Central banks added gold to their reserves in record amounts in 2018 and 2019, but buying slowed last year with the onset of the COVID-19 pandemic. The slower pace has continued into 2021, but buying is ahead of last year as many countries continue to load up on the yellow metal. The World Gold Council projects gold will continue to play an important role in central bank reserves in the coming year.
Well-known management consultant Peter Drucker perfectly described the predicament faced by central bankers.
You can’t manage what you can’t measure.”
So why do we put so much faith in central bankers?
Which countries have the biggest gold reserves?
Central banks globally have been increasing gold holdings over the last few years. Central bank demand came in at 650.3 tons last year. That was the second-highest level of annual purchases for 50 years, just slightly below the 2018 net purchases of 656.2 tons. According to the World Gold Council, 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.
According to the report, the RBI is mulling upping its gold holdings from the current level of 6.5% of total reserves to 10%. As part of the move, the Indian central bank would also lower its holdings of US Treasuries.
Central banks globally added another net 46.1 tons of gold to their reserves in March with the usual suspects making big purchases, according to the latest data released by the World Gold Council.
The pace of central bank purchases seems to be increasing, although a few banks are doing the bulk of the buying. Globally, central banks upped purchases in March by about 10 tons over February’s total, which was 33% higher than January’s buying.
Central banks continued their gold-buying spree in February, although the pace of gold purchases has slowed compared to last year’s near-record purchases.
On net, central banks globally added another 36 tons of gold to their reserves in February, according to the latest data released by the World Gold Council. That was about 33% higher than January’s total.
Last year at the Vancouver Resource Investment Conference, Peter Schiff bet Brent Johnson a gold coin that the Fed’s next move would be a rate cut. At this year’s conference, Peter collected his gold coin.
Brent and Peter went on to debate the future of the US dollar. Brent says the dollar will go up this year. Peter thinks it’s going down. Peter put his money where is mouth is and went double or nothing against the dollar.
The sound of war drums dominated this week. After Iran launched missiles at US bases in Iraq in retaliation for an airstrike that killed an Iranian general, gold spiked to over $1,600 an ounce — an eight-year high. But tensions seem to have eased and the price of gold with it, as the war drums have quieted. So, what did we learn from this and what’s next for the gold market? Host Mike Maharrey talks about it in this episode of the Friday Gold Wrap podcast.
Globally, central bank gold reserves charted another healthy gain in October as they continue their quest to diversify reserves away from the US dollar.