Ten Nations That Control the World’s Gold

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10) India
> Gold reserves: 557.7 tonnes
> Pct. of total foreign reserves: 10.0%
> GDP: $1.82 trillion (10th highest)
> Stock performance: Bombay BSE up 7.6% in Q3, up 21% YTD

While India ranks 11th on the World Gold Council list, it is 10th if you remove the International Monetary Fund. India has been a steady buyer of gold over time. That is likely to continue as the government needs to support its currency, even if the economy is volatile. India became an aggressive buyer in 2009, when it spent almost $7 billion to buy 200 tonnes of gold, which the IMF sold to raise capital. For the economy to support 1.2 billion people, the central bank must hold gold and hard assets. The Indian population is a large consumer of gold for jewelry and there is high demand for the precious metal to store wealth. India will thus continue to buy gold in the years ahead.

9) Netherlands
> Gold reserves: 612.5 tonnes
> Pct. of total foreign reserves: 59.8%
> GDP: $838 billion (17th highest)
> Stock performance: AEX up 5.1% in Q3, up 3.4% YTD

It is surprising that the Netherlands has so much gold. But it is also important to recall that the country is a former colonial power and has a long history as a very wealthy nation. Its population of 16.7 million ranks 63rd among all nations, while its GDP is the 17th largest in the world. As with some European nations, the Netherlands did not sell all the gold provided for by the Central Bank Gold Agreement. Now that the Netherlands is under some of the same pressure as many other European nations, it is unlikely to be a big seller of gold. It may need that gold to protect itself if the euro comes unraveled.

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8) Japan
> Gold reserves: 765.2 tonnes
> Pct. of total foreign reserves: 3.2%
> GDP: $5.86 trillion (3rd highest)
> Stock performance: Nikkei 225 fell 1.5% in Q3, up 4.6% YTD

Japan has to hold large amounts of gold. The Bank of Japan has held interest rates at almost zero for about two decades. It recently sold gold so that it could pump about $200 billion worth of yen into the economy as stimulus after the tsunami and nuclear disaster threatened to send Japan back into recession. At some point in the future, Japan may need to buy that gold back to support its large monetary base. Until then, the yen remains one of the stronger global currencies, which makes exports more expensive. Japan’s population of 127 million is aging rapidly and birth rates are extremely low.

7) Russia
> Gold reserves: 936.7 tonnes
> Pct. of total foreign reserves: 9.6%
> GDP: $1.85 trillion (9th highest)
> Stock performance: MICEX down near 4% in Q3, negative YTD

Russia continues to buy gold as its global economic ambitions grow. A previous 24/7 Wall St. analysis showed that Russia’s reserves were 784 tonnes in early 2011 after it bought 120 tonnes in the first 10 months of 2010, more than 100 tonnes in 2009 and close to 70 tonnes in 2007. The World Gold Council reported that Russia has added more gold, so that reserves likely will rise yet again. Russia is extremely wealthy in natural resources, and president Vladimir Putin and his allies want it to become more of an economic superpower. With a population of 142 million and Russia’s GDP of $1.85 trillion, its holdings of gold are likely to surge.

6) Switzerland
> Gold reserves: 1,040.1 tonnes
> Pct. of total foreign reserves: 11.5%
> GDP: $660 billion (19th highest)
> Stock performance: Swiss Market up 7% in Q3, up 9.4% YTD

Switzerland is the world’s private banker and so must be a top holder of gold. Still, it is amazing to consider that its population is barely 7.9 million and it ranks 95th in the world for population. Also, its dollar-adjusted GDP of $660 billion ranks only 19th. Switzerland sold gold from 2003 to 2008, right before the huge run up in gold prices. If Switzerland needs to devalue its currency to remain competitive, it can always sell more gold. Unless global banking disappears entirely, the Swiss will remain one of the largest holders of gold in the generations ahead.