Banks Store Gold

bryanfox bryanfox 07 December 2022 Follow

Central banks are once again buying gold in a frenzy (see chart). 400 tonnes were added to their reserves in the third quarter alone. This has increased the total from January to September to 670 tonnes, a rate not seen since the Bullion Market meltdown. Turkey purchased nearly 20 tonnes in a single transaction in May.

India and Qatar are also hungry. The metal now accounts for two-thirds of Uzbekistan’s reserves, despite the country’s intention to reduce gold reserves to less than half. Kazakhstan is also stepping up its efforts.

Why Central Banks Store Gold

Central bankers may also believe they are getting a good deal. Despite holding up better than most, the metal’s price has dropped 3% this year. Gold investors expect a rebound.

Moving physical metal is a logistical nightmare, but it keeps transactions off the West’s digital radar, which is advantageous for those who play both sides, such as Qatar or Turkey. According to the World Gold Council, unidentified buyers account for a large portion of this year’s bonanza.

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