Do banks hold physical gold?

Most banks store gold in their underground vaults, although some keep their physical gold in foreign exchange reserves. For example, of its 612 tons, the Dutch central bank has 15,000 gold ingots, or 31 percent, of its available gold stocks; another 31 percent is in the Federal Reserve Bank of New York. Banks sell gold ingots and coins, as well as silver coins, but the vast majority of Americans, Americans. Banks don't make gold or silver available to the public.

Banks usually avoid selling precious metals due to fluctuating prices. And even if a bank sells gold or silver, its inventories don't usually match the size and variety of inventory found in precious metals companies and other sellers. When inflation and inflation expectations are high, gold is considered a hedge against accelerating asset prices. Central banks buy gold to protect the purchasing power of their currencies in the event of inflation.

The Federal Reserve does not own gold. A gold reserve is gold held by a national central bank, primarily intended to guarantee the reimbursement of payment promises to depositors and banknote holders (p. e.g. Paper money), or its trading pairs, during the era of the gold standard, and also as a store of value or to support the value of the national currency.

For most of history, a nation's gold reserves were considered its main financial asset and an important war prize. The Belgian government transferred one-third of its gold reserves to the United Kingdom, another third to Canada and the United States, and most of the rest to southern France. After the outbreak of the war, the gold deposited in France was sent to Dakar, the capital of Senegal, which was then part of the French colonial empire. .

After the Germans occupied Belgium and France in 1940, they demanded the Belgian gold reserve located in Senegal. In 1941, the French authorities in Vichy organized the transportation of 4,944 boxes containing 198 tons of gold to German Reichsbank officials, and the German Government used them to purchase products and ammunition from neutral countries. The Bank of France fully compensated the National Bank of Belgium for the loss of its gold after the war. The IMF regularly maintains statistics on domestic assets, as reported by several countries.

The World Gold Council uses this data to classify and report periodically the gold stocks of countries and official organizations. The gold listed for each of the countries in the table may not be physically stored in the country listed, since central banks have generally not allowed independent audits of their reserves. The leasing of gold by central banks could call into question the gold holds declared in the following table. Table 3.13 indicates the book value of gold deposited with the Federal Reserve Bank of New York for foreign and international accounts charged for specific purposes.

While you may want to buy gold for some of the same reasons as central banks, buying gold through a bank isn't that simple. Based on the official list of gold holders in the sector prepared by the World Gold Council (which uses IMF data obtained from each bank), the top 40 gold holders on this list were identified. Together, these 42 central banks and monetary institutions claim to have 32,075 tons of gold, which represents 95% of the 33,790 tons of gold that the 100 central banks included in the World Gold Council list claim to have. Gold has been an essential component of nations' financial reserves for centuries, and its attractiveness shows no signs of diminishing, as central banks will once again become net buyers of gold this year.

Ronan Manly is a precious metals analyst at BullionStar, whose blogs usually cover current topics, such as what is happening in the London gold market and the gold activities of central banks. While there is some discussion about gold in BIS documents 40 and 58, the reasons why central banks hold gold as a reserve asset are not discussed. A gold reserve is the gold held by a national central bank, mainly intended to guarantee the reimbursement of payment promises to depositors, to banknote holders (e.g. However, despite the fact that all four countries bought substantial quantities of gold in the last decade, they still lag behind their Western counterparts, since gold represents only 22 percent of Russia's reserves, while China's stocks, of just under 2000 tons, represent only 3 percent.

It should be noted that the United States Treasury, which claims to have the largest official gold reserves in the world, 8133 tons of gold, did not respond by explaining why it supposedly has the largest gold reserves in the world. The cutoff point of this survey were the 42 main gold-holding central banks in the world, which included Australia and Brazil, which are large holders of gold and both are also major domestic producers of gold. The main characteristics that support the unprecedented role of gold constitute, at the same time, the justification for keeping gold within the central bank's reserves. The only reference made by the central bank's fourth gold agreement (which was concluded between the ECB and European central banks) to gold reserves is that “gold is still an important element of global monetary reserves”, but it does not say why.