The US dollar's position as the world's main reserve currency is slowly being undermined, with several countries shedding their holdings of US Treasury securities, once considered the safest asset.
Amid this, economist Peter Schiff warned that the US economy is on the brink of "the biggest economic crisis of our lifetimes," citing the rise in gold and silver as other factors. What really is the situation with the US dollar? Let's dive in.
Peter Schiff's warning on US economy
Schiff warned that the fall in treasury holdings and rise in gold and silver prices could send consumer prices, bond yields, and unemployment soaring in the US.
Some of his predictions could be alarmist and should be taken with a pinch of salt, as Schiff is a well-known gold advocate and frequent critic of US monetary policy. Schiff's forecasts are not new; he has been discussing hyperinflation, gold price surges, and imminent dollar destruction for 15 years, most of which did not happen within his predicted timeframe or scale.
Gold and silver prices are indeed rising
Gold and silver prices fluctuate daily, and both reached record or near-record highs in recent years, with gold around $2,600-$2,700 per ounce in late 2025, and silver above $30-$35 per ounce. Geopolitical uncertainties, Federal Reserve activity, and inflation hedging are among the reasons.
US Treasuries is a sign of trust in the dollar but who is trimming holdings?
As the world's primary reserve currency, the dollar is roughly 60 per cent of global reserves. Demand for US Treasuries remains strong. But foreign holdings of US Treasury securities - including bills, notes, and bonds - have slowly been declining, as tracked by the US Treasury Department's Treasury International Capital (TIC) system.
Total foreign holdings currently exceed $9 trillion, with the largest holders being Japan (around $1.1-1.2 trillion), followed by the UK (around $800-900 billion), and China (around $750-800 billion). Net inflows in recent months are primarily driven by private investors and some official institutions.
China has been the most notable long-term reducer of US Treasury holdings, after peaking at around $1.3 trillion in the early 2010s. Its holdings have fallen to roughly $750-760 billion. Diversification into gold and other currencies is part of China's effort to reduce reliance on dollar assets amid geopolitical tensions.
Russia's holdings fell sharply after 2022 due to sanctions following the Ukraine invasion, declining to under $2 billion from tens of billions before 2022.
Saudi Arabia and some other oil exporters have occasionally reduced holdings for short-term capital needs and diversification. Switzerland, Germany, and Norway have also trimmed US Treasury holdings in recent months, as have smaller holders like Brazil and Vietnam.
These reductions have not led to broader sell-offs, at least for now.
In fact, Japan has increased its holdings to record levels of around $1.15 trillion as of 2025. The UK has risen to the second-largest holder of US Treasuries, surpassing China this year, with around $850-865 billion currently.
India is reducing its US Treasury holdings
India has gradually reduced its US Treasury securities over the past year as part of a broader diversification strategy by the Reserve Bank of India (RBI). Factors include US trade policies, diversification trends, and a preference for gold as a hedge against dollar volatility and inflation.
Concerns over US fiscal debt, credit rating issues, and rising yields have also contributed. India's US treasury holdings had peaked in 2024 at $247 billion, but fell to around $220 billion by year-end.
Yet, India remains among the top 20 foreign holders of US Treasuries.
India is increasing its gold reserves
The RBI has simultaneously increased gold reserves, adding dozens of tonnes in 2025, bringing total reserves to over 880 metric tonnes. Gold now accounts for roughly 14-15 per cent of the RBI's reserves. Overall, India's total foreign exchange reserves have remained robust at around $690-700 billion, adequate to cover a large share of imports and external liabilities.
Unlike Japan and the UK, India and other BRICS nations have trimmed exposure, often in response to global uncertainties.
India's foreign currency assets usually constitute about 80-85 per cent of total reserves, mostly in US dollar-denominated assets such as US Treasury securities, deposits, and sovereign bonds.
source: WION, Dailyhunt
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