The silent exit

The Great Unshackling: Why India is Bringing Gold Home and Ditching US Debt

By Digvijay Mourya

For decades, the script of global finance was written in Washington and ratified in trading desks from London to Tokyo. A core tenet of this script was simple: burgeoning economies, like India, would recycle their trade surpluses and foreign exchange earnings into the bedrock of the global system – US Treasury securities. It was a cycle of mutual convenience: the US funded its deficits, and investors got a "risk-free" return.

That script is being torn up. And India, under the strategic guidance of the Reserve Bank of India (RBI), is one of its lead editors.

Recent data reveals a seismic shift, one that speaks louder than any diplomatic statement. Between October 2024 and October 2025, India sold a staggering $50.7 billion in US Treasuries—a 21% drawdown of its holdings. This wasn't a routine portfolio adjustment. This was a deliberate, strategic retreat executed despite attractive yields on those very bonds. Money was left on the table. Why?

The answer lies not in finance textbooks, but in the grim geopolitics of the 2020s. The weaponization of the US dollar and the freezing of $300 billion of Russian central bank assets served as a catastrophic alarm bell for every nation not firmly in the Western alliance. Overnight, the "risk-free" asset was revealed to carry an existential political risk: the risk of confiscation.

The RBI looked at its vast holdings of digital entries in New York Fed custodial accounts and saw not just assets, but vulnerability. This is the heart of the matter: Geopolitical fear has outpaced financial yield as the primary driver for sovereign reserves.

Concurrently, a parallel, physical movement is underway. Since March 2023, India has been quietly, steadily repatriating its gold. Over 274 tons of the precious metal have been brought back to domestic vaults. Today, over 65% of India’s gold reserves are held securely within its own borders. This is not a whimsical fondness for the shiny metal. This is the building of a financial fortress.

Gold is the antithesis of the digital Treasury bond. It is sovereign, tangible, and free from counterparty risk. It cannot be frozen with a keystroke. It is the ultimate asset in a fragmenting world—accepted globally, yet owned absolutely. By swapping digital US debt for physical gold, India is executing a profound hedge against a fracturing global order.

What does this mean for the world?

1. The Unwritten Rule is Broken: The assumption that growing economies will automatically fund US deficits is dead. India’s move signals that the "exorbitant privilege" of the dollar faces a buyer's strike from those who fear its power.

2. The Multipolar Reserve System is Here: We are witnessing the active, deliberate construction of a multipolar financial world. Central banks are diversifying away from dollar-denominated assets and towards hard, neutral commodities. Gold is the prime candidate.

3. Trust is the New Scarcity: The 2008 crisis eroded trust in private banks. The 2020s sanctions have eroded trust in the state-backed financial system. What remains? Tangible assets and new, neutral corridors of trade.

An Actionable Insight for the Astute Observer:

Central banks are not just policy entities; they are the world’s largest and most sophisticated investors. Watch what they do, not what they say. Their collective pivot from Treasuries to gold is the most significant investment thesis of our time.

For individual investors, the lesson is clear: Diversify beyond paper. The RBI’s playbook is a masterclass in seeking security in an insecure world. Consider your own exposure to system-dependent assets and ask yourself: what portion of your wealth is truly under your sovereign control? Allocating to physical gold and other tangible commodities is no longer a relic of doomsayers; it is a rational response to central banks’ own loss of faith in the old order.

India’s journey is more than a rebalancing of a reserves spreadsheet. It is a declaration of financial atmanirbharta (self-reliance). It is a bet that in the coming age of uncertainty, real, hold-in-your-hand value will outlast digital promises. The gold is coming home. The trust in the old system is not.

Digvijay Mourya is an observer of global macro-trends and the intersection of finance, geopolitics, and sovereignty.