Central Banks Step Up Gold Purchases
After years of not adding gold to reserves, more than a handful of central banks have begun making purchases and/or have stepped up their purchases of gold. Over the past ten years, central banks from China to the European Central Bank, to the Bank of England, to the Bank of Japan and the U.S. Federal Reserve have issues trillions of dollars worth of credit to boost their domestic economies. In addition, the fiscal policies of many economies have provided massive deficit spending to supplement central bank.
The economies have improved, but the recent slowdown in China, indicates that perhaps adding mountains of debt no longer provides an adequate return, while previously issued debt remains unpaid. Against this backdrop it appears some central banks are insuring their reserves by adding gold as insurance against any time of local or global credit crisis.
Here are the central banks that are paying closer attention to gold.
Increased Gold Buying
The Central Bank of the Federation of Russia has been the world’s largest purchaser of gold over the past five years, adding over 1000 tons of gold! Last year Russia added a record 224 tons of gold to reserves. This year Russia is on pace to top last year’s additions, having purchased over 199 tons of gold through September.
As a result of the Central Bank of the Federation of Russia gold buying binge, Russia now has the fifth largest gold holdings of all central banks with 2,037 tons.
Kazakhstan has been adding gold to reserves every month for nearly five years! As of August 2018, the Central Bank of Kazakhstan has added gold to reserves for the past 71 months. Kazakhstan’s gold purchases have vaulted her into 13th place among gold holding nations with .
New Gold Buyers
Indians posses perhaps the most gold of any people on earth. It is estimated that between Indians and Indian temples there are approximately 22,000 tons of gold in India. The Reserve Bank of India, however, held a modest 557 tons of gold for the past ten years, until this year when the RBI added 2.2 tons in March, 0.6 tons in April, 0.9 tons in May, 4.4 tons in June, 6.8 tons in July and 7.9 tons in September, increasing gold reserves from 557 tons to 580 tons placing India in the top ten of gold holding nations.
Poland became the first European Union nation to add gold to reserves this year by adding 1.9 tons of gold in July and 7.5 tons of gold in August. Polish gold reserves now stand at 112.3 tons, good enough for 33rd place among gold holding nations.
Earlier this month the Central Bank of Hungary announced a 10 fold increase in her gold reserves. The Central Bank of Hungary added 28 tons of gold bringing her total reserves to levels last seen in 1946! In a press release the Central Bank of Hungary announced the rational for adding gold to her reserves:
“In keeping with the historical role of gold, gold remains one of the safest instruments in the world (emphasis added), and, even under normal market conditions, provides a stability and confidence-building function.”
Prior to Hungary’s recent purchase the central European nation held just 3.1 tons of gold (89th place). With the recent gold addition, Hungary now boasts 31.5 tons of gold and has vaulted into 55th place, behind Slovakia (31.7 tons) and ahead of Qatar (26.6 tons)
This article by BGASC is not, and should not be regarded as, investment advice or as a recommendation regarding any particular course of action.