Foreign Countries Reducing US Treasuries, Opt for Gold Reserves

As the vast majority of the global economy was shut down in response to the severity of the coronavirus pandemic, foreign holdings of US government debt declined to a new low for the month of April.

Foreign sales of treasuries declined from $299 billion in the month of March to $177 billion in April. Although foreign countries still purchased $10.9 billion worth of corporate bonds, they conversely ended up selling $5.6 billion of those corporate stocks in April. Saudi Arabia has dumped the most US Treasuries, with a total of $60 billion sold between March and April. In the meantime, Japan and China have followed Saudi Arabia and also reduced their holdings of US government debt by $5.7 billion and $8.8 billion, respectively.

There is one interesting observation amidst all of this, however. The world’s gold holdings have been steadily increasing in the meantime. It appears that many foreign governments are opting for a less volatile store of value.

Information for this briefing was found via Bloomberg. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.