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A central banker’s guide to gold as a reserve asset


World Gold Council/Central Banks and Public Policy Group/October 2021

bar chart showing global central bank gold purchases and sales 1971 to present
Chart courtesy of World Gold Council.com • • • Click to enlarge

“[G]old is not an asset bought because of its industrial uses or income-generation appeal – rather it is an ultimate strategic hedge whose value usually grows in circumstances of increased risk of financial or political crises or turbulences, i.e. precisely at times when the central bank might need its reserves most. And, yes, physical gold may seem “barbaric” by today’s standards of digital currencies, blockchain technology and cashless payments, but – to put it bluntly – an ounce of gold will still be an ounce of gold should lights rather unfortunately go out.” – Adam Glapinski, Governor, National Bank of Poland

USAGOLD note: As the accompanying chart shows, central banks became net purchasers of gold in 2010 – a major switch from being net sellers from the mid-1980s. Since 2010, central banks have added over 5500 tonnes to their reserves – much of that purchased by emerging countries diversifying from other countries currencies, including the U.S. dollar. Given the attitude towards gold now prevalent among central banks as summarized by the head of Poland’s central bank, the trend toward accumulation is likely to continue. In fact, according to Glapinski, Poland will buy another 100 metric tonnes of the metal in 2022.

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