Another Year, Another Massive Pile of Physical Gold Acquired by National Banks
Another Year, Another Massive Pile of Physical Gold Acquired by National Banks by Rory for The Daily Coin
In 2018 the world witnessed the largest movement of physical gold, in more than 50 years, with 656.2 tonnes acquired. 2019 was only slightly lower, 650.3 tonnes, and came in just shy of the massive record set in 2018. National banks around the world are scooping up physical gold unlike anything in modern history.
One of the more telling aspects of what’s happened the past two years is the end of the decade marks a decided shift in how national banks see gold. From 2000 to 2009 national banks were net sellers of gold while the years between 2010 and 2019 national banks added more than 5,000 tonnes of physical for an average of 500 tonnes per year for an entire decade. We will see a repeat over the next ten years?
Interestingly, this demand was – in the words of the WGC – “exclusive to emerging market central banks looking to bolster and/or diversify their overall reserves.” The following central banks purchased gold in 2019:
- TURKEY: Officially the largest buyer in 2019, due to a scaling down of purchasing from both China and Russia. Turkey added 159 tonnes to its gold reserves last year, taking the central bank holdings to 413 tonnes; a 63% increase from 2018 and the equivalent of 20% reserves.
- POLAND: Turkey may have bought the most gold, but Poland achieved the largest purchase in 2019, buying 94.9 tonnes in June. The eastern European country bought 100 tonnes total in 2019, meaning their national reserves now contain 228.6 tonnes of gold.
- RUSSIA: Gold reserves in Russia have been rising consistently for the past 20 years as part of Russia’s intent to move away from the US Dollar as much as possible. Russia added 1 tonnes of gold in 2019 – a 42% reduction on 2018 – with the country keen to focus on being a gold exporter for the new decade and offering introductory discounts.
- CHINA: Akin to Russia, China bought a modest 8 tonnes of gold between January and September last year, before ceasing purchases. China’s gold reserves now stand at 1,948 tonnes, which is 3% of their reported total reserves.
- KAZAKHSTAN (35 tonnes)
- INDIA (32.7 tonnes)
- UAE (13.5 tonnes)
- QATAR (11 tonnes)
- ECUADOR (10.6 tonnes)
- SERBIA (10 tonnes)
- KYRGYZSTAN (N/A)
- MONGOLIA (N/A)
- BELARUS (N/A)
- COLOMBIA (N/A)
- GUINEA (N/A)
2019 also brought a decade of significant gold buying to an end. According to the Council’s figures, central banks have added an astounding 5,019 tonnes of gold to (official) national reserves. This works out at an average of 500 tonnes per year. In contrast, the decade before saw sales of gold rather than purchases, with 443 tonnes per year on average released for sale from central bank holdings. The chart below illustrates the change:
What will 2020 and beyond bring? What we can say with certainty is this year, and beginning of a new decade, is starting out on very shaky ground. Trade wars, shooting wars, pandemic and later this year a Presidential and national election in the U.S. It seems as if the table is set for the acquisitions at the high level and at ground zero will continue at elevated levels. Don’t be surprised if gold acquisitons move higher in 2020 than they reached in 2018.
As I predicted several weeks back when I said people that have an idea of what I do but have never ask about gold, silver or money in general, will be approaching me, well, this is already happened twice. I suspect this is just the beginning and feel confident it will only grow over the coming months and years ahead. The masses are growing uneasy and nervous about what is happening. The national banks around the world are simply ahead of the curve. We believe this is merely the first couple of very small sparks that will be fueling the new paradigm that is beginning to unfold.