Global central bank gold reserves top 33,000 tonnes, roughly one-fifth of all gold ever mined. What are the top central bank gold holdings?
Global central bank gold reserves top 33,000 tonnes, approximately one-fifth of all the gold ever mined. The vast majority of central bank gold holdings were acquired in the last decade, when national banks became net buyers of the yellow metal.
Central banks purchase gold for a number of reasons: to mitigate risk, to hedge against inflation and to promote economic stability. In its most recent annual survey, the World Gold Council (WGC), said that 88 percent of central bankers also cited negative interest rates as a factor in reserve management decisions.
COVID-19, and more specifically times of crisis, were also identified as a reason to hold gold by 79 percent of survey respondents, up from 59 percent in 2019.
Central banks added 668.5 tonnes of gold to their vaults in 2019, the most since the national financial institutes became net buyers of the yellow metal in 2010.
Central bank gold buying, 2010 to 2020. Chart via the WGC.
That trend was expected to keep pace in 2020 until COVID-19 hit. The first two quarters of the year saw positive inflows totaling 220 tonnes. However, in Q3 national banks sold off 12.1 tonnes for the first time since Q4 2010. The selling was due to the impact the coronavirus has had on the global economy.
The rapidly rising gold price, which peaked at an all-time high of US$2,063 in mid-2020, has also made purchasing gold more expensive, and thus less likely for global central banks.
As the WGC survey notes, “Central banks and other official institutions have been a key source of gold demand since 2010. Between 2010 and 2016, average annual central bank net purchases were 470 tonnes, accounting for 11 percent of global gold demand.”
Read on to find out the 10 top countries by central bank gold holdings. All reserve tallies were compiled using data from the WGC.
1. United States
When it comes to the largest gold reserves, the Central Bank of America comes in at number one with 8,133.5 tonnes. Valued at US$10.9 billion, a large percentage of US gold is held in “deep storage” in Denver, Fort Knox and West Point.
As the US Treasury explains, “That portion of the US Government-owned gold bullion reserve which the Mint secures in sealed vaults that are examined annually by the Treasury Department’s Office of the Inspector General and consists primarily of gold bars.”
The rest of US-owned reserves are held as working stock. This metal is described as a “gold reserve which the Mint uses as the raw material for minting congressionally authorized coins and consists of bars, blanks, unsold coins and condemned coins.”
The Bundesbank, Germany’s central bank, currently owns 3,362.4 tonnes of gold, less than half the amount amassed by America. Like many of the central banks on this list, the German national bank stores more than half of its stock in foreign locations in New York, London and France.
The Bundesbank’s foreign gold reserves came into question in 2012, when the German Federal Court of Auditors, the Bundesrechnungshof, was openly critical of the Bundesbank’s gold auditing.
In response, the German bank issued a public statement defending the security of foreign banks. Privately, the Bundesbank then began the arduous process of repatriating its gold stock back to German soil. By 2016, more than 583 tonnes had been transferred back to Germany.
“As at 31 December 2016, 47.9 percent of Germany’s gold holdings were in storage in Frankfurt, 36.6 percent in New York, 12.8 percent in London and the remaining 2.7 percent in Paris,” reads a Bundesbank statement.
Banca d’Italia, the national bank of Italy, began amassing its gold in 1893, when three separate financial institutes merged into one. From there its 78 tonnes grew into the 2,451.8 tonnes the country now owns.
Like Germany, Italy also stores parts of its reserves offshore. In total, 141.2 tonnes are located in the UK, 149.3 tonnes are in Switzerland and 1,061 tonnes are kept in the US Federal Reserve.
Italy houses 1,100 tonnes domestically and a Banca d’Italia report gives the following explanation as to why central banks amass gold reserves:
“Because of gold’s characteristics and functions central banks use it for a variety of purposes: they buy and sell it for financial reasons or to adjust the level of the reserves; they deposit it to earn income and use it as collateral to obtain loans.”
The Banque de France keeps all 2,436 tonnes of its gold reserves on hand. The precious metal is stored in the bank’s secure underground vault, dubbed La Souterraine (subterranean tunnel); it is located 27 meters below street level.
The bank’s gold reserves were estimated to be worth $80 billion Euros in 2015.
“The national gold reserves are thus equivalent to 4 percent of gross domestic product (gdp) or 15 days of national output,” according to the French central bank. “Each French citizen owns, indirectly, 38 grams of gold (2.5 million kilograms of gold divided by 65 million inhabitants), or around 6 ‘napoleons’.”
The Bank of Russia is the official central bank of the Russian Federation and owns 2,298.7 tonnes of gold. Like France, Russia’s central bank has opted to store all its physical gold domestically.
The Bank of Russia stores two-thirds of its gold reserves in a bank building in Moscow, and the remaining one-third in Saint Petersburg.
The majority of the yellow metal is in the form of large, variable-weight standard gold bars weighing between 10 and 14 kilograms. There are also smaller bars on site weighing as much as 1 kilogram each.
Russia, which is the third largest gold producer by country, has been a steady purchaser of the precious metal since roughly 2007, with sales ramping up significantly between 2015 and early 2020.
The persistent buying was briefly interrupted in 2020 due to the impact that COVID-19 disruptions had on the oil sector (Russia is also third in oil production). Effective April 1, 2020, the Bank of Russia suspended all its central bank gold buying on the domestic bullion market.
The moratorium on central bank purchases was short-lived. According to Reuters, requests from banks across Russia prompted the national bank to recommence its bullion buying six days later.
The central bank for mainland China is the People’s Bank of China (PBoC), located in Beijing. The national financial institute stores 1,948.3 tonnes of gold, most which has been purchased since 2000. In 2001, the PBoC had 400 tonnes of gold in reserve, but in less than two decades that total has climbed 387 percent.
The PBoC also issues the Panda gold coin, which was first created in 1982. The Panda coin is now one of the top five bullion coins issued by a central bank. It is among the ranks of the American Eagle, Canadian Maple Leaf, South African Krugerrand and Australian Gold Nugget.
Holding the seventh largest central bank gold reserves is the Swiss National Bank. Its 1,040 tonnes of gold are owned by the state of Switzerland, but the central bank manages and maintains the reserve.
After years of opaqueness regarding the country’s golden treasure trove, the Swiss Gold Initiative, or Save our Swiss Gold campaign, was launched in 2011.
The publicity culminated in a national referendum in 2014, asking citizens to vote on three proposals.
The first was a mandate for all reserve gold to be held physically in Switzerland. The other two dealt with the central bank’s ability to sell its gold reserves, along with a decree that 20 percent of the Swiss bank’s assets be held in gold.
The referendum was unsuccessful, but did prompt the bank to be more transparent. In a 2013 release, the central bank reported that 70 percent of its gold reserve was held domestically, 20 percent was located at the Bank of England and 10 percent was stored with the Bank of Canada.
Public information about the Bank of Japan’s gold reserves is hard to come by. In 2000, the island nation was holding approximately 753 tonnes of the yellow metal. By 2004, the Bank of Japan’s gold store had grown to 765.2 tonnes, where it remains today.
The Reserve Bank of India is one of the few banks on the list that has added to its holdings in 2020.
According to August reports, at the time the Indian central bank was considering increasing its gold levels from 6.5 percent to 10 percent of its total reserves. Data from the WGC notes that India has so far increased its reserves by 22.7 tonnes in 2020.
Rounding out the top central bank gold reserves by country is the Dutch National Bank, the central bank of Netherlands.
Like Switzerland, the Dutch central bank stores as much as 38 percent of its gold in Canada’s national reserve. Another 31 percent in the form of 15,000 gold bars is held in a domestic vault, while the remaining 31 percent is located in New York’s Federal Reserve bank.
In a report, the Dutch National Bank notes that gold’s aversion to risk and reduced liability makes it the supreme safe haven asset.
“Central banks such as DNB (Dutch National Bank) have therefore traditionally had a lot of gold in stock. After all, gold is the ultimate nest egg: the trust anchor for the financial system,” it reads. “If the entire system collapses, the gold supply provides collateral to start over. Gold gives confidence in the strength of the central bank’s balance sheet. That gives a safe feeling.”
*11. International Monetary Fund
The gold reserve held by the International Monetary Fund (IMF) is the third largest in terms of size. The large gold reserve was amassed primarily during the founding of the international organization in 1944.
In that inaugural year it was decided that “25 percent of initial quota subscriptions and subsequent quota increases were to be paid in gold.”
Since 1944, the IMF has also added gold through the repayment of debts owed by member countries. Nations can also exchange gold for another member country’s currency.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.