Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers. Last year, official sector activity declined 1% from the year prior, with central banks adding a total of 650.3 tonnes. This is slightly lower than in 2018 when banks purchased 656.2 tonnes - the second-highest level this century, according to data compiled by the World Gold Council (WGC). The 10 central banks with the largest gold reserves have remained mostly unchanged for the last few years.
The US still holds the number one spot with over 8,000 tonnes of gold in its vaults - nearly as much as the next three countries combined. As many as 15 central banks made net purchases of one tonne or more in 2019, highlighting the continued demand for bullion around the world. Turkey was the number one buyer - adding 159 tonnes to reserves. Poland made the single largest purchase for the year when it bought 94.9 tonnes in June.
WGC notes that central banks bought 5,019 tonnes in the last decade, which more than offsets the 4,426 tonnes of net sales from 2000 to 2009. Gold reserves are now only 12% below the all-time high of 38,491 tonnes in 1966. Below are the top 10 countries with the largest gold holdings.
1. The United States
The United States has long sat atop the list of largest gold owners since Fort Knox. The size of the country’s economy (it’s the largest in the world) and its long history of financial success make this less than a shocking finding. What is more interesting is that the over 8,100 metric tonnes of gold the United States owns are more than twice the amount of the second-largest holder of gold (no spoilers, you’ll have to wait to find out what European nation claims the number 2 spot). In other words, the US stockpile is far and away from the largest. It’s also four times the size of China’s gold hoard despite the fact that this emerging nation is the second-largest world economy.
There’s one more interesting thing about the US gold stash, it’s carried on the Federal Reserve’s balance sheet with a book value of $11 billion. However, the market value of that gold is closer to $300 billion, according to the central bank of New York. That means that the US government may have a little more of a financial backstop than the official numbers suggest. Not such a bad thing with US debt levels ratcheting swiftly higher following the deep 2007 to 2009 financial downturn.
There you have it, the No. 2 owner of gold is Germany. The country owns a bit under 3,370 metric tons of gold. What’s notable here is that Germany’s economy is the fourth largest in the world, roughly one-fifth the size of the US’s economy and one-third the size of China’s. Showing up in the second slot on the gold list may seem like Germany is punching above its weight. That’s especially true when you think back to the financial and political turmoil that followed WWII in Europe, notably for that war’s primary aggressor.
Europe’s financial devastation, however, might help to explain the country’s fondness for the metal. Add in the crippling inflation Germany experienced in the 1920s, and you can see where a store of wealth like gold is a key piece of the German Central Bank’s balance sheet. Even in the worst-case scenario, it will have this huge gold horde to fall back on.
Still, it’s worth noting that the country’s holdings of gold are down slightly over the past decade, falling from around 3,410 metric tonnes at the end of 2008. That’s not a huge change, but the decline has been fairly steady. However, there’s a long way to go before Germany loses its second-place ranking to No. 3 on the list.
The third country with the largest gold holdings is fellow European Italy. Italy clocks in at roughly 2,450 metric tonnes. That’s just a little above No. 4, but actually below the International Monetary Fund (IMF), which owns about 2,800 metric tonnes. Since the IMF isn’t a country, however, it didn’t make this list - but not mentioning the IMF here would have been a noteworthy oversight. Interestingly, Italy’s gold stores haven’t budged since the start of the century, unlike No. 2 Germany’s reserves, which have slowly declined lately.
With just the eighth largest economy in the world, Italy showing up so high on the gold list might be something of a shock. Indeed, the country’s economy is around one-tenth the size of the United States’ economy, However, Italy and gold have a very long history, with mining for the precious metal in the southern European country dating all the way back to the Roman Empire. Note, too, that Italy’s gold reserves plunged to just 22 metric tonnes during WWII, a low number driven by Nazi Germany’s confiscation of the metal during the war. In the end, getting to a comfortable level of gold ownership and staying there makes a lot of sense for this nation.
Just 15 or so metric tonnes behind Italy on the top-10 list is France, with about 2,435 metric tonnes. France is the sixth-largest economy in the world, so it's No. 4 ranking is pretty reasonable. However, it had much more gold at the start of the millennium, when it owned roughly 3,025 metric tonnes. In just 18 years, then, the country has sold around 20% of its gold reserves. That’s a pretty notable change, though the tally has held pretty steady at 2,435 metric tonnes for the last decade.
France’s central bank carries gold at market value, unlike the United States. So changes in gold prices can have a big impact on the country’s balance sheet. For example, in 2017, the latest year for which data is available, the value of France’s gold holdings fell by $1.26 billion Euros. That’s a lot of money on an absolute basis, but France owns a huge amount of gold. In percentage terms, the drop wasn’t nearly as startling at only about 1.5%. There’s upside potential here as well. If the price of historically volatile gold were to rise materially France’s central bank would suddenly seem much richer.
One more interesting thing about France’s gold stash is that it keeps it “hidden” in a vault underneath its central bank building. You can’t actually see it in person, of course, but you can learn about the gold if you are happy to be lucky enough to visit France during the annual European Heritage Annual.
Next on the list is Russia with around 2,070 metric tonnes of gold. Russia isn’t one of the top-10 global economies according to the IMF, so being in the middle of the top-10 gold holdings list is something of a surprise. That said, the country has been a military and political agitator on the global stage in recent years (it annexed Crimea in 2014 to much global criticism, for example), so having some insulation against outside financial shocks makes a lot of sense. Not that the country is currently facing strict sanctions related to its actions that have put a material crimp on its economy.
With that as a backdrop today, it might be interesting to know that Russia’s gold stores fell to a very low 340 metric tonnes in 2000. Since that point, however, the country’s central bank has fairly steadily added more of the yellow metal to its stash. In fact, over the past year or so, it has increased its holdings of gold by more than 12%. Those additions were enough to push the country up to one spot on this top-10 list. If the trends hold, it also seems likely that Russia is intent on bolstering its gold holdings until there’s some material change on the sanction front.
As the second-largest global economy, China’s spot all the way down at No. 6 on the top gold holdings list is at first somewhat shocking. That said, the country is still in the process of shifting from a largely rural and agrarian nation to a more modern, centered one. At this point, China owns roughly 1,840 metric tonnes of gold. That’s up from 395 metric tonnes in 2000. So, like Russia, it has been adding materially to its holdings over the longer term. The primary reason (rapid economic growth), however, is a bit different. Hong Kong, owned by China, has another 2.1 metric tonnes, but that’s just a rounding error compared to the holdings in mainland China.
Recent news reports suggest that China has been adding to its gold reserves lately. Locked in a contentious trade battle with the United States, it makes sense that China would be looking to fortify its finances with gold. This move is also likely part of the country’s efforts to shift away from the US dollar as the primary global currency. There’s a long way to go before the dollar loses its supremacy, so there may be more gold acquisitions in the cards for China over the near term near Portugal, Belgium, Spain, and the United Kingdom.
There’s a sizable gap between China and No. 7 Switzerland, which owns roughly 1,040 metric tonnes of gold. The only larger drop between the two countries is between the United States and Germany, Nos. 1 and 2 on the list. Switzerland, meanwhile, isn’t one of the top 10 economies in the world. Being a relatively small European nation, that makes sense. However, there’s an interesting gold statistic that comes with a modest population (roughly around 8.4 million people) and a big gold stash.
Industry watchers estimate that Switzerland has nearly four ounces of gold for every resident in the country. That’s far and away from the largest per capita figure, with top-five gold owners Italy and Germany only coming in with around 1.3 ounces per person. The United States, with over 325 million residents and counting, doesn’t even crack the one ounce per person mark.
Even more interesting when you consider the per capita number is the fact that Switzerland has reduced its gold holdings by 60% since 2000. If you think four ounces per person is a lot of gold, it was even higher at the start of the century.
As the world’s third-largest economy, Japan has a surprisingly low rank on the top gold holdings list. The country’s 765 metric tonnes of gold is only good for an eighth-place showing and is roughly a tenth the size of the US hoard. The country’s gold stores have been basically static at that level for the last decade.
One of the more interesting facts about Japan’s gold reserves is that it contains gold coins that date back to before the Edo era, which started in 1603. Although these coins have been classified as bullion as gold standard, which is basically a gold coin or ingot of collectible value, Japan took stock of its older coins in the early part of the new century and brought out examples of its old coinage for display as numismatic (the fancy term for collectible gold coins) specimens. The country says very little about its gold holdings, but with over 400-year-old coins in the mix, it must be an interesting stash.
Another small fry on the global stage, the Netherlands comes in at No. 9 on the top-10 gold owner’s list with roughly 610 metric tonnes of the metal on the coronavirus. That’s down by about a third from the 910 or so metric tonnes at the start of the new millennium. That said, the country has been doing a lot with its gold lately.
In late 2016 the central bank of the Netherlands announced that it was moving gold from the center of Amsterdam to a new location owned by the defense ministry and the foreign exchange. The goal is to better protect the gold. The new facility, which is expected to receive the gold in 2022, has been dubbed the cash center and will also be used to deal with currency sorting and distribution. This plan follows the country’s decision to bring a material portion of its gold back from foreign locations in 2013.
The shifting piles of gold, meanwhile, has spawned internet rumors that, perhaps, the Netherlands doesn’t have accurate records of its gold holding, nor do Austria or Venezuela, or Kazakhstan. That would be unusual, but one thing is clear, the central bank doesn’t seem to enjoy talking about its gold.
The second most populous nation on Earth, India sneaks in at No. 10 on the largest gold holdings list. It has a little over 590 metric tonnes of the metal. The country held roughly 360 central bank gold metric tonnes of gold between 2000 and 2009, but at the end of the year increased its holdings by more than 50% to around 560 metric tonnes. Additional gold acquisitions in 2018 pushed the tally to the current figure. Although no reason was given for the purchase, central bank watchers have suggested that it was likely an attempt to offset the impact of US dollar fluctuations.
That said, India is one of the world’s largest consumers of gold, with the country’s residents having a material affinity for the metal. For many years India has had restrictions on the import of the metal but scrapped them in 2015. At the time the rule change led to a doubling of the gold imported into the country according to news sources. What’s even more eye-opening is that some industry watchers suggest that India’s residents own 20,000 metric tonnes of gold - a figure that would dwarf the country’s central bank holdings of the metal.
The United States holds the largest gold reserved at more than 8,000 metric tonnes, which is twice that of the next leading country, Germany, and three times that of Italy and France. If valued at a conservative USD $1,300 per ounce, these reserves are theoretically worth more than USD $375 billion. These reserves were a significant portion of the country’s roughly USD $8500 billion monetary base in August 2008, but since then, it has become a smaller portion of the USD $4.9 trillion monetary base in 2020.
These gold reserves accounted for about 79% of the Federal Reserve’s holdings as of September 2020, which means that it seems to prefer gold over a basket of currencies, foreign reserves, and foreign sovereign debt like many other countries. By comparison, China holds less than 4 percent of its reserve holdings in gold and a majority in US government bonds that it acquires through a long-running trade deficit amounting to trillions of dollars.
While the US holds the largest gold reserves, other countries like Uzbekistan, Algeria and Argentina are adding to their reserves at a faster rate or have access to domestic gold sources. For example, China ranks relatively low on the list of gold reserves, but it is mining more new gold than any other country. Similarly, Australia has just 280 metric tonnes in its reserves, but it houses the largest gold mine reserves in the world along with the third-largest gold producer.
In recent decades, more and more central banks have sold large portions of their gold holdings. While around 60% of all currency reserves were invested in gold in 1960, today they are less than 10%. As a result of the massively increased price of gold over the past few years, inventories have also risen in value - which in turn had led to the gradual sale of further reserves without reducing the monetary value of the reserves.