Central Bank Gold-Buying Ramps Up Again

The central bank gold-buying spree shows no signs of letting up. In fact, it ramped up again in August after ebbing slightly in July, according to the latest data released by the World Gold Council.

After a relatively modest net increase of 13.9 tons in July, central banks globally took in a net 57.3 tons of gold in August.

Gold purchases of a ton or greater amounted to 62.1 tons. Gross sales came in at 4.8 tons.

The World Gold Council bases its data on information submitted to the International Monetary Fund.

Four central banks accounted for the bulk of the buying in August.

Turkey added the most gold to its reserves, accumulating 41.8 tons of the yellow metal.

Russia added another 11.3 tons to its hoard. Russia has been the number one gold-buying central bank this year and it has paid off in a big way. The Russian Central Bank’s gold reserves topped $100 billion in September thanks to continued buying and surging prices. With its latest purchases, Russia has increased its gold holdings by nearly 120 tons this year alone.

China bought another 5.9 tons. It was the ninth straight month of gold purchases for the People’s Bank of China.

Qatar increased its gold reserves by 3.1 tons.

Two other central banks added smaller amounts of gold to their reserves.

• ECB – 0.1 tons
• Kyrgyz Republic – 0.4 tons

Two central banks sold gold amounts greater than one ton. Kazakhstan shrunk reserves by 2.6 tons. This was a reverse in course. The Kazakh central bank has been aggressively buying gold.

Uzbekistan sold another 2.2 tons of gold in August after dumping 22.4 tons in July. Uzbek central bank Governor Mamarizo Nurmuratov announced earlier this year that he planned to purchase US and Chinese sovereign debt in order to diversify the nation’s $26 billion of international reserves away from gold as the country moves out of relative economic isolation.

According to the World Gold Council, a dozen central banks have increased their gold reserves by at least 1 ton through the first eight months of 2019.

Central bank gold purchases in July continue a trend we saw through 2018. In total, the world’s central banks accumulated 651.5 tons of gold last year. The World Gold Council noted that 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record.

A move to minimize exposure to the US dollar, especially by countries like Russia and China, is driving this central bank gold-buying spree.

Peter Schiff has talked about central bank gold-buying. He has noted that the US went off the gold standard in 1971, but he thinks the world is going to go back on it.

The days where the dollar is the reserve currency are numbered and we’re going back to basics. You know, everything old is new again. Gold was money in the past and it will be money again in the future, and central banks that are smart enough to read that writing on the wall are increasing their gold reserves now.”