marker 05

Gold Will Return to a Quasi-Monetary Role in Settlement

status: drifting
status change: changed from on-track (May 25, 2026)
reading dated: July 30, 2026 link permalink
published: October 6, 2026
next reading: October 30, 2026
reading id: M5-2026Q3

from Appendix G

The lens suggests we should expect gold to expand from pure reserve holding to active settlement functionality—used to balance accounts between central banks that do not trust each other's currencies. This return should be driven by geopolitical fragmentation rather than by gold's physical properties.

The diagnostic logic: In a multipolar monetary order where no single currency commands universal trust, settlement between rival blocs requires a neutral asset. Gold's cultural legibility advantage—universally recognized, politically neutral, physically verifiable—makes it the natural candidate for this role. The lens identifies this not because gold is technically superior but because it is the only asset whose cultural legibility spans all major civilizational blocs simultaneously.

what to watch

The acceleration of central bank gold purchases through 2025; gold surpassing U.S. Treasuries in the value of official reserves during 2025, the first such crossover since the 1990s—driven largely by price rather than purchases, and leaving gold second only to dollar-denominated holdings as a whole; any recognition of allocated gold as a high-quality liquid asset under Basel III's liquidity rules, which the bullion industry has sought but no jurisdiction has adopted; and any bilateral or multilateral settlement mechanism that explicitly incorporates gold—all are early signals consistent with this direction. Continued central bank accumulation, the formal inclusion of gold in BRICS or other bloc-level settlement arrangements, and the absence of a viable non-gold neutral settlement alternative would all reinforce the pattern. For the purposes of this marker, settlement functionality means the use of gold by the official sector—in physical or tokenized form—to discharge cross-border obligations, with reported volume. Tokenized gold used in private settlement, and the clearing and vaulting infrastructure built to support it, are leading indicators of that function, not evidence that it has arrived.

current reading

The World Gold Council revised its estimate of first-quarter 2026 central bank gold purchases from 244 tonnes to 57 tonnes—a 77% reduction, after reclassifying flows from the official sector to the over-the-counter market. The Q2 reading cited the original figure. Second-quarter purchases then came in at 288.9 tonnes, a record for a second quarter and 62% above Q2 2025, with central banks buying into a 16% quarterly price decline—the steepest in a decade—from gold's January 28 all-time high of $5,589. The half-year total of 345 tonnes is the lowest first half since 2022. Both facts belong in the record: the measured pace of accumulation slowed sharply in Q1, and the official sector then bought a record second-quarter volume into falling prices.

The crossover Appendix G named as a leading indicator received institutional confirmation and an institutional caveat in the same month. The European Central Bank's June 2 International Role of the Euro report put gold at roughly 27% of global central bank reserve assets, up from about 20% at the end of 2024, surpassing US Treasuries as the second-largest reserve asset after dollar-denominated holdings at 42%. The IMF's July 1 COFER brief then stated that gold's overtaking of Treasuries in 2025 was driven almost entirely by price valuation effects and is not reflected in the dollar's share of currency reserves, which rose to 57.13% in Q1 2026. Both are correct. Valuation did most of the lifting; sovereign buying did the rest, and continued into the quarter when valuation reversed.

The buyer composition held and the seller list lengthened. The National Bank of Poland added 51 tonnes in Q2 to reach 632 tonnes against its 700-tonne target. The People's Bank of China added 33 tonnes, its largest quarterly addition since late 2023, extending its streak to 20 consecutive months and its holdings to 2,346 tonnes—still under 10% of reserves. Uzbekistan, Kazakhstan, Singapore, Chile, Jordan, and the Czech Republic bought; Turkey (83 tonnes net sold year-to-date), Russia (44 tonnes), and Azerbaijan sold under fiscal pressure. The WGC's June 16 survey found 89% of reserve managers expect global gold holdings to rise over twelve months and a record 45% expect to raise their own; 93% now hold gold, up from 81% a year earlier, and a growing share report changing where it is vaulted. The settlement function the marker is named for did not advance. UNIT remains a research prototype of the Russian Academy of Sciences, not BRICS policy, with no reported transaction volume beyond its initial issuance. No change to gold's Basel treatment was reported in the quarter.

Status reads as drifting. The direction of official-sector accumulation has not reversed—Q2 set a record—but the evidence the Q2 reading stood on weakened in three ways this quarter: the first-quarter figure it cited was cut by 77%, the IMF attributed the gold-over-Treasuries crossover almost entirely to price, and the settlement function the marker is named for did not advance. Drifting records that the quarter's evidence partially supports the marker with caveats; it does not record a reversal. What would call this into question: a sustained reversal in central bank gold accumulation; gold's role remaining confined to reserve holding without settlement functionality scaling beyond pilots; or the emergence of a credible non-gold neutral settlement asset that fulfills the same function. The first did not register. The second describes the current state. The third has not appeared. What would return the marker to on-track: a gold-anchored settlement instrument with reported volume, or a second consecutive quarter of record official-sector buying with the valuation caveat no longer doing the work.

sources for this reading

standing sources

past readings

May 25, 2026 link permalink on-track read in full collapse

Gold/Treasuries crossover confirmed; Q1 2026 central bank purchases 244 tonnes, 17 consecutive months net positive; UNIT research prototype launched as directional signal for gold-anchored settlement architecture.

The crossover Appendix G named as a leading indicator has happened and widened. Foreign central bank gold holdings reached approximately $4 trillion by early 2026, surpassing their roughly $3.9 trillion in US Treasury holdings—the first time since 1996 that gold has been the larger reserve asset. The gap continues to grow as the trend compounds: gold rose roughly 65% in 2025 and continued upward through Q1 2026, while Treasury holdings dipped modestly. Central bank net purchases ran above 1,000 tonnes per year for three consecutive years (2022, 2023, 2024) and added 244 tonnes in Q1 2026 alone—the seventeenth consecutive month of net purchases at price levels 81% above year-ago.
The buyer composition matters more than the headline figures. Poland led 2026 purchases on a publicly stated trajectory toward 700 tonnes; Uzbekistan, China, India, Turkey, and Brazil continue accumulating; new buyers appeared in 2026—Guatemala, Indonesia, Malaysia—that had not been net buyers in years or ever. The Bank of Korea announced in early 2026 it would begin acquiring gold via overseas-listed ETFs, its first gold-related investment since 2013. The buying is concentrated among central banks with sanctions exposure, currency volatility, or geopolitical alignment outside the Western financial perimeter—the institutions for whom dollar-denominated reserves carry counterparty risk that gold does not. This is not portfolio diversification at the margins. It is the slow reconfiguration of what central banks treat as the neutral asset.
The settlement function the marker named is beginning to materialize, though at pilot scale. In October-December 2025, the Institute of Economic Strategy of the Russian Academy of Sciences launched a research prototype called UNIT—a gold-anchored digital settlement instrument with a reserve basket of 40% physical gold and 60% BRICS national currencies. The initial pilot issued 100 Units, each backed by one gram of gold. The instrument is not yet officially adopted BRICS policy, and the New Development Bank's role as issuer remains unconfirmed. Russian Deputy Foreign Minister Sergey Ryabkov has framed full operational status as a 2030 target. The empirical reality is modest: a research-stage prototype, not a settlement network with volume. But the direction of travel matches what the marker named—gold-anchored settlement architecture explicitly engineered for cross-bloc trade outside dollar-cleared infrastructure. Whether UNIT or some successor instrument reaches operational scale is the next test.
The regulatory environment continues to lean the same direction, though more incrementally than some reporting suggests. Allocated physical gold has carried a 0% risk weight under Basel rules since 1988, including under Basel III. The proposed Level 1 HQLA reclassification—actively advocated by the LBMA and World Gold Council—has not been adopted in any major jurisdiction. What has shifted is the institutional environment around physical bullion: Basel III's stricter treatment of unallocated (paper) gold positions relative to allocated holdings, the US's July 2025 alignment with the Basel III endgame rules, and central bank policy framing that increasingly treats gold as core reserve rather than peripheral holding. Status reads as on-track. What would call this into question: a sustained reversal in central bank gold accumulation, gold's role remaining confined to reserve holding without settlement functionality scaling beyond pilots, or the emergence of a credible non-gold neutral settlement asset that fulfills the same function. None is currently visible.
sources for this reading

what would call this into question—from Appendix G

Gold's role remaining purely as a reserve asset without settlement functionality, or the emergence of a non-gold neutral settlement asset—such as the SDR, a new digital instrument, or a successful BRICS commodity-basket settlement unit—that fulfills the same function. If digital alternatives prove culturally legible enough to span blocs, the lens's reading that gold's trust memory advantage is decisive would be weakened.