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Chapter 4 presents analyses exploring the link between US financial sanctions and the buildup of physical gold reserves. After documenting how central bank gold purchases have increased since the global financial crisis of 2008, the chapter explains how gold operates as a form of insurance against potential US sanctions. The case of Venezuela’s embattled Maduro regime illustrates this point, revealing why investments in gold can be understood as an anti-dollar policy. The chapter then presents a statistical model demonstrating the link between US sanctions and increases in gold holdings. Gold reserves grew faster among sanctioned states and those facing an elevated risk of sanctions than among non-sanctioned and low-risk states. Additional illustrations show that sanctions are associated with a decline in foreign holdings of US Treasury bonds, which implies that sanctions provoked actual de-dollarization of reserves. |
