According to research conducted by the World Gold Council, central banks acquired and bunkered more gold in 2018 than in any year since 1971. In 2018 alone, central banks bought 651 tons of gold, up 74% compared to 2017. And the trend continues this year.
As the price of gold and silver continues to rise – gold is up 11% YTD, while silver is up 8% YTD – central bankers appear eager to make sure they don’t miss the buying opportunity. In a survey of central bankers conducted by the World Gold Council and YouGov, roughly 54% of respondents expect global central bank gold holdings to continue growing in the next 12 months. Two-thirds of the respondents expect gold’s share of reserves to remain the same or to rise. It is clear that, as the risk expectations in other reserve asset classes rise, gold once again assumes its role as a safe haven and insurance asset.
Bullion holdings increased by 651.5 tons last year. According to IMF numbers, nations have consistently increased their gold holdings by about 14% since 2009. The total holdings are estimated at US$ 1.6 trillion. According to Bloomberg, nations like Russia or China in particular, appear intent on diversifying their reserves away from the Greenback.
Source: IMF, Bloomberg
“This year’s survey signals another healthy year of central bank gold demand,” the WGC said in a report Thursday. “In the next 12 months, heightened economic risks in reserve currency issuing countries are seen as the main factor driving these purchases, but in the medium term structural changes in the global economy may also play a role.”