Central banks bought more gold in the last few years than at any time since the early 1970s – and the trend has continued this year.
What is the rationale behind this renewed interest in gold? First, heightened uncertainty about the global economic and geo-political outlook and second, gold’s intrinsic value as a reserve asset.
The dollar is the most widely held reserve asset but, according to International Monetary Fund statistics, gold comes third, accounting for 11% of global reserves. Having been net sellers until 2000, central banks have been net buyers ever since. In 2018 alone, central banks bought 651 tonnes of gold, up 74% compared to 2017 and the highest level since 1971. Over the past decade, central banks have purchased more than 4,300 tonnes of gold, taking their total holdings to around 34,000 tonnes today.
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