Gold Holdings by Country
The People’s Bank of China has been buying gold in a big way. This year, it has been among the largest net buyers of the precious metal globally.
But what are the reasons behind its covert purchasing? We will look at the top 10 gold holdings by country to find out.
1. United States
With 8,000 metric tons of gold, the United States has more bullion in its vaults than all other countries except Russia. This makes sense, since gold has long been viewed as a safe haven and store of value by central banks around the world.
In fact, the total global gold reserves held by central banks stands at 35,715 metric tons, or roughly a fifth of all the gold ever mined. This is mostly due to recent buying activity by countries like China and Russia seeking alternatives to the dollar because of chilly relations with the West.
As a nation that once relied heavily on gold as part of the Bretton Woods System, Germany has a natural affinity for the yellow metal. It is no wonder German citizens hold 8918 tonnes of private gold according to the latest survey from CFin.
The Germans are wary of inflation and see gold as an investment that will preserve their wealth. According to a survey by CFin, more than 80% of Germans who own gold bought it for this reason.
The Bundesbank is reluctant to talk about how it transfers its gold reserves between the US, UK and France for security reasons. It also refuses to disclose what routes and means of transport are used for such transfer operations.
India’s gold holdings have been steadily increasing in recent years. According to a report by the World Gold Council, the Reserve Bank of India added 63 tonnes of gold to its reserves in Q2 2022, bringing the metal’s share of the country’s total forex reserves up to 7.06 per cent.
But it is household demand that keeps India the world’s biggest gold hoarder. “We conducted a study two years ago and found household stocks at around 23,000-25,000 tonne,” Somasundaram PR, managing director (India), World Gold Council, told the Financial Express.
Gold is considered a safe haven and is used as a hedge against financial turmoil. Its popularity has spiked over the past few years as central banks have been buying gold at a pace not seen since 1967.
Japan has a surprisingly small gold holding compared to economies of its size. Its gold position represents only 2.5% of its foreign reserves.
Switzerland is another country that places a heavy emphasis on gold, with the precious metal constituting 66.5% of its foreign reserve positions. This is likely due to its proximity to the Swiss mining industry and strong demand for the physical form of the commodity.
Gold is an important store of value, and a crucial link to paper money for many countries. It is especially popular with central banks, which have been net buyers for 11 consecutive years.
Russia’s brisk purchasing surge in 2020 may have been a reaction to financial sanctions, as the metal is difficult for foreign adversaries to seize short of an invasion. But if Moscow were to face further sanctions in the future, who would buy its gold? One option is China, which has been a net buyer of bullion in recent years.
Central banks are continuing to be net buyers of gold and it is unlikely that any will reduce their current holdings moving forward. Indeed, all of the top ten central banks are expected to continue to accumulate and/or add to their existing reserves.
Switzerland holds more gold than all but one other country on this list. It’s not a surprise, as this neutral country became the epicenter of European gold trading during World War II, transacting with both Allies and Axis powers. Today, it mainly trades with China and Hong Kong.
7. Poland & Hungary
Different organizations compile gold data differently. For example, the World Gold Council uses figures published by the International Monetary Fund with a two-month lag, which excludes Hungary’s recent purchases.
But the National Bank of Poland’s purchase of 2 tons in July and 7 tons in August brings its holdings close to the world central banks’ average. And it moves Warsaw into a top-six position in the European region.
Hungary’s central bank is also ramping up its gold reserves. In doing so, it may be signaling a new focus on the role of gold in both regional and global monetary reserves.