As 2018 turned into 2019, the easy reflection would be that it was a wild ride in the global equity markets. The year 2018 turned out to be a pretty exciting year for gold as well. The price gyrations might not have been as extreme as in years past, but central banks were major gold buyers in 2018.
The World Gold Council reported that net central bank purchases of gold totaled 651 tonnes over the course of 2018. If that sounds like a large number, there is a reason. That figure was up 74% over 2017, and it was the highest central bank gold-buying in decades — all the way back to 1971 when Bretton Woods was dissolved. Heightened geopolitical and economic uncertainty was shown to be the key drivers for central banks to diversify their reserves during a turbulent year.
The big question now is who really owns all the world’s gold. 24/7 Wall St. has reviewed global gold demand trends for years. It turns out that central banks and ministries now hold nearly 34,000 tonnes of gold (close to $1.4 trillion in value), but almost 28,000 tonnes, or more than 80%, of that is owned by just the 15 largest international holders of gold.
The United States has remained the world’s largest central bank owner of gold for ages. While some of the nations may seem obvious as the world’s top gold owners, some unexpected gains have been seen elsewhere in the world and that has shaken up which nations are more influential in the gold market now.
The gold-buying spree of 2018 was led by Russia, Turkey and Kazakhstan, but other central banks were big buyers of gold as well, including Iraq, Hungary, Poland, Mongolia and Azerbaijan. The net sales made by Australia, Germany, Sri Lanka, Indonesia and the Ukraine were deemed to be miniscule, with just a total of 15.6 tonnes combined.
The council showed that 76% of central banks view gold as a highly relevant safe-haven asset, and 59% of central banks see gold as an effective portfolio diversification tool. Almost one-fifth of the central banks also have indicated that they intend to increase their gold purchases over the next 12 months.
Note that the International Monetary Fund and European Central Bank are such large holders of gold that they have been included in the world’s top nations holding gold, despite not being nations. And to prove just how dominant the few largest gold holders are, a special reference has been made for the world’s largest exchange-traded fund for gold.
24/7 Wall St. sourced back to a similar view of the world’s top gold holders from 2012 here for comparisons, to see things now versus how central banks were acting in the aftermath of the last recession. Here are the 15 nations and government-related entities that dominate the global ownership of gold.
> Tonnes of gold: 350.4
Kazakhstan will seem odd to consider, being a larger holder of gold than Saudi Arabia (323.1 tonnes) and the United Kingdom (310.3 tonnes), but that is because its gold reserves rose by 50.6 tonnes in 2018 alone. This has now made for its eighth consecutive annual increase, and its gold reserves have risen for 75 consecutive months. Over that longer period, Kazakhstan net purchases totaled an impressive 246.4 tonnes.
> Tonnes of gold: 382.5
Portugal’s gold holdings have also remained steady for years.
> Tonnes of gold: 423.6
Taiwan has been a steady owner of gold for years and is expected to remain more or less the same.
12. European Central Bank (ECB)
> Tonnes of gold: 504.8
The ECB is a non-nation that gets counted as a national holder of gold. After all, it is the equivalent of the Federal Reserve for all of continental Europe covered by the European Union. Back in 2012, the ECB ranked right behind India as well, but with 502.1 tonnes of gold at that time. As a reminder, the ECB has been striving to end the massive bond buying, and the central bank would like to begin a path to moving away from what had been negative interest rates back to normalized interest rates.
> Tonnes of gold: 598.6
If there is one nation in which the population covets gold as much as the government, it’s India. Its 598.6 tonnes of gold held by the central bank are up from 557.7 tonnes counted in 2012. Still, this gain feels small compared to the past decade, when India spent almost $7 billion in 2009 to buy 200 tonnes of gold from the IMF. Indian’s monthly purchases began in March of 2018 and picked up in the second half of the year, for a total of 40.5 tonnes purchased in 2018.