Core Viewpoint - Gold has historically been viewed as a stable asset, contrasting with the volatility of paper currencies and stock markets, and serves as a strategic reserve for central banks, particularly in China [1][4]. Group 1: Historical Context - After World War II, the Bretton Woods system established the U.S. dollar as the core of the international financial system, with over two-thirds of global gold reserves held by the U.S. [1][2]. - Countries stored their gold in the U.S. for safety and convenience, as the U.S. was the world's strongest economy at the time [1][2]. Group 2: Current Gold Storage Practices - Despite the collapse of the Bretton Woods system in 1971, many countries, including China, have retained their gold in the U.S. due to the dollar's continued dominance in international trade [2][4]. - China is estimated to have about 600 tons of gold stored in the New York Federal Reserve, which is known for its high security [2][4]. Group 3: Reasons for Storing Gold Abroad - Storing gold in the U.S. helps diversify risk, protecting against potential domestic disasters or geopolitical conflicts [4][9]. - The liquidity of gold transactions is enhanced by its storage in New York, facilitating participation in global markets [4][9]. Group 4: Challenges in Repatriating Gold - Historical attempts by countries like Germany to retrieve gold from the U.S. have faced delays and complications, indicating that repatriation is not straightforward [8][9]. - The U.S. has previously frozen foreign assets, raising concerns about the security of gold reserves held abroad [6][9]. Group 5: China's Strategy - China has been increasing its gold reserves while reducing its holdings of U.S. Treasury bonds, reflecting a strategy to mitigate risks associated with U.S. dollar dominance [9][11]. - As of December 2024, China's gold reserves reached 2,271 tons, a 16.6% increase over two years, while its U.S. debt holdings decreased by over 40% [9][11]. Group 6: Future Implications - The rising importance of gold in the international financial system is expected to grow alongside the increasing international status of the Chinese yuan [13]. - The dual strategy of maintaining gold reserves abroad while increasing domestic holdings aims to safeguard China's economic interests amid global uncertainties [11][13].