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Which Country Has The Largest Gold Reserves In The World – By David Modell David Modell All Articles → David Modell serves as Principal Analyst and Opportunity Researcher at Portfolio Wealth Global. Rely on David for wealth building strategies and resources for investors and traders of all financial profiles. Follow:
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Which Country Has The Largest Gold Reserves In The World
“Have you ever heard of the golden rule? Whoever has the gold makes the rules.” It’s an old joke, of course, but the countries with the largest gold reserves follow their own rules at a time when very few countries still use the gold standard.
Which Country Has The Most Gold In The World?
Governments and central banks hold gold for many reasons. They may not have complete confidence in the currency, or they may be preparing for economic turmoil. After all, gold has a good track record of maintaining value in times of high inflation.
Gold does not carry counterparty risk (the possibility that the other party to a transaction will not meet its obligations) like currencies and bonds. Additionally, gold can help diversify national wealth reserves.
The balance of economic power could shift dramatically if gold prices rise significantly in the coming months and years. So there’s nothing earth-shattering about countries hoarding gold, but the amount — and which countries top the list of gold holders — might surprise you.
Ironically, the country that went off the gold standard in 1934 currently holds the top spot among the countries with the largest gold reserves. According to the World Gold Council, the US central bank held 8,133 tons (sometimes known as metric tons) of gold as of July 28, 2022.
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. Gold is held at various locations, including Fort Knox in Kentucky; West Point, New York; and Denver, Colorado
Central banks often hold national gold. In the United States, however, gold is held by the Treasury Department at the Mint, not the Federal Reserve.
Europe is short of some commodities, including oil and natural gas, as the Russia-Ukraine crisis and resulting sanctions have sharply reduced flows. There is no shortage of a single commodity on offer in some EU countries, and it is definitely gold.
Germany is second with 3,355 tonnes of gold, while Italy and France are almost equal with 2,452 and 2,437 tonnes respectively.
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Even before the Russian-Ukraine crisis and sanctions, the EU already wanted to strengthen its gold reserves. In 2021, after two decades of gold hoarding in the EU, the European Central Bank declared that gold “is an important component of global financial reserves as it continues to facilitate asset diversification”.
Today, there is no doubt that the German Bundesbank, the Italian Banca d’Italia and the French Banque de France still strongly support gold as a reliable store of wealth.
The Russian Federation has 2,299 tons of gold, making it one of the five largest gold holders in the world. This is an interesting example, as Russia is said to have kept its gold reserves years before the invasion of Ukraine.
Russian gold stored in vaults in Moscow and elsewhere in the country during the initial stages of the invasion of Ukraine was valued at about $140 billion. One can assume that Russia built up its gold reserves years ago, anticipating an invasion of Ukraine. The idea is obviously to insulate Russia from the effects of sanctions that would reduce the value or utility of the ruble.
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There is also the question of how Russia could sell its gold if it wanted to. While some countries have imposed sanctions on Russian gold, the country is still believed to be able to sell its gold to China, India and/or Kazakhstan.
China may not have made the top five on this list, but the country’s 1,948 tonnes of gold is nothing to sneeze at. It is one of only two East Asian countries in the list of countries with the largest gold reserves. However, it is difficult to justify China’s exact place on this list because the country does not necessarily have a perfect track record when it comes to transparency in the release of economic statistics.
Still, it’s not unreasonable to assume that China has a ton of gold stockpiled. One commentator has even suggested that China actually has more gold than the United States—estimated to be around 20,000 tons—an interesting possibility to consider, but difficult to prove.
Why would China choose to stockpile so much gold? One reason may be the country’s apparent desire to “de-dollarize,” that is, reduce reliance on the world’s most widely used reserve currency, the U.S. dollar. Both China and Russia may have increased their gold holdings due to dollar liberalization.
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Also, when Russia invaded Ukraine, there was concern that China might follow suit and attack Taiwan. If so, China’s multi-year gold hoarding may have a specific and dubious purpose.
Switzerland’s love of gold is no secret, and the Swiss National Bank’s 1,040-ton holdings cement the country’s place among the ten largest owners of gold. It is widely believed that Switzerland has the largest per capita gold reserves in the world.
Russia is a major producer of precious metals, while Switzerland is the world’s largest gold refining and transit hub. Customs data show that Switzerland received 3.1 tons of gold from Russia in May, worth about $200 million.
According to the Federal Bureau of Customs and Border Protection, “import of gold from Russia to Switzerland is not prohibited by the regulation on measures related to the situation in Ukraine.” On the other hand, “gold exports to Russia are prohibited by the existing sanctions regime”. Thus, there may be debate as to whether Swiss purchases of gold from Russia violate the terms and/or spirit of European sanctions against Russia.
Which Country Has The Most Gold?
Finally, we can close the list of the world’s top gold hoarders with the Bank of Japan owning 846 tons of gold. After Japan, India, Netherlands, Turkey, Taiwan and Kazakhstan are the next largest holders of gold.
2022 was an interesting year for gold in Japan to say the least. Metal prices in Japan hit an all-time high in February, likely due to concerns over geopolitical risks and a weak Japanese yen.
Then, in June, Japan joined the United States, Great Britain, and Canada in banning Russian gold exports. British Prime Minister Boris Johnson said the joint action would “hit Russian oligarchs directly and strike at the heart of (President Vladimir) Putin’s war machine.”
Owning gold can be rewarding. Gold is generally considered a hedge against inflation and fluctuating exchange rates and is highly sought after as a means of diversifying national wealth.
Chart: How Much Gold Is In The World?
Holding gold also has its downsides. Gold reserves do not earn interest, so removing assets in gold countries may deprive them of interest income.
Countries with the largest gold reserves are neither stronger nor weaker than other countries. Maybe they just have different priorities and choose to put their resources in different ways!
David Modell serves as Principal Analyst and Opportunity Researcher at Portfolio Wealth Global. He writes for The Motley Fool, InvestorPlace, Tipranks and Crush the Street. David is also active on several social media platforms with hundreds of thousands of followers on YouTube, Twitter, StockTweets and other popular sites. Rely on David for wealth building strategies and resources for investors and traders of all financial profiles.
Editors use only quality primary sources to substantiate information in our articles. Read our editorial policy to learn more about how we ensure our content is unbiased, accurate and up-to-date.
Countries With The Largest Gold Reserves
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