Central banks have been net buyers of gold for 11 consecutive years. According to World Gold Council (WGC) data, central banks around the world bought 272.9 tonnes of bullion in 2020.
Last year’s purchases were 60% below the record 668 tonnes added in 2019. The COVID-19 pandemic has been a stronger driver for some central banks to sell reserves and inject liquidity into their economies. Purchases concentrated in the first half of the year, then became virtually non-existent in the third quarter and picked up again in the last three months of the year.
The top 10 central banks with the largest gold reserves have remained virtually unchanged in recent years. The United States ranks first with over 8,000 tonnes of gold in its coffers – almost as much as the next three countries combined – and accounting for 79% of total reserves. The only countries where gold represents a higher percentage of reserves are Portugal at 80.1% and Venezuela at 82.4%
10 central banks made net purchases of a ton or more in 2020, underscoring continued demand for the precious metal. Turkey was the top buyer for the second year in a row – adding 134.5 tonnes – and was also the biggest seller after declining holdings by 36.3 tonnes. WGC ticket sales have focused on a small number of central banks that buy domestically produced gold, including Mongolia and Uzbekistan.
Below are the top 10 countries with the largest gold reserves, with the ranking unchanged from 2019. Figures are as of April 2021 and do not include the International Monetary Fund (IMF) as a country, otherwise it would occupy third place. with 2,814 tonnes.
Percentage of foreign exchange reserves: 67.4 percent
The Dutch Central Bank has announced that it will move its gold vaults from Amsterdam to Camp New Amsterdam, about an hour outside of the city, citing heavy security measures at its current location. As many others have pointed out, this seems odd, given that the bank has fairly recently repatriated a large amount of its gold from the United States.
Percentage of foreign exchange reserves: 6.5 percent
It is not surprising that the Bank of India has one of the largest gold stores in the world. The South Asian country, with a population of 1.25 billion, is the second largest consumer of precious metal and one of the most reliable engines of global demand. The festival and wedding season in India, which runs from October to December, has always been a a huge boon for the love of gold trade.
Percentage of foreign exchange reserves: 3.1 percent
Japan, the world’s third-largest economy, is also the eighth largest storekeeper of yellow metal. Its central bank has been one of the most aggressive practitioners of quantitative easing – in January 2016, it cut interest rates below zero – which has helped fuel demand for gold around the world. .
Percentage of foreign exchange reserves: 5.4 percent
In seventh place is Switzerland, which actually has the largest per capita gold reserves in the world. During World War II, the neutral country became the center of the gold trade in Europe, transacting with the Allies and the Axis Powers. Today, much of its gold trade is with Hong Kong and China.
Percentage of foreign exchange reserves: 3.3 percent
In the summer of 2015, the People’s Bank of China began sharing its gold buying activity on a monthly basis for the first time since 2009. Although China ranks sixth for most gold held , the yellow metal is only a small percentage of its total. reserves – barely 3.3 percent. From 2021, China will now allow domestic and international banks to import large amounts of the precious metal into the country in an attempt to support prices. According to Reuters reports, around 150 metric tons worth $ 8.5 billion will be shipped to China as early as April or May.
Percentage of foreign exchange reserves: 22.0 percent
The Russian Central Bank has been one of the biggest buyers of gold over the past seven years and overtook China in 2018 to hold the fifth largest reserve. In 2017, Russia bought 224 tons of ingots in a diversification effort away from the US dollar, as its relations with the West have become cold since the annexation of the Crimean peninsula in mid-2014. To raise the cash needed for these purchases, Russia sold a huge percentage of its US Treasuries.
Percentage of foreign exchange reserves: 64.5 percent
The French central bank has sold little of its gold in recent years. The current reserves consist of 100 tons of gold coins with the remainder in ingots weighing about 12.5 kilograms each. The coffers of the Banque de France à Paris are one of the four designated depositaries of the International Monetary Fund (IMF).
Tons: 2 451.8
Percentage of foreign exchange reserves: 69.3 percent
Italy has also maintained the size of its reserves over the years. Mario Draghi, former Governor of the Bank of Italy and Governor of the European Central Bank, when asked by a journalist in 2013 about the role of gold in a central bank’s portfolio, replied that the metal was “A security reserve”, adding, “This gives you pretty good protection against fluctuations against the dollar.”
Tons: 3 362.4
Percentage of foreign exchange reserves: 74.5 percent
In 2017, Germany completed a four-year repatriation operation to bring a total of 674 tonnes of gold from the Banque de France and the Federal Reserve of New York to its own coffers. First announced in 2013, the move was to last until 2020 to be completed. Although the demand for gold fell in 2017 after reaching a absolute record in 2016, this European country has seen its investments in gold increase steadily since the global financial crisis.
1. United States
Percentage of foreign exchange reserves: 77.5 percent
With the largest official holdings in the world, the United States claims almost as much gold as the next three countries combined. It also has the third highest gold allocation as a percentage of its foreign exchange reserves. From what we know, the majority of US gold is held at Fort Knox, Kentucky, with the remainder held at the Philadelphia Mint, Denver Mint, San Francisco Assay Office, and West Point Bullion Depository. Which state loves gold the most? Well, the state of Texas went so far as to create its own Texas Bullion Depository to protect gold from investors.
Originally published by US Funds, 04/29/21
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