The 13 Countries That Control the World’s Gold

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Even if 2011 has gotten off to a rough start for gold, everyone knows that the value of gold is at historic highs.  What is interesting is that there is rarely a discussion about which countries actually have a lock on the world’s gold.  24/7 Wall St has compiled a list of the top 13 nations which hold the bulk of the world’s gold reserves and added in an outlook for 2011.

After having peaked above $1,420 per ounce at the end of 2010, gold has recently traded under $1,330 per ounce and has basically put in 3-month lows.  As part of its analysis 24/7 Wall St.  looked at the trends of the world’s top holders that may drive demand up or down ahead in 2011 after taking a look at the new data from the World Gold Council.

Many issues should be considered in gold investing including demand from the private sector for bars, coins and jewelry along with industrial use.

1) United States holds 8,133.5 tonnes.

What the U.S. holdings will be when the next report comes out in another 7 weeks or so  is uncertain.  There will have been more than $600 billion in new commitments for Quantitative Easing by the Federal Reserve in the last few months. The US debt ceiling has been an ongoing issue.  The U.S. could always try unloading some gold to depress rising commodity prices rather than to increase the deficit, but unfortunately that would only last a few months.  If it did sell some of the shiny gold metal, Uncle Sam would have to find huge amounts of gold later. Besides, it is arguable whether countries are any good at price intervention. The lackluster economic recovery may result in little change in the gold holdings of Uncle Sam in 2011.

2) Germany holds 3,401.8 tonnes.

Germany is the foundation of the European Union and the Euro.  The Germans were sellers of gold for coins under the Central Bank Gold Agreements (The third Central Bank Gold Agreement currently in force covers the gold sales of the Eurosystem central banks, Sweden and Switzerland) from at least 2003 to 2008, but the sales were not enough to put a serious dent in its supply of gold.  Under the current state of the E.U., it’s hard to see Germany becoming a huge buyer of the shiny metal.   A sale might cause investors to panic and cause the euro to collapse.  Unlikely, but a theory.   The funds to bail out troubled European countries, however, have to come from somewhere.  If Germany does sell gold reserves then it seems unlikely to be substantial enough that its #2 position would be up for challenge.

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3) Italy holds 2,451.8 tonnes.

Italy was in the Central Bank Gold Agreements .  On the surface, it seems that the Italians are unlikely to sell off their gold reserves even if they are the least discussed nation among the PIIGS.  Releasing gold might address some of Italy’s budget gaps, but the country faces many serious economic problems.  If we had to guess about reserves, we’d expect to see a slow or small drop but not enough to make much difference.