Sinolink Securities Co., Ltd. has released a research report stating that historically, geopolitical factors have been the core driver influencing the United States' strategic resource reserves, while fiscal pressures also impact reserve behavior. Regarding global gold reserves, a sustained decline in geopolitical risk has been a key factor driving down the proportion of gold holdings, whereas concerns about the credibility of the U.S. dollar have been a major catalyst for increasing gold reserves. Given the current extremely low level of U.S. strategic inventories and the public-private partnership approach of the latest "stockpile plan," metals with both industrial and strategic attributes—such as copper, silicon, rare earths, gallium, and germanium—are likely to take center stage in this round of reserve demand, leading to a significant upward shift in price levels.
The historical trajectory of U.S. strategic resource reserves can be divided into four main phases. The first phase, from 1939 to 1960, was a period of reserve expansion against the backdrop of World War II, the Korean War, and U.S.-Soviet tensions. The second phase, during the 1960s, saw a shift in Cold War focus toward economic and technological competition, prompting the U.S. government to reduce strategic reserves and sell off resources to address shortages caused by factors such as overseas strikes. The third phase, spanning the 1970s to 1980s, was marked by policy ambivalence: while the oil crisis renewed official emphasis on strategic reserves, environmental and fiscal concerns led to inconsistent approaches, including selling reserves to alleviate budget deficits. The fourth phase, beginning in the 1990s, involved a sharp reduction in strategic inventories, driven largely by diminished geopolitical risks. The Fiscal Year 1993 Defense Authorization Act lowered reserve requirements for most minerals to zero, leading to a rapid decline in stockpiles. By 2024, the nominal value of U.S. strategic reserves had fallen below $1 billion, hitting a historic low since the 1960s. Overall, shifts in the U.S. government’s reserve stance have been primarily influenced by geopolitical risks, while rising fiscal pressures have often inclined authorities toward divestment.
Changes in global official gold reserves can also be segmented into four stages: a decline from the post-war period until the early 1970s, an increase from the 1970s to 1980, a significant drop from 1980 until the 2008 financial crisis, and a trend reversal upward after 2008. A sustained downturn in geopolitical risk has been a key factor behind the declining share of gold in official reserves—evident in the early 1960s and early 1980s, when trend-adjusted geopolitical risk indices began to fall, aligning with periods of persistent decline in gold’s reserve share. Concerns over the U.S. dollar’s credibility have been another critical driver. The dollar’s internal and external devaluation after its decoupling from gold in the early 1970s, as well as the post-2008 era of quantitative easing and rapid fiscal expansion, both contributed to increases in gold’s reserve proportion. A frequently overlooked aspect is that fiscal pressures can periodically strengthen governments’ incentive to sell gold reserves. Under fiscal deficit strain, countries such as Germany in 1997, Lebanon in 2002, and South Africa in 2024 have revalued official gold holdings to generate revenue. South Africa’s case is particularly illustrative: following the move, the government’s net financing needs declined noticeably, and both its 10-year bond yield and the spread over U.S. Treasuries narrowed, at least temporarily achieving the goal of reducing interest expenses.
From a government reserve perspective, current opportunities and risks in commodities are shaped by the trend reversal in geopolitical risk indices after 2020. Against a backdrop of persistent and escalating geopolitical tensions, U.S. demand for resource stockpiling may end the decline that began in the 1980s and enter a long-term upward trajectory, similar to the post-1930s period. The U.S. proposal for a $12 billion "stockpile plan" aimed at strategic resource reserves signals the start of a global resource accumulation trend. Unlike previous U.S.-led reserve initiatives, this plan emphasizes public-private collaboration and focuses more on supply chain security for economic production than on national defense. From a supply chain security standpoint, overseas strategic reserve efforts are likely to prioritize resources with high supply concentration and importance to emerging technologies like artificial intelligence. Metals that benefit from high national supply concentration and AI-driven demand—including copper, silicon, rare earths, gallium, and germanium—are well-positioned. Notably, China is the largest global producer of gallium, silicon, germanium, and rare earths, accounting for over 50% of worldwide output in each case.
On the risk side, current U.S. fiscal pressures may curb the gold price rally driven by central bank purchases. With U.S. government interest payments exceeding 20% of fiscal revenue, continued deficit expansion—coupled with reduced foreign appetite for U.S. Treasuries amid rising gold prices—could prompt the U.S. to sell gold to finance deficits. Considering the historically low level of U.S. strategic inventories and the public-private nature of the "stockpile plan," industrially and strategically significant metals such as copper, silicon, rare earths, gallium, and germanium are poised to lead this round of reserve demand, resulting in a notable upward adjustment in price benchmarks.
Risks include slower-than-expected domestic economic recovery and a significant downturn in overseas economies.
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