the popular arguments in favour of gold overlook crucial economic realities. The appeal is rarely purely financial; it is shaped by fear, uncertainty and a deep erosion of trust in institutions. With the taka having depreciated by 30–40 per cent against the dollar between 2020 and 2025 and with recurring crises in the financial sector, gold has come to represent safety in a turbulent landscape.
But gold’s safety is neither absolute nor costless. Its long-term value tends to hold, but it is prone to sharp fluctuations. In 2012, gold reached $1,900 per ounce; by 2015, it fell to around $1,050, a drop of more than 40 per cent. In Bangladesh, where gold is often bought as jewellery, the gap between purchase and resale can be substantial because of making charges, variable purity and dealer margins that sometimes reach 20 per cent. These costs mean that the apparent stability of gold disguises significant inefficiencies.
When middle-class households place the bulk of their savings in gold, they inadvertently divert capital away from productive sectors such as business investment, the stock market, government bonds, education and skill development. The problem is compounded by the scarcity of reliable alternatives. Beyond pensions in the public sector and a few private institutions, most families have limited access to diversified savings instruments. The stock market suffers from instability and governance failures; trust in banking is fragile; the insurance industry is underdeveloped; and the bond market remains narrow. Gold, by contrast, is easy to understand, easy to buy and perceived as trustworthy. If ten million households were to invest Tk 500,000 each in gold, the total would reach five trillion taka, roughly 10 per cent of Bangladesh’s nominal gross domestic product in 2024. Such a large withdrawal of resources from the productive economy would inevitably weaken growth and job creation.
Gold can also trap wealth in moments of crisis. It is not easily or quickly liquidated without financial loss, especially when urgent cash is needed. Many families who invest heavily in gold eventually find themselves ‘asset-rich but cash-poor’: they possess items of value but lack the liquidity to meet immediate needs. Economists generally recommend holding no more than 10–15 per cent of one’s assets in gold as a form of insurance, with the rest allocated to deposits, bonds, equities, education, or business. Over time, the returns generated from productive investments far exceed those from gold.
The growing obsession with gold in Bangladesh reflects more than personal financial choices; it is also a mirror of institutional distrust. People seek refuge in gold because they doubt that banks will safeguard their deposits or that state institutions can guarantee financial stability. This sentiment is a warning sign. Sustainable development requires a financial system that citizens can rely on, one that channels their savings into productive sectors rather than pushing them to hide their money in metal.
China’s approach offers a clear lesson: real assets can reinforce national strength, but they must be part of a broader productive strategy. For Bangladesh’s middle class, gold may symbolise safety, but it cannot single-handedly secure the future. Gold can preserve wealth, but it cannot generate growth. Ultimately, value is created through investments that expand knowledge, innovation and productivity. While gold may remain attractive for those seeking to protect undeclared or illicit money, its role as a development tool is limited. A balanced approach, combining modest gold holdings with stronger engagement in productive investments, education and financial literacy, is essential if households and the broader economy are to build resilience and long-term prosperity.
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Anamul Haque is an associate professor of banking and insurance at the University of Chittagong and PhD research fellow (Finance) at the University of Exeter, United Kingdom.