Considered A Safe Haven During Crises The Yellow Metal Is Being Stockpiled By Central Banks Around The World Adding 650 Tonnes To Their Reserves In The Last Year
In times of uncertainty, gold has long been touted as a safe haven and never more so than during times of financial crisis like the one the Covid-19 pandemic has triggered worldwide.
While the gold standard was abandoned in the 1970s, the metal is still held by central banks across the world for its ability to provide stability: it is perceived as less prone to political or economic volatility and can be converted to cash if necessary.
Even before the pandemic, the global economy was showing warning signs and many countries had begun to hoard more gold.
Central banks added 650 tonnes to their reserves in 2019, the second highest shift in 50 years, after 656 tonnes were added in 2018. Before the 2008 financial crisis, central banks were net sellers of gold worldwide for decades.
There has been a large effort by central banks to repatriate their gold as well, mostly from storage in New York Federal Reserve and the Bank of England the two largest keepers of gold in the world.
Venezuela started repatriating its gold in 2011, shipping 160 tonnes from New York. A third of its holdings remain in London, but the UK wont return it because it doesnt recognise the Maduro government. Earlier this month, the UK High Court ruled against Caracas in a legal battle over access to $1bn of Venezuelan gold stored in the Bank of England.
Since the start of 2020, Turkeys Central Bank has purchased 148 tonnes, making it the largest official buyer of gold this year.
1. United States
Gold Reserves By Country 2022
One of the world’s most precious metals, gold is a bright, reddish yellow mineral with the elemental symbol Au. Because of its unique mix of practical and aesthetic qualitiesit is malleable, ductile, electrically conductive, corrosion resistant, largely non-reactive, and of course, beautiful to beholdgold has a myriad of uses. These range from jewelry and coinage to infrared shielding, gold leafing, tooth restoration, and computers and other electrical devices. Despite its usefulness, gold is relatively rare in nature, a fact that makes it all the more valuable.
Gold has been used as a form of currency since ancient times, which eventually led to the establishment of the gold standard. Widely used in the 19th and 20th centuries, the gold standard was a monetary system in which countries ensured the value of their paper money and coins by keeping equivalent values of actual gold under lock and key. The gold standard became less practical as economies grew, and is not currently used by any of the world’s countries. However, many nations still hold significant gold reserves. As of September 2021, there were approximately 31,695 tons of gold reserves in the world. The top ten central banks with the largest gold reserves have remained relatively the same over the past few years .
Low Regulation In The Clean Metal Supply Chain
While China leads all countries in terms of cobalt processing, the metal itself is primarily extracted in the Democratic Republic of Congo . Still, Chinese interests own 15 of the 17 industrial cobalt operations in the DRC, according to a data analysis by The New York Times and Benchmark Mineral Intelligence.
Unfortunately, the DRCs cobalt production has been criticized due to reports of corruption and lack of regulation.
Part of the Congolese cobalt comes from artisanal mines with low regulation. Of the 255,000 Congolese artisanal miners, an estimated 40,000 are children, some as young as six years old.
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The Rise Of Clean Energy Metals
The necessary shift from fossil fuels to renewable energy opens up interesting questions about how geopolitics, and these supply chains, will be affected.
In the race to secure raw materials needed for the green revolution, new world powers could emerge as demand for clean energy metals grows.
For now, China has the lead.
Top 10 Countries That Have The Largest Gold Reserves 2021
Central banks are significant gold holders and play an important role in the management of reserves. A gold reserve is a gold owned by a country’s central bank to support the value of its currency, and it was used as a pledge to redeem commitments to pay depositors, noteholders, or trading peers during gold standard periods. Governments place a high value on gold reserves. When inflation starts to rise, governments will buy large amounts of gold as a countermeasure.
According to World Gold Council data as of April 2021, central banks bought 272.9 tonnes of gold in 2020. Because the International Monetary Fund is not a country, it is not included on this list. The IMF, on the other hand, would have been third on the list, with 2,814 tonnes of gold in its vaults. The top ten countries with the most gold are listed below.
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How Gold Reserves Work
Gold has served as a means of exchange, to varying degrees, for thousands of years. For much of the 17th to 20th centuries, the paper money issued by national governments was denominated in terms of gold and acted as a legal claim to physical gold. International trade was conducted using gold. For this reason, countries needed to maintain a store of gold for both economic and political reasons.
No contemporary government requires that all of its money be backed by gold. Nevertheless, governments still house huge stacks of bullion as a failsafe against hyperinflation or another economic calamity. In fact, every year, governments increase their gold reserves, which are measured in terms of metric tons, by hundreds of tons.
For businesses, gold represents a commodity asset that is used in medicine, jewelry, and electronics. For many investors, both institutional and retail, gold is a hedge against inflation or recession.
What Countries Have The Largest Gold Reserves
The United States holds the largest stockpile of gold reserves in the world by a considerable margin. In fact, the U.S. government has almost as many reserves as the next three largest gold-holding countries combined . Russia rounds out the top five.
The International Monetary Fund is reported to have more gold reserves than Italy but less than Germany.
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Top 10 Countries With Largest Gold Reserves
Beginning in 2010, central banks around the world turned from being net sellers of gold to net buyers of gold. Central banks around the world bought 272.9 tonnes of bullion in 2020.
Central banks have been net buyers of gold for 11 consecutive years. According to World Gold Council data, central banks around the world bought 272.9 tonnes of bullion in 2020.
Purchases last year were a whopping 60% lower than the record 668 tonnes added in 2019. The COVID-19 pandemic was a stronger driver for some central banks to sell reserves and inject liquidity into their economies. Purchasing was concentrated in the first half of the year, then turned nearly nonexistent in the third quarter and resumed in the last three months of the year.
The top 10 central banks with the largest gold reserves have remained mostly unchanged for the last few years. The United States holds the number one spot with over 8,000 tonnes of gold in its vaults nearly as much as the next three countries combined and accounting for 79% of total reserves. The only countries where gold represents a higher percent of reserves are Portugal at 80.1% and Venezuela at 82.4%
Below are the top 10 countries with the largest gold holdings, with the rankings remaining unchanged from 2019. Figures are as of April 2021 and do not include the International Monetary Fund as a country, or else it would hold the number three spot with 2,814 tonnes.
Percent of foreign reserves: 67.4 percent
African Countries With Highest Gold Reserves
Algerias Gold Reserves held by the countrys Central Bank is the highest in Africa with 173.56 tonnes in the first quarter of 2022, a report by the World Gold Council has revealed.
Apart from the gold reserves held by The Bank of Algeria, the North African country is also blessed with the most precious metal .
For instance, there are deposits of gold in the Amessmessa mine estimated to be about 70 metric tons, which can be found about 60km to the south of the Tirek gold mine.
In the second position is South Africa with 125.35 metric tons in the first quarter of 2022, showing unchanged gold reserves held by the South African Reserve Bank in the fourth quarter of 2021.
Egypt increased its gold reserves from 80.91 tonnes to 124.97 tonnes to rank No.3 in Africa in terms of gold holdings
This indicates that the Central Bank of Egypt is one of the countries that is warming to deploy gold to reduce the effect of inflation on its economy. This corroborates the 2022 Central Bank Gold Reserves Survey conducted by the World Gold Council.
Libya and Moroccos gold reserves remain unchanged from what they had in 2021, holding 117 and 22.12 tonnes as No.4 and No.5 respectively.
Gold Reserves in Nigeria remained unchanged at 21.37 Tonnes in the first quarter of 2022 from 21.37 Tonnes in the fourth quarter of 2021
The Central Bank of Nigeria maintained its 2021 gold reserve at 21.37 tonnes, occupying the 6th position on the continent.
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Germany: 33624 Tonnes Of Gold
Germany’s gold reserves are held at the Deutsche Bundesbank in Frankfurt am Main, the New York branch of the Federal Reserve Bank of the United States, and the Bank of England in London. Germany completed a four-year repatriation operation in 2017 to return 674 tonnes of gold to its own vaults from the Banque de France and the Federal Reserve Bank of New York.
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1. United States
With the largest official holdings in the world, the U.S. lays claim to nearly as much gold as the next three countries combined. It also has the highest gold allocation as a percentage of its foreign reserves at 76 percent. From what we know, the majority of U.S. gold is held at Fort Knox in Kentucky, with the remainder held at the Philadelphia Mint, Denver Mint, San Francisco Assay Office and West Point Bullion Depository.
In 2017 Germany completed a four-year repatriation operation to move a total of 674 tonnes of gold from the Banque de France and the Federal Reserve Bank of New York back to its own vaults. First announced in 2013, the move was expected to take until 2020 to complete. Although gold demand fell in 2017 after hitting an all-time high in 2016, this European country has seen gold investing steadily rise since the global financial crisis.
Italy has likewise maintained the size of its reserves over the years, and it has support from European Central Bank President Mario Draghi. The former Bank of Italy governor, when asked by a reporter in 2013 what role gold plays in a central banks portfolio, answered that the metal was a reserve of safety, adding, it gives you a fairly good protection against fluctuations against the dollar.
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Where Clean Energy Metals Are Produced
China produces 60% of all rare earth elements used as components in high technology devices, including smartphones and computers.
The country also has a 13% share of the lithium production market, which is still dominated by Australia and Chile . The highly reactive element is key to producing rechargeable batteries for mobile phones, laptops, and electric vehicles.
But even more than extraction, China is the dominant economy when it comes to processing operations. The countrys share of refining is around 35% for nickel, 58% for lithium, 65% for cobalt, and 87% for rare earth elements.
Despite being the largest economy in the world, the U.S. does not appear among the largest producers of any of the metals listed. To shorten the gap, the Biden administration recently launched an executive order to review the American strategy for critical and strategic materials.
Its also worth noting that Russia also does not appear among the top producers when it comes to clean energy metals, despite being one of the worlds leading producers of minerals like copper, iron, and palladium.
Indonesia Peru And Sudan
Mine production: 90 MT
Indonesia, Peru and Sudan are tied for eighth place on the list of largest producers of gold. Half of Indonesias gold production originates from Freeport-McMoRans Grasberg mine, the worlds largest gold mine, which is believed to contain the largest gold reserves globally.
Peru saw a slight uptick in gold production from last year, with output nudging up 3 MT from the previous year to 90 MT in 2021. Illegal gold mining continues to be a struggle for the country, and has been responsible for the devastation of land, including patches of the precious Amazon forest.
Sudan is new to the list of top gold countries, and its gold-mining industry is also affected by protests against environmental degradation and gold smuggling. In late 2021, a gold mine collapsed, killing 38 artisanal miners.
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Securities Disclosure: I, Melissa Pistilli, currently hold no direct investment interest in any company mentioned in this article.
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United Kingdom: 31029 Tonnes
Many countries choose to store their gold in the heavily-fortified Bank of England vault, the second largest in the world after the vault at the New York Federal Reserve. The UK has its fair share of gold reserves too, with 310.29 tonnes of the precious metal currently held in its name. Despite there being no active gold mines in the UK, it’s long been seen as the centre of the wholesale gold market and a major importer and exporter of the metal.
However, this is a much-reduced reserve after the nation’s Chancellor at the time Gordon Brown made the controversial decision to sell more than half of the UK’s gold reserves 401 tonnes for $3.5 billion in 1999. The price of gold skyrocketed in the years that followed and many believe it was the wrong time to sell.
Chinas Dominance In Minerals
Perhaps unsurprisingly, China is the single largest supply source of mineral commodities for the United States.
Cesium, a critical metal used in a wide range of manufacturing, is one example. There are only three pegmatite mines in the world that can produce cesium, and all were controlled by Chinese companies in 2021.
Furthermore, China refines nearly 90% of the worlds rare earths. Despite the name, these elements are abundant on the Earths crust and make up the majority of listed critical minerals. They are essential for a variety of products like EVs, advanced ceramics, computers, smartphones, wind turbines, monitors, and fiber optics.
After China, the next largest source of mineral commodities to the United States has been Canada, which provided the United States with 16 different elements in 2021.
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The 50 Minerals Critical To Us Security
The U.S. aims to cut its greenhouse gas emissions in half by 2030 as part of its commitment to tackling climate change, but might be lacking the critical minerals needed to achieve its goals.
The American green economy will rely on renewable sources of energy like wind and solar, along with the electrification of transportation. However, local production of the raw materials necessary to produce these technologies, including solar panels, wind turbines, and electric vehicles, is lacking. Understandably, this has raised concerns in Washington.
In this graphic, based on data from the U.S. Geological Survey, we list all of the minerals that the government has deemed critical to both the economic and national security of the United States.
Most Of The Economically Powerful Countries Like America Germany Italy And France Focus On Maintaining High Gold Reserves
Reported By:| |Source: DNA Web Desk |Updated: Mar 25, 2022, 07:46 AM IST
Gold reserves are a very important asset for the boost up of any country’s economy and is particularly helpful during economic crisis. A country that exports gold or has access to gold reserves will see an increase in the strength of its currency when gold prices increase.
This actually increases the value of the country’s total exports. In other words, an increase in the price of gold can create a trade surplus or help offset a trade deficit. On the other hand, countries that are large importers of gold will inevitably end up having a weaker currency when the price of gold rises.
Let us know that according to the research done by GoldHub, which are the top-10 countries with the highest gold reserves.
The US ranks first in this list with 8,133.47 tonnes of gold reserves. Germany has 3,359.09 tonnes of gold reserves which has helped it to secure the second spot in terms of gold reserves. Italy ranks third in this list with gold reserves of 2,451.84 tonnes.
India ranks ninth in this list with 743.83 tonnes of gold reserves. The Netherlands is at number ten with 612.45 tonnes of gold reserves.
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