In past few years, the demand of gold bullions among different world countries has considerably raised high. From starting of this decade, the central banks of different countries have started buying gold instead of selling it. Due to this trend, in 2016, the demand for gold has reached 4,308.7 tons by an increase of 2%.
It doesn’t mean that central bank of all countries has become net buyers of gold bullions instead of sellers. Mainly Russian and Chinese banks are involved in this activity. According to records, United States of America holds the highest amount of gold. Some other countries that are playing important role in World’s economy, are still using their gold reservoir for different purposes. For instance, Bank of Canada has sold off most of its gold, and that too in form of gold coins. Similarly, Venezuela, an important South American country, is using gold to get rid of its debts.
Despite these facts, according to the World Gold Council, abbreviated as WGC, 17.8% of all gold mined till today is collectively owned by World’s central banks.
In this article, we will discuss the top 10 countries that hold officially declared the largest amount of gold, but first, have a look at how much gold is produced and consumed globally in a year.
Production of Gold:
The main source of gold production is earth mining, but recycling of gold is also considered as its production. Therefore, it is estimated that 2/3 of total gold produced is through mining, while remain 1/3 is through recycling. According to WGC, an average of 4000 tons of gold has been produced annually in last 10 years.
Some of the top gold producers in the world are:
- • South Africa 428.3 tons
- • United States of America 353 tons
- • Australia 295.7 tons
- • China 175 tons
- • Canada 153.8 tons
- • Russia 144 tons
- • Peru 133 tons
- • Indonesia 124.6 tons
The demand for Gold:
Gold is a precious metal, and it has a great cultural, emotional, and financial value all over the world. Mainly gold is used in jewelry making. It is also used to increase the financial portfolios and wealth protection of nations.
Top 10 Countries with the Largest Gold Bullions Stores:
Following is the list of top 10 countries that hold largest amount of gold bullions:
1-United States of America
Holding about 8133.5 tons of gold, USA is the largest gold bullions holding country of the world. According to records, 74.9% of foreign reserves of the central bank of USA is gold. After Tajikistan, where gold is about 88% of the foreign reserve, USA has largest gold as foreign reserve (about 74.9%). The largest gold holder in the USA is Fort Knox of Kentucky.
3,381 tons, making 68.9% of total foreign reserves. Germany is the second largest gold holder of the world. Now days, Germany is in the process of repatriating its own gold from different locations, especially from Paris and New York. In 2016, German Federal Bank transferred its 210 tons back to the country, and according to the plans, by 2020, bank will transfer 3,381 tons back to Germany.
68% of foreign reserves of Italy makes about 2,451.8 tons of gold. Over the period of past years, Italy has successfully maintained its foreign reserves. According to a former governor of central bank of Italy, gold has proved to be a good reserve of safety, and it also helps in protecting the country’s economy against fluctuating Dollar value.
2,435.7 tons of gold makes about 62.9% of the total of foreign reserves of the country. The central bank of France has sold some of its gold in last several years, but now there are campaigns to stop selling the gold. An important political leader of France, and also the president of the country’s far-right National Front party s demanded to immediately stop selling gold of the nation. He has also demanded to repatriate all gold.
The total gold bullion of China is 1979.5 tons of gold, which is about only 2.2% of foreign reserves. A couple of years back, People’s Bank of China started sharing its gold purchasing activity with people on monthly basis. As the current gold bullions of the country is only about 2.2% of total foreign reserves, chances are high that the bank will buy large amounts of gold bullions in near future.
The central bank of Russia is very actively working on rebuilding its gold reserves for last few years. In 2015, Russia appeared as the top buyer of gold in the world added a record of 206 tons of gold in its foreign reserves. This is a very serious effort of the country to diversify itself away from the US dollar, after its chilly relationship with the West since mid of 2014. According to the latest records, 15% of foreign reserves of Russia, which is about 1460.4 tons of gold, is comprised of gold.
Although Switzerland is at the seventh place in the list of gold bullions holders of the world, it has the largest reserve of gold per capita. It was during the World War II that the country became the center for trade of gold. Switzerland was a neutral country during the war, and it had made transactions with both the Axis and the Allies powers. In recent years, the country trade gold mainly with China and Hong Kong. The Swiss National Bank has 1040 tons of gold which is 6.7% of its total foreign reserves.
With 765.2 tons of gold (2.4% of total foreign reserve), Japan stands at the eighth largest gold holder of the world. It is also the third largest economy of this time on planet. The central bank of Japan lowered the interest rate even below zero in January, which actually helped in fueling the gold demand in the world.
With 61.2% of the foreign reserves, 612.5 tons of gold, Netherland is at the ninth position of gold holder of the world. These days, the central bank of the country is looking a safe and suitable place to store its gold as they want to renovate their vaults. The Dutch Central Bank has repatriated a fairly large amount of gold from the USA.
India is geographically and economically an important country of South Asia. With large population (about 1.25 billion people), India is at the top of the list of gold consumers in the world. The central bank of the country, The Bank of India, is one of the largest gold bullions holders of the world.
10 reasons countries buy Gold Bullions
It is in the nature of humans that they want to know about the benefits of thing they are about to invest their money in. So when the countries are making investments in the Gold Bullions it means that there must be some major advantages to it.
It is often thought that countries invest in the gold to enhance the value of its money in the world market. However, there are many other hidden benefits that no one wants you to know. So here we have a list of 10 reasons that will make you understand that why some of the biggest countries are investing in Gold Bullions.
1-Gold is money
Gold is superior to any currency because of the role in plays in the market. So gold might not be used as money now but it would always have a higher value than the paper money. However, in the past gold was the only currency that was utilized around the world. If we go back you would be surprised to know that gold has been used as money 3000 years ago. On the other hand, the paper money is only 1200 years old.
Apart from that, gold is the perfect asset to save your money. It will provide you with the long-term benefits as well as when the market price of gold will enhance the countries will not only sale it for profit but also get a chance to increase the value of their currency.
Compared to the currency gold will preserve the purchasing power of a country for the next 5 years. This is the reason it is said that the value of gold is timeless.
One of the biggest benefits that the countries get from investing in the gold is:
- It is physical thing that can be stored in the lockers so they will know that the asset is going nowhere
- It will not require any kind of maintenance which means that the only money you will invest in gold is the once used to buy it.
- You will not have to worry about the destruction of gold because it is not affected by water, environment or fire
- The gold bullions cannot be hacked or erased this means that the asset of the country is in the safe hands as once it is in the secure locker the only safety they require is from the thieves
So the gold bullions will always be better than the digital investment and the paper currency for a country. As there are many other tasks that the government has to perform so having gold bullions will provide them a peace of mind.
3-No counterparty risk
The best thing about the gold bullions is that when a country invests in it there is no need to sign a contract. It is a simple give and take policy. There is no need to add a third party or someone to state that you have paid and bought the gold. It is simply a financial asset that the country has to deal with because there is no liability or other requirements that need to be fulfilled.
Gold will never go to zero and this is the reason that it is regarded as the most powerful tool of the country. In case the economy is falling or the country is facing some financial issues they can always use their gold bullions to manage the downfall.
Gold will always have the most value because you can sell it to have currency. Since the past 3000 years, gold has still the same value which means that countries have taken the right decision by investing in it.
4-Confidential or Private
The best thing about gold bullions is that the countries can keep it private. If they do not want other to know about the deal or the amount of gold that they have stored they can simply keep it hidden. As there is, no paper work required so simply just transfer the gold in the lockers and no one will know about it.
On the other type of investments, such kind of freedom and privacy cannot be enjoyed. Gold bullions will allow the countries to keep their assets hidden, which mean that they can reveal them when the time comes to gain the importance in the world that they require. Apart from that, it is the purest form of asset. It means that there is no mixing in the metal and so the countries will not have to worry about the fake money or the property that has been sold to them illegally. Gold bullions are something that cannot be scammed.
One of the amazing things about gold bullions is that they are liquid. It means that there is no wait when you need to sell it. This is the reason that most of the countries stock gold because they will then utilize it to buy good or export other essential items that might be necessary for the development of the country.
The value of gold is same around the world to it is often profitable to finalize the deals with gold rather than money. Apart from that, it is easier to carry and sell. The reason is that it will allow the countries to finalize the quick deal as compared to other digital assets or money because that will require some kind of authentication at some point.
The benefit of gold is that it can be transported anywhere in the world. The transportation of gold also does not require special security checks. So it can be regarded as easily convertible cash that can be taken to any part of the world.
6-Low maintenance and easy to store
There has been a misconception that the storage of gold is very costly as well as in case it is stolen it might cost you a fortune. However, countries investing in gold bullions have changed this concept completely. Here are a few reasons why:
- We know that a country will invest in gold that is worth millions of dollars still they do not require much space to store it
- The storage cost of gold bullions is less because there are no taxes or renter payments that are required to be dealt with
- Its value is dense which means that a large amount can be easily stored in a small space. This is the reason that the financial departments a country has small lockers in the banks confined to store the gold bullions bought for the developments of the country
So remove the misconception than investing in gold bullions is the waste of time and money. As it is the asset that will provide lifelong benefits.
When a country requires investing in something big they have to make sure that their specialist has the require knowledge about it. As this is the only way, they will know if the investment is going to be profitable for the economy or not. You can take the example of digital or real estate investment. If the financial department does not have the expert of the field, they might make the wrong deals that would be hard for the country to adjust.
In the same way, it is difficult to spot a real diamond but in the case of gold, there is no doubt because the difference can be easily spotted. Gold bullions are the best way to protect the countries against the crisis because they can be utilized to earn cash when the value of gold is increasing. Apart from that, no one can fake an investment because selling impure gold will cause many issues to the company as well as in case finalizing the deal of impure gold with a country might end up the organization forever.
One of the biggest advantage that countries get by investing in gold is protection against the ruthless countries. It is a common thing that when the 5 powers of the world want to destroy a country they will start by damaging their economy. It means that they might block their banks, enhance the taxes on even the minor necessities of life.
So in case, the country has the proper storage of gold than it would be hard for the world power to destroy it. There would be no worry about the confiscation of the funds because the gold can be utilized to open an account in many other states as well. Therefore, the country would easily transfer its assets to some other friendly state that would provide them the protection that they require. It means that if a country has properly invested in the gold bullions they will not have to worry about the downfall of the economy.
9-Increase the value in Stock market
Stock markets are not only for the individuals to invest in. There is a global stock market in which the countries invest to enhance their assets. They can then utilize them for the development of the country. It has been proved that gold will be a better investment in the market rather than cash. As the value of cash will remain, the same but in the case of gold when its value will enhance the country will be able to get more profit.
In case the market value of the gold has fallen still there is nothing to be worried about. As it has been noticed that when the market rate falls they will soon increase at such a rate that was higher than the previous value. So it creates a win-win situation for the financial department of the country as they will get their stats ready. So that they can invest at the right time to get the benefits that can be then enjoyed by the public.
10-Protection of investments
One of the strongest benefits of gold bullions is that it has been protecting the investments of the country. In case that there has been an economic crisis in the world if a country as stored enough amount of gold they can turn it from an asset to the profit-generating tool.
It can be regarded as the natural safe heaven even if the country is going through some severe crisis like environmental disaster or war. It can be regarded as the defensive tool that will allow the country to stay in the power despite the situation of crisis or downfall. With money, it might be hard for a country to stand up again. However, with gold, they will be able to earn the profit and cash that would allow them to develop once again and reach the same value of the successful economy.
Gold is a precious metal that is obviously quite expensive to buy and has a lot of value too. The price of gold keeps on fluctuating in the international market and so one can never predict when it is the best time to buy it. Developed countries like Japan, Switzerland, china, Russia and many others are the ones where the prices of gold bullions are pretty low.
These countries possess high gold reservoirs and hence have offer gold bullions at a cheaper rate than many other countries. Gold bullions are the best form of investment. Countries who are rich in gold reservoirs are leading the world today