Real Assets
Charted: 30 Years of Central Bank Gold Demand
30 Years of Central Bank Gold Demand
Did you know that nearly one-fifth of all the gold ever mined is held by central banks?
Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.
However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.
The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.
Why Do Central Banks Buy Gold?
Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:
- Balancing foreign exchange reserves
Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil. - Hedging against fiat currencies
Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation. - Diversifying portfolios
Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.
The Switch from Selling to Buying
In the 1990s and early 2000s, central banks were net sellers of gold.
There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.
Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.
Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:
| Rank | Country | Amount of Gold Bought (tonnes) | % of All Buying |
|---|---|---|---|
| #1 | 🇷🇺 Russia | 1,888 | 28% |
| #2 | 🇨🇳 China | 1,552 | 23% |
| #3 | 🇹🇷 Türkiye | 541 | 8% |
| #4 | 🇮🇳 India | 395 | 6% |
| #5 | 🇰🇿 Kazakhstan | 345 | 5% |
| #6 | 🇺🇿 Uzbekistan | 311 | 5% |
| #7 | 🇸🇦 Saudi Arabia | 180 | 3% |
| #8 | 🇹🇭 Thailand | 168 | 2% |
| #9 | 🇵🇱 Poland | 128 | 2% |
| #10 | 🇲🇽 Mexico | 115 | 2% |
| Total | 5,623 | 84% |
Source: IMF
The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.
Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.
Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.
Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.
Which Central Banks Bought Gold in 2022?
In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.
| Country | 2022 Gold Purchases (tonnes) | % of Total |
|---|---|---|
| 🇹🇷 Türkiye | 148 | 13% |
| 🇨🇳 China | 62 | 5% |
| 🇪🇬 Egypt | 47 | 4% |
| 🇶🇦 Qatar | 33 | 3% |
| 🇮🇶 Iraq | 34 | 3% |
| 🇮🇳 India | 33 | 3% |
| 🇦🇪 UAE | 25 | 2% |
| 🇰🇬 Kyrgyzstan | 6 | 1% |
| 🇹🇯 Tajikistan | 4 | 0.4% |
| 🇪🇨 Ecuador | 3 | 0.3% |
| 🌍 Unreported | 741 | 65% |
| Total | 1,136 | 100% |
Türkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.
Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.
According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.
The following content is sponsored by the Reagan Gold Group
The U.S. economy may not be as strong as it previously was. GDP growth in 2023 was 2.5% compared to 5.8% in 2021. High levels of public debt and geopolitical tensions have dissuaded other nations from using the dollar, which could create inflationary pressure on Americans. Could investing in gold provide the solution?
This charticle, sponsored by the Reagan Gold Group, will explore the U.S. economic climate and how gold can help Americans protect their investments.
#1: High Levels of Public Debt
The U.S. public deficit has grown considerably over the last decade. According to the U.S. Treasury, as of September 30th, 2024, total public debt stood at $35,464,673,929,172–if called in, it would be as every U.S. citizen would have to pay over $100,000.
High levels of public debt can negatively affect the U.S. economy. Interest payments can divert funds from where needed and reduce economic growth. However, public debt alone does not break an economy.
For example, Japan’s sovereign debt is more than 250% of GDP, but as much of the debt is held by Japan’s central bank, its robust and asset-focused balance sheet mitigates much of the potential instability.
#2: Less U.S. Dollars in International Systems
Another global trend that could impact the U.S. economy has slowly emerged since World War II–the dollar has lessened its circulation among international markets. The IMF reports that global FX reserves held in USD have notably declined, dropping from 71% in 2000 to 58% in 2023.
Geopolitical tensions have contributed to fewer U.S. dollars flowing through the global banking and exchange systems. This reduction in demand for U.S. dollars impacts the nation’s overall economic influence globally, potentially creating instability in other areas.
#3: Subpar Returns for U.S. Pension Funds
The performance of the largest pension funds in the U.S. over the last five years shows slightly depressed returns, especially when compared to gold.
Inflation and the overall reduction in the dollar’s economic power create a situation where, as pressure mounts, retirement payments may not stretch as far as retirees hope. This situation has led to many, including central banks, seeking insurance.
Could investing in gold be that insurance?
#4: Rising Gold Spot Prices
Despite financial crises, rising geo-political tensions, and a global pandemic, gold performance over the last 20 years has been strong, with its spot price growing aggressively:
Historically, gold has held its value against inflation, and its continued growth over the years has made it a sound investment in times of turmoil. So, considering the current economic climate, it’s no surprise that many investors are turning to gold.
#5: Increasing Demand from Central Banks
As if underlining the importance of gold, central banks have also increased their gold purchases by over 30% over the last five years.
When the World Gold Council asked central bankers, “How relevant are the following factors in your organization’s decision to hold gold?” The most common, highly relevant answers were that gold has no default risk, its performance in crises, and its value as a hedge against inflation, at 49%, 47%, and 42%, respectively.
#6: The Growth of Gold
When compared against other assets, gold’s current performance shows that it is more than just a hedge against inflation over the long term:
Gold’s recent performance has eclipsed many other assets over the long and short term, with its price growing at a higher rate than even the Emerging Markets Index.
#7: Gold Returns vs. Other Assets
In fact, gold was one of the better-performing overall assets between 2023 and 2024, returning nearly 14%.
Indeed, keeping to its history of consistency, investing in gold has provided percentage returns above other lauded long-term assets such as bonds.
A Golden Opportunity
The U.S. economy may not be what it was, with economic and geopolitical turmoil creating inflationary stresses that pressure lower-performing assets such as retirement funds.
Institutional and personal investors want to protect their wealth, and physical gold has proven to be one of the best hedges against uncertainty.
Learn more about how gold can protect your investments.
Real Assets
Visualizing the Gold-to-Oil Ratio (1946-2024)
This graphic shows the gold-to-oil ratio since 1946, charting the significant shifts between the world’s two biggest commodities.
Visualizing the Gold-to-Oil Ratio (1946-2024)
This was originally posted on our Voronoi app. Download the app for free on iOS or Android and discover incredible data-driven charts from a variety of trusted sources.
Gold and oil—two of the most influential commodities on the planet—have a fascinating relationship that has evolved over decades, captured in the gold-to-oil ratio.
The gold-to-oil ratio represents the number of barrels of crude oil equivalent to the price of one troy ounce of gold.
It is viewed as an indicator of the health of the global economy, indicating when gold or oil prices are significantly out of balance with each other.
This graphic shows the gold-to-oil ratio since 1946, using data compiled by Macrotrends.
What is the Gold-to-Oil Ratio?
The gold-to-oil ratio expresses the price relationship between gold and West Texas Intermediate (WTI) crude oil. WTI is a grade of crude oil and one of the three primary benchmarks for oil pricing, along with Brent and Dubai Crude.
A high ratio indicates that gold is relatively expensive compared to WTI crude oil, and vice versa. This can indicate periods of outsized demand for energy in the form of crude oil, or periods of monetary uncertainty when there is higher demand for gold.
Below is the gold-to-oil ratio every decade between 1946 and 2024.
| Date | Gold to Oil Ratio |
|---|---|
| 1946-01-01 | 29.91 |
| 1950-01-01 | 13.62 |
| 1960-01-01 | 11.89 |
| 1970-01-01 | 10.91 |
| 1980-01-01 | 20.86 |
| 1990-01-01 | 18.10 |
| 2000-01-01 | 10.29 |
| 2010-01-01 | 14.80 |
| 2020-01-01 | 30.66 |
| 2024-01-01 | 26.88 |
| 2024-11-01 | 39.06 |
During the 1950s and 1960s, fixed gold prices and stable oil prices kept the ratio between 11 and 13 for 20 years.
Since the 1980s, the ratio has typically traded within the range of 6 to 40 with a notable exception: in 2020 when the ratio reached a high of 91.1. The peak in 2020 was driven by COVID-19, which boosted gold prices as a safe haven while oil demand and prices plummeted due to global lockdowns.
In contrast, between 2000 and 2008, oil prices were relatively high compared to gold. During this period, the ratio dropped to nearly 6 but never rose above 16.
When comparing the two commodities, it’s worth remembering that the crude oil market is around 10 times larger than that of gold, making it the largest commodity market in the world.
Learn More on the Voronoi App 
If you enjoyed this graphic, make sure to check out this graphic that shows the top countries by natural resource value.
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