Posted on September 06, 2017
Last week at JM Bullion we looked at the visit of Treasury Secretary Steve Mnuchin to the US Gold Bullion Depository at Fort Knox, the first such visit by a Treasury Secretary in 69 years. This week we’re continuing our focus on national gold bullion reserves by focusing on the nations with the greatest reported stores of gold bullion on hand. If you’ve been paying close attention to the news, you may have noticed this topic appearing regularly at the moment.
Germany has one of the top gold reserves in the world, but for the majority of the post-World War II era in modern history a vast amount of its gold has been held outside of the country out of fear that were Germany overrun by the Soviet Union during the Cold War, its massive stores of gold would fall into the wrong hands. Read on to learn about the ten countries with the greatest gold reserves in the world today.
With 1.25 billion residents, India is rightly a driving force in the precious metals marketplace. While the nation itself holds 557.7 tonnes of gold, representing 6.3% of its foreign reserves, the people of India as individual buyers are considered to be either the number one or number two largest consumers of gold. One particular reason for this is India’s so-called Love Trade of gold, with the metal playing a role in the festival and wedding season that runs annually from October to December.
At the Dutch Central Bank, some 612.5 tonnes of gold are held representing 61.2% of foreign reserves in the Western European nation. Like Germany, the Netherlands had moved much of its gold offshore following World War II and concerns of Soviet aggression during the Cold War. Although the Dutch Central Bank recently completed repatriation of much of its gold from the United States, it is now looking for a temporary home as it remodels its gold vaults.
Japan might be the third largest economy in the world, but its gold stores come in 8th at the moment in terms of volume. The nation holds 765.2 tonnes of gold, representing a scant 2.4% of its foreign reserves. Japan has been in the grips of a long economic slowdown, with the nation struggling to build momentum in terms of economic growth. The central bank is an aggressive user of quantitative easing, lowering its interest rates below zero in January 2016.
If you judged a nation’s gold reserves per capita, Switzerland would find itself at the top of the list. It was one of the few nations not to move its gold offshore in the aftermath of World War II. The neutral country was the center of the gold trade during World War II, working with both the Allied and Axis powers, though today much of its trade occurs with Hong Kong and China. The nation holds 1,040 tonnes of gold representing 6.7% of foreign reserves.
The nation that once scared the rest of Europe into moving its gold out of harm’s way is now aggressively building its own gold reserves. Russia holds 1,460.4 tonnes of gold representing 15% of foreign reserves. In 2015 alone, Russia added 206 tonnes of gold to its stores by selling US Treasuries to fund its buying. The move is an effort to diversify its economy away from the US dollar.
The world’s second largest economy has 1,797.5 tonnes of gold reserves representing just 2.2% of its foreign reserves. China, like Russia, has been aggressively purchasing gold in recent years to boost the status of the renminbi as an official International Monetary Fund reserve currency. To do so however, nations must have a higher volume of gold as a percentage of foreign reserves. China might be fifth on this list, but they are the world’s largest producer of gold.
While many other central banks around the world were selling in recent years, France’s central bank has held firm to the nation’s 2,435.7 tonnes of gold, representative of 62.9% of its foreign reserves. Ahead of this year’s presidential election, there were calls from some in the nation to halt the sale of France’s gold altogether and repatriate the entirety of its gold held in foreign vaults immediately.
Another European power lands high on the list, this time it’s Italy with 2,451.8 tonnes of gold representing a whopping 68% of its foreign reserves. Italy has followed in the footsteps of France, holding on to most of its gold reserves rather than selling off gold. This decision is supported by the European Central Bank President, Mario Draghi, who just happens to be the former Bank of Italy governor.
As we mentioned earlier, Germany has been driving the news cycle lately when it comes to cold. The nation that was split in two by World War II’s outcome holds 3,381 tonnes of gold representing 68.9% of its foreign reserves. However, following the split into West Germany and East Germany, there was great fear in Europe that Germany’s sizeable gold reserves could fall into the hands of the Soviets should they decide to invade West Germany.
As a result, the vast majority of Germany’s gold was moved to central bank vaults in Paris, London, and New York. The high cost and logistical stress of moving that much gold home to Germany left lawmakers convinced that the nation’s gold reserves were safe where they were at. However, a 2012 German court order calling for an inspection of the country’s reserves and the crippling economic crisis in the Eurozone pushed Germany to begin repatriating its gold.
Germany enacted a repatriation plan to bring home most of its gold by 2020, but like an efficient German auto, the country actually completed this push in August 2017. During the past five years, Germany spent $9 million moving half of its total stockpile of gold, valued at $140 billion, back to Frankfurt. The latest movements included 91 metric tons moved from Paris. In total, all of its gold from Paris (374 metric tons) is now in Frankfurt, with roughly 12% of its stockpile remaining in London’s vaults and nearly 38% remaining in New York’s vaults, though 300 metric tons were repatriated from New York during the past five years.
The United States holds gold reserves that nearly total the holdings of the next three closest nations combined. Gold bullion depositories in the United States hold some 8,133.5 tonnes of gold representing a staggering 74.9% of the nation’s foreign reserves. Only the nation of Tajikistan has a higher holding of gold as a percentage of its foreign reserves. While most of the US gold is held at Fort Knox in Kentucky, smaller portions are held at the Philadelphia Mint, Denver Mint, San Francisco Mint, and the West Point Bullion Depository.
Earlier we mentioned that China is the number one producer of gold in the world, so where is the world’s gold coming from? Well, here’s a breakdown of the top five mining producers of gold in the world:
Come back next week as we take a look at the gold vaults of the United States Gold Bullion Depository at Fort Knox. As always, follow us on Facebook and check back regularly with the blog as we share news stories, informational tidbits, and coin previews with you each week!