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More Countries are Bolstering their Gold Reserves

June 12, 2019 07:00
More Countries are Bolstering their Gold Reserves

Over the past 9 months, a new trend has developed in the world economy: more central banks are buying up gold. According to the World Gold Council, 2018 had the highest level of annual net central bank gold purchases since 1971, and the second highest annual total on record. In total, the world’s central banks accumulated 651.5 tons of gold last year.

With central banks adding another 90 tons of gold to their reserves over the first 2 months of 2019, the trend appears to be going on strong. Just a few noteworthy examples include:

  • Since December 2017, the Reserve Bank of India has added 50.4 tons of gold to its reserves. More than 10% of that total (8.2 tons) was acquired in January and February of this year. According to data from the International Monetary Fund (IMF), India’s gold reserves currently stand at a record high of almost 609 tons.

  • Russian gold reserves increased 274.3 tons in 2018, marking the country's fourth consecutive year of 200+ ton growth. During the first quarter of 2019, Russia has already acquired an additional 56 tons.

  • Last year, Poland dramatically increased its gold reserves by approximately 20%, going from 103 tons in July to about 128.6 tons by December.

  • The Hungarian National Bank increased the size of its gold reserves from 3.1 tons to 31.5 tons during October 2018 – a 1000% increase. Prior to that, Hungary’s central bank had not altered its gold reserves since 1986.

When it comes to this trend, the exact reasons for investing in more gold may differ for each country, but the overall message is clear: gold is still the asset of choice for lower-risk, longer-term growth strategies.

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