By Frank Holmes | July 5, 2018
Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Last year official sector activity rose 36 percent to 366 tonnes – a substantial increase from 2016.
The top 10 central banks with the largest gold reserves have remained mostly unchanged for the last few years. The United States holds the number one spot with over 8,000 tonnes of gold in its vaults – nearly as much as the next three countries combined. For six consecutive years the Russian Central Bank has been the largest purchaser of gold, increasing its holdings by 224 tonnes in 2017 and overtaking China to hold the fifth spot, according to the GFMS Gold Survey.
Not every central bank is a net buyer. For the second year in a row, Venezuela has been the largest seller of gold, with 25 tonnes sold last year to help pay off debt. However, gross official sector sales declined by 55 percent last year, to the lowest since 2014, indicating that central banks are happy to keep their reserves in gold, historically viewed as a safe-haven asset.
2018 could be another strong year for central bank gold demand. According to the World Gold Council(WGC), demand in the first quarter was up 42 percent year-over-year, with purchases totaling 116.5 tonnes for the highest first-quarter total since 2014. As global debt continues to skyrocket, central banks and individual investors alike might want to keep gold in their pockets, as it historically has performed well during times of economic downturn and geopolitical uncertainty.
Below are the top 10 countries with the largest gold holdings, beginning with India.
10. India
Tonnes: 560.3
Percent of foreign reserves: 5.5 percent
It’s no surprise that the Bank of India has one of the largest stores of gold in the world. The South Asian country, home to 1.25 billion people, is the second largest consumer of the precious metal and is one of the most reliable drivers of global demand. India’s festival and wedding season, which runs from October to December, has historically been a huge boon to gold’s Love Trade.
9. Netherlands
Tonnes: 612.5
Percent of foreign reserves: 68.2 percent
The Dutch Central Bank announced that it will be moving its gold vaults from Amsterdam to Camp New Amsterdam, about an hour outside the city, citing burdensome security measures of its current location. As many others have pointed out, this seems odd, given that the bank fairly recently repatriated a large amount of its gold from the U.S.
8. Japan
Tonnes: 765.2
Percent of foreign reserves: 2.5 percent
Japan, the world’s third-largest economy, is also the eighth largest hoarder of the yellow metal. Its central bank has been one of the most aggressive practitioners of quantitative easing—in January 2016, it lowered interest rates below zero—which has helped fuel demand for gold around the world.
7. Switzerland
Tonnes: 1,040.0
Percent of foreign reserves: 5.3 percent
In seventh place is Switzerland, which actually has the world’s largest reserves of gold per capita. During World War II, the neutral country became the center of the gold trade in Europe, making transactions with both the Allies and Axis powers. Today, much of its gold trading is done with Hong Kong and China.
6. China
Tonnes: 1,842.6
Percent of foreign reserves: 2.4 percent
In the summer of 2015, the People’s Bank of China began sharing its gold purchasing activity on a monthly basis for the first time since 2009. Although China comes in sixth for most gold held, the yellow metal accounts for only a small percentage of its overall reserves – a mere 2.4 percent – the lowest of the top 10 central banks with the most gold. However, this figure is up slightly from 2.2 percent of holdings in 2016.
