Gold-Hoarding Nations: Changing Gold Reserves Since 2000
Gold has long been an important hedge in times of uncertainty, and unlike foreign currencies, equities, or debt securities, its value is not dependent on any company or nation’s solvency.
This has made gold an essential part of many national central bank reserves, especially as the monetary supply of many nations continues to expand and central banks are exploring digital currencies which could be reserve or gold backed.
With gold still making up a large part of many nations’ reserves, how have central banks been managing the precious metal?
Using data from the IMF’s International Financial Statistics, this infographic looks at the top 20 countries by their central bank’s gold holdings and how their national gold reserves have changed since 2000.
European Nations Sold Gold, but Still Hold Plenty
Many European nations started the millennium by reducing their gold holdings. The Euro Area (including the European Central Bank) sold a total of 1,885.3 tonnes over the past two decades, reducing gold holdings by around 15%.
Despite this, European nations like Germany, Italy, and France still retain some of the largest gold reserves, with Italy not having touched their gold at all over the past 20 years.
After the termination of the Central Bank Gold Agreement in July of 2019, the European Central Bank made it clear that gold is still held in high standard by the Euro Area’s nations:
“The signatories confirm that gold remains an important element of global monetary reserves, as it continues to provide asset diversification benefits and none of them currently has plans to sell significant amounts of gold.”
Small Countries, Big Buyers
While nations across Europe sold off some of their central bank gold reserves, smaller countries like Kazakhstan, Cambodia, Kyrgyz Republic, Belarus, Qatar, and Uzbekistan have been some of the biggest gold purchasers relative to their GDP.
Large Gold Purchases of Six Small Nations
|Central Bank Gold Reserves (tonnes) in 2021||Net Change in Gold Reserves (tonnes) since 2000||Purchased Gold USD Value (at $1,730/oz)||Nominal GDP in USD||Purchased Gold as a Percentage of GDP|
*Uzbekistan data only available from 2013 onwards
**Belarus data only available from 2002 onwards
Source: IMF World Economic Outlook Database
None of the nations in the table above rank in the top 50 by nominal GDP, however, their central bank reserves have greatly grown in value thanks to their gold accumulation over the past 20 years. Along with this, countries like Uzbekistan are focusing on making gold production and circulation a key part of their economies.
In November of 2020, Uzbekistan introduced a new gold product available at commercial banks to make buying and selling gold more accessible: gold bars weighing 5, 10, 20, and 50 grams in a protective card packaging with a matching QR code for authentication.
As Uzbekistan pushes to become one of the world’s largest gold producers over the next few years, this product reintroduces gold in smaller purchasable amounts for everyday citizens.
A Turkish Delight of Gold Purchases
Since 2017, Turkey has increased gold within their central bank reserves from 116 to 527 tonnes (a 354% increase), while wrestling with rising inflation and a plummeting Turkish lira.
Alongside the central bank’s gold purchases, the Turkish government introduced gold-backed bonds and changes to gold regulations in an attempt to draw out household gold deposits. To further strengthen the nation’s economic independence and cut down gold import costs, Turkey is planning to radically ramp up domestic gold production to 100 tonnes of gold per year.
The country broke records in 2020 with 42 tonnes of gold produced, and the recent discovery of a 3.5M oz gold deposit (valued ~$6B) will help supply the nation’s surging demand for the precious metal.
A Common Trend: Gold is Rising as a Percentage of Reserves
One trend that is common across many nations: gold as a percentage of reserves has risen consistently since Q3 of 2018 as gold’s price has skyrocketed.
Most European central banks have gold reserves above the 50% mark of their reserves despite mostly selling gold over the past two decades. On the other hand, China and India have been aggressively purchasing gold since 2000, and yet gold still remains at single-digit percentages of their total reserves with plenty of room for expansion.
While some major nations’ gold holdings are reaching 70-80% of their reserves, the head of foreign exchange reserves management for the Central Bank of Hungary, Róbert Rékási, doesn’t think that nations are approaching a ceiling for this figure, and that central banks are still willing to increase their gold exposure.
China and Russia’s 20-Year Accumulation
The two nations that have increased their gold exposure the most over these past two decades have been China and Russia, which have purchased 1,553 tonnes (393% increase) and 1,873 tonnes (443% increase) respectively.
These aggressive purchases highlight a potential distancing from a weakening U.S. monetary system. The U.S. dollar was recently overtaken by gold as a percentage of Russian reserves, and has fallen to 25-year lows in global central bank foreign exchange reserves.
As both China and Russia have begun preparing central bank digital currencies, the two nations could be looking to set new monetary standards and strengthen their roles in the world’s evolving financial system.
The Next 20 Years of Gold Reserves
Gold’s value has stagnated over the past few months while bitcoin and equities have taken the spotlight, however, central banks still consider it an essential part of their reserves.
Developing nations and global heavyweights like Russia, China, and India have all been accumulating and prioritizing gold production, and while European countries have sold some gold the past two decades, they still rank among the largest holders of the precious metal.
As central bank digital currencies loom on the horizon, gold still plays an essential role in the composition of national central bank reserves backing these new financial systems, providing a familiar inflation hedge for central banks and investors in these uncertain monetary times.
Visualizing the $2.9B Money Flow into Gold Exploration
This infographic tracks $2.87B from 425 transactions for gold projects in 41 countries between February 1, 2020, and February 28, 2021.
Visualizing the $2.9B Money Flow into Gold Exploration
In 2020, the price of gold reached multi-year highs, in part to the impact of COVID-19 shutdowns. This renewed interest in gold spurred the plans of many gold exploration and development projects around the world.
This infographic uses data from Mining Intelligence which tracked the $2.87 billion from 425 transactions for gold projects in 41 countries between February 1, 2020, and February 28, 2021.
Gold Financings, by Country
Five countries accounted for 75% of the money raised for top gold projects around the world.
Canada attracted the most with $965 million or roughly 34% of all the money raised for gold exploration and development.
|Country||Amounts ($USD)||Number of Transactions|
|Dem. Republic of the Congo||$4,528,450||1|
|Papua New Guinea||$1,737,903||2|
In second place, Mexico attracted $389 million or 14% of total exploration dollars raised while Australia with $291 million (10%) is in third place.
The United States comes in fourth place with $256 million or 9% of global gold exploration dollars. Chile on the fifth spot received $254 million (9%) with one project attracting the largest amount of any on the list.
Top 10 Financings by Gold Project
Focusing on individual projects, Gold Fields’ Salares Norte project in Chile received $252 million for the largest financing of the period. The company started construction this year, after a delicate operation to remove endangered chinchillas from the site.
Silvercrest’s Las Chispas project in Mexico’s Sonora state received $228.9 million, giving it the second largest sum. According to the company, the property hosts 94.7 million ounces of silver equivalent (AgEq) in proven and provable reserves.
|Salares Norte||🇨🇱 Chile||$251,845,426 ||Gold Fields Ltd.|
|Las Chispas||🇲🇽 Mexico||$228,858,469||SilverCrest Metals Inc.|
|Windfall Lake||🇨🇦 Canada||$130,539,783||Osisko Mining Inc.|
|Blackwater||🇨🇦 Canada||$129,712,140 ||Artemis Gold Inc.|
|Magino||🇨🇦 Canada||$108,128,440||Argonaut Gold Inc.|
|Dargues Reef||🇦🇺 Australia||$96,500,680||Aurelia Metals Ltd|
|Cariboo||🇨🇦 Canada||$95,460,630||Osisko Development Corp.|
|Marmato||🇨🇴 Colombia||$66,116,989||Aris Gold Corp.|
|Cerro Blanco||🇬🇹 Guatemala||$65,632,958||Bluestone Resources Inc.|
|Mount Morgans||🇦🇺 Australia||$63,179,600||Dacian Gold Ltd.|
Gold is Canada’s most valuable mined mineral and the next 3 projects on the list show this priority. Osisko Mining’s Windfall Lake project in Quebec is third ($130 million), Artemis Gold’s Blackwater mine ($130 million) in British Columbia is the fourth, and Argonaut’s Magino project in Ontario ($108 million) the fifth.
The analysis found that more than half of the money raised (57%), went to 63 gold projects to advance economic studies – from scoping studies or preliminary economic assessments through to bankable feasibility studies and permitting.
A total of 71% of the projects were in the early stages of exploration, but they only accounted for about 25% of the total capital raised during the period.
Gold Going Forward
With $2.9 billion in capital going into gold projects around the world, the gold industry has big plans. These financings represent opportunities for host countries’ economies and their workers, along with more gold for investors to buy.
Purchasing Power of the U.S. Dollar Over Time
$1 in 1913 had the same purchasing power as $26 in 2020. This chart shows how the purchasing power of the dollar has changed over time.
What is Purchasing Power?
The purchasing power of a currency is the amount of goods and services that can be bought with one unit of the currency.
For example, one U.S. dollar could buy 10 bottles of beer in 1933. Today, it’s the cost of a small McDonald’s coffee. In other words, the purchasing power of the dollar—its value in terms of what it can buy—has decreased over time as price levels have risen.
Tracking the Purchasing Power of the Dollar
In 1913, the Federal Reserve Act granted Federal Reserve banks the ability to manage the money supply in order to ensure economic stability. Back then, a dollar could buy 30 Hershey’s chocolate bars.
As more dollars came into circulation, average prices of goods and services increased while the purchasing power of the dollar fell. By 1929, the value of the Consumer Price Index (CPI) was 73% higher than in 1913, but a dollar was now enough only for 10 rolls of toilet paper.
|Year||Event||Purchasing Power of $1||What a Dollar Buys|
|1913||Creation of the Federal Reserve System||$26.14||30 Hershey’s chocolate bars|
|1929||Stock market crash||$15.14||10 rolls of toilet paper|
|1933||Gold possession criminalized||$19.91||10 bottles of beer|
|1944||Bretton Woods agreement||$14.71||20 bottles of Coca-Cola|
|1953||End of the Korean War||$9.69||10 bags of pretzels|
|1964||Escalation of the Vietnam War||$8.35||1 drive-in movie ticket|
|1971||End of the gold standard||$6.39||17 oranges|
|1987||"Black Monday" stock market crash||$2.28||2 boxes of crayons|
|1997||Asian financial crisis||$1.61||4 grapefruits|
|2008||Global Financial crisis||$1.20||2 lemons|
|2020||COVID-19 pandemic||$1.00||1 McDonald’s coffee|
Between 1929-1933, the purchasing power of the dollar actually increased due to deflation and a 31% contraction in money supply before eventually declining again. Fast forward to 1944 and the U.S. dollar, fixed to gold at a rate of $35/oz, became the world’s reserve currency under the Bretton Woods agreement.
Meanwhile, the U.S. increased its money supply in order to finance the deficits of World War II followed by the Korean war and the Vietnam war. Hence, the buying power of the dollar reduced from 20 bottles of Coca-Cola in 1944 to a drive-in movie ticket in 1964.
By the late 1960s, the number of dollars in circulation was too high to be backed by U.S. gold reserves. President Nixon ceased direct convertibility of U.S. dollars to gold in 1971. This ended both the gold standard and the limit on the amount of currency that could be printed.
More Dollars in the System
Money supply (M2) in the U.S. has skyrocketed over the last two decades, up from $4.6 trillion in 2000 to $19.5 trillion in 2021.
The effects of the rise in money supply were amplified by the financial crisis of 2008 and more recently by the COVID-19 pandemic. In fact, around 20% of all U.S. dollars in the money supply, $3.4 trillion, were created in 2020 alone.
How will the purchasing power of the dollar evolve going forward?
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