Something interesting is happening inside the plumbing of the global financial system.

It was reported yesterday that the Netherlands just shifted approximately 86 tonnes of its gold reserves from New York and Ottawa to London, explicitly citing “increasing geopolitical unrest” and the need to prepare for severe crises.

The Dutch central bank says gold held in London can be accessed and traded more quickly during an emergency than gold stored in New York or Canada.

That is some wonderfully sanitized central-bank language to deliver a message that seems to me to be “confidence in the U.S. holding the world’s gold…and likely being a cornerstone of the global economic machine…is dwindling.”

Either way, it means the Netherlands has effectively decided that if the world goes sideways, it would prefer substantially less of its ultimate crisis reserve sitting in North America.

Why is the Netherlands moving gold to London? What is behind the central bank’s choice? – La Sicilia

Before the move, 31.3% of Dutch gold was in New York, 19.7% in Ottawa and 18.1% in London. Now New York and Ottawa each hold 18.5%, while London has jumped to 32.1%. The Netherlands owns 612.4 tonnes of gold altogether.

Technically, all 86 tonnes weren’t loaded onto planes and flown across the Atlantic. DNB sold roughly 59 tonnes in New York and bought equivalent market-standard gold in London. More than 27 tonnes were physically moved from the U.S. and Canada to the Netherlands, while a similar quantity moved from the Netherlands to London.

The distinction matters operationally. Economically, not so much. The result is fewer Dutch reserves in New York and considerably more in London.

And we’ve seen this before. In 2014, the Netherlands physically brought 122.5 tonnes home from New York. Germany later completed the relocation of 300 tonnes from New York to Frankfurt. And between July 2025 and January 2026, France eliminated its remaining New York gold position, replacing 129 tonnes held there with market-standard bars now stored in Paris. France says that decision was about trading efficiency, not politics, which is fair enough. The bars nevertheless wound up in Paris instead of New York.

India has also dramatically reduced the portion of its gold stored overseas, although most of that repatriation involved gold held in London rather than America.

This seems to be me to be a very obvious trend toward central banks wanting greater control over the one reserve asset that is nobody else’s liability.

Gold doesn’t require Washington to pay you back. Funny how attractive that feature becomes when Washington owes more than $40 trillion.

As I have droned on about for a decade, the entire modern financial system is ultimately held together by confidence and fiat. The dollar works because everyone believes everyone else will continue accepting dollars. Treasuries work because the world believes the United States will honor its debts without destroying the purchasing power of the currency used to repay them.

Confidence…not basic math or economics…is what encourages people like Paul Krugman to say things like “debt is money we owe to ourselves”.

It’s what allows Stephanie Kelton to write a book called “The Deficit Myth”.

For decades, that confidence allowed America to enjoy the greatest financing arrangement imaginable: running up a tab with no worries about paying it back, while we turn into entitled chickensh!t cowards about equity markets because we feel like the Fed can, and always will, bail us out at the very first sign of trouble.

But there are little cracks appearing everywhere.

The dollar still dominates global reserves, so claims that it is about to disappear are nonsense. It represented 57.13% of disclosed foreign-exchange reserves in Q1 2026. But that’s down substantially from levels above 70% around the turn of the century.

Meanwhile, central banks can’t seem to get enough of the barbarous relic.

They bought 863 tonnes of gold in 2025 after three consecutive years of purchases above 1,000 tonnes. The World Gold Council’s 2026 survey found 89% of reserve managers expect global central-bank gold holdings to increase over the coming year, while a record 45% expect their own institution to buy more.

Apparently nobody told the world’s central bankers that gold is just a shiny rock. Also, as I’ve constantly talked about here with my friend Andy Schectman, something unusual has also happened at COMEX.

DBS data show roughly 289,000 gold delivery notices during the first nine months of 2025, versus approximately 119,000 during the same period of 2024…about 2.4 times as many. A delivery notice transfers title to deliverable metal; it doesn’t necessarily mean somebody immediately backs a Brinks truck up to the warehouse. But it is another indication of heightened demand for physical settlement.

Gold is moving. Central banks are buying it. Countries are repositioning it. And increasingly, they want to know exactly where it is and how quickly they can get their hands on it. All of which would be merely interesting if America’s fiscal situation weren’t simultaneously becoming absurd.

U.S. federal debt has now crossed $40 trillion, while some Treasury yields have reached their highest levels in nearly two decades. For some reason, it feels like 6% on the 10 year Treasury is looming closely….

The global bond selloff reflects several forces: inflation, huge government borrowing requirements, geopolitical pressures and expectations for interest rates. So it would be too simplistic to blame rising yields entirely on declining confidence in America.

But the bond market is sending Washington a message nonetheless: Money isn’t free anymore and something is horribly wrong with the status quo.

And that creates the problem I have been writing about for years. At $40 trillion of debt, higher interest rates produce higher interest expense. Higher interest expense produces larger deficits. Larger deficits require more borrowing. More borrowing creates more Treasury supply. And eventually investors demand still-higher yields to absorb it.

It’s a fiscal snake eating its own tail, except the snake has a Bloomberg terminal and an Excel spreadsheet that allows it to temporarily mess with the numbers. There are only so many ways out. Washington could slash spending, dramatically raise taxes or…as Treasury Secretary Bessent suggested this week, somehow grow its way out of the problem. I’ll pause for laughter.

But my longstanding view is that eventually Washington chooses another solution: yield curve control.

We’ve done it before. Beginning in 1942, the Federal Reserve pegged Treasury bill rates at 0.375% and effectively capped long-term Treasury yields at 2.5%. Maintaining those rates required the Fed to buy government securities whenever necessary. Federal Reserve historians explicitly note that the policy forced the Fed to surrender control over the size of its balance sheet and money supply.

That is the endgame I continue to worry about. If the free market eventually demands 6%, 7% or 8% to finance America’s debt and Washington decides those rates are economically or fiscally intolerable, somebody has to buy the bonds at lower yields.

That somebody is the Federal Reserve. Call it yield curve control. Call it QE. Call it an “emergency market functioning facility” if you’d like to make it sound sufficiently boring for financial TV. It amounts to the same basic choice: suppress the cost of financing the debt and let the currency absorb some of the consequences.

And that is why these seemingly obscure gold stories matter. The Netherlands isn’t abandoning America. France isn’t declaring war on the dollar. Germany didn’t empty the New York Fed because it expected the apocalypse. Something subtler is happening.

Central banks are buying enormous quantities of an asset with no counterparty risk while increasingly emphasizing physical control, accessibility and geographic diversification. At the same time, America’s debt has crossed $40 trillion and the bond market is demanding increasingly expensive compensation to finance governments around the world.

The monetary system is a confidence game. This is why I focus my efforts on highlighting potential areas of the market that cannot be printed and can sidestep, or benefit, from inflation.

So when another American ally decides that, for the next crisis, it would prefer substantially less of its gold sitting in New York, I pay attention. They can call it diversification, crisis preparedness, or improved tradability.

These a-holes in charge always have a wonderful vocabulary for avoiding the obvious. I just call it as I see it: taking chips of the table as you lose confidence in the U.S. financial system.

The Raven, Quote the Raven