Central banks have boosted their gold stocks by almost 10% since the financial crash, reflecting its renewed attractiveness as a safe haven in an environment of uncertainty and low or negative interest rates.
China and Russia have led the switch to gold away from foreign currencies, especially the US dollar, to shore up their reserves. Western nations, including the UK, have halted several decades of mass sell-offs.
According to the Official Monetary and Financial Institutions Forum (OMFIF), central banks have swooped on the gold markets every year since 2008 to become net bullion buyers, adding more than 2,800 tonnes, or 9.4%, to reserves.
Britain has one of the smallest holdings of gold in the G7 at 0.9% in 2016 while the US has the largest after increasing its share from 24.5% to 24.8% between 2000 and 2016. In 1980, the US had 44.1% of all gold stocks and 75.7% in 1940.
“Developed countries [accounting for the lion’s share of total official holdings] have been conserving stocks, while developing countries led by China and Russia have been building them up.
“This is the longest protracted spell of gold accruals since 1950-65, when central banks and treasuries acquired a net total of more than 7,000 tonnes during the economic recovery after the second world war,” said David Marsh, the director of OMFIF.
via The Guardian