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Visualizing Two Decades of Central Bank Gold Reserve Changes

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Changes in central bank gold reserves

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.”
ECB

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 2021Net Change in Gold Reserves (tonnes) since 2000Purchased Gold USD Value (at $1,730/oz)Nominal GDP in USDPurchased Gold as a Percentage of GDP
Uzbekistan*340.6+159.9$8.89B$63.30B14.0%
Kazakhstan390.7+334.7$18.64B$180.72B10.3%
Kyrgyz Republic16.8+14.2$0.79B$8.45B9.3%
Cambodia45.5+33.1$1.84B$28.55B6.4%
Belarus**50.0+40.7$2.26B$60.97B3.7%
Qatar56.7+56.1$3.12B$155.57B2.0%

*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.

chart of gold as a percentage of central bank reserves

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.

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The Periodic Table of Commodity Returns (2013-2022)

This table shows the fluctuating returns for various commodities over the past decade, from energy fuels to industrial and precious metals.

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periodic table of commodity returns over last ten years

The Periodic Table of Commodity Returns (2013-2022)

Trying to predict which commodities will come out on top in any given year is tricky business—especially during this turbulent period in markets.

By looking back at previous years, investors can gain insights into long-term trends and patterns in commodity prices. To help better understand these trends, U.S. Global Investors releases a visualization called the Periodic Table of Commodity Returns at the outset of each year.

This year’s edition looks back over the past decade of returns between 2013 and 2022, and features an interactive design that allows users to sort returns by various categories including returns, volatility, and other groupings.

Editor’s note: Because of the Russia-Ukraine conflict, regional benchmarks for some commodities (coal, natural gas) had much bigger price divergences than is typical. In this case the graphic focuses in on U.S. regional benchmarks like Powder River Basin coal and Henry Hub natural gas prices. These prices may differ from price action seen around the world.

More Volatility, but Positive Returns

After 2021 saw an impressive surge in commodity prices as the world reopened post-pandemic, 2022 brought another year of positive returns for the asset class that were defined by high levels of volatility.

The broad-based S&P Goldman Sachs Commodity Index (GSCI) surged 52.1% in the first five months of 2022, as supply disruptions and fears across grains, metals, and energy fuels were spurred by Russia’s invasion of Ukraine.

The second half of the year saw prices cool as the U.S. continued to release crude oil from its strategic petroleum reserve while Russia and Ukraine established an agreement to enable grain and agricultural exports, quelling fears of extended supply disruptions.

The result? In the last seven months of the year the S&P GSCI nearly completed a return trip and only ended up rising 8.7% in 2022 overall.

Commodity2022 Returns
Lithium72.49%
Nickel43.13%
Natural Gas (Henry Hub)19.97%
Corn14.37%
Platinum10.90%
S&P Goldman Sachs Commodity Index (GSCI)8.71%
Crude oil6.71%
Silver2.77%
Wheat2.76%
Lead-0.05%
Gold-0.28%
Palladium-5.89%
Copper-14.13%
Aluminum-16.27%
Zinc-16.34%
Coal (PRB)-48.34%

Another key factor that helped keep commodity prices cool in 2022 was China’s extended lockdowns which slowed down the country’s manufacturing and industrial capabilities. This helped reduce the demand of energy fuels in 2022, along with industrial metals like copper, aluminum, and zinc.

Lithium Continues to Top Commodity Returns

A metal that did shine brightly in 2022 was lithium, which has been newly added to the Periodic Table of Commodity Returns.

After topping the table in 2021 with an outsized price increase of 442.8%, lithium kept its top spot in 2022 with a more modest price increase of 72.5%.

lithium in the commodities ranking 2013-2022

The growing global push towards electric vehicles (EVs) has been a major contributor to the increase in demand for lithium and nickel, which was the second-best performing commodity in 2022 with a price increase of 43.1%. As more countries set targets to phase out gasoline and diesel vehicles, demand for key battery minerals like lithium and nickel is expected to continue to rise.

While the U.S. is working to strengthen its battery metals production and supply chains with $2.8 billion in grants for domestic lithium, graphite, and nickel projects, it will be years before more supply comes online as a result. In the meantime, robust demand for EVs in China has provided a constant need for these battery metals which are currently in short supply.

Energy Price Variance Fueled by Regional Uncertainty

After 2021 saw energy fuels dominate the top spots after lithium, energy fuel prices in 2022 were more volatile with more scattered returns. Natural gas was the only fuel which saw double-digit returns at a 19.9%, with crude oil returning 6.7% and coal at the bottom of the table at -48.3%.

It’s important to keep in mind how geopolitical events and supply disruptions last year affected the regional price differences for energy fuels. While WTI crude oil (North America’s benchmark) increased by 6.7% in 2022, Brent crude oil (Europe’s benchmark) was up 10.4% as Urals crude oil (Russia’s benchmark) fell by more than 26.5%.

Type of Crude Oil2022 ReturnsPrice in U.S. dollars (Jan 17, 2023)
Brent Crude Oil (European benchmark)10.35%$86.72
WTI Crude Oil (North American benchmark)6.72%$81.01
Urals Crude Oil (Russian benchmark)-26.53%$55.60

As a result of the war and ensuing sanctions, the discount of Urals crude oil compared to Brent crude oil went from -$1.72 at the start of 2022 all the way to -$30.71 by the end of the year.

Thermal coal prices faced similar regional divergences, with Powder River Basin (PRB) coal (America’s benchmark for coal) falling by 48.3% this year while Newcastle coal, which is delivered out of the port of Newcastle, Australia primarily to various Asian nations, saw prices skyrocket up by 156.6% in 2022.

After such a wild year with huge variance in commodity prices, we’ll see if 2023 can bring some stability or if high volatility and growing regional price discrepancies will become the norm.

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The Top 10 Best and Worst-Performing Commodities of 2022

The year 2022 was full of volatility for commodity prices. This infographic charts the top 10 best and worst commodities by returns in 2022.

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best performing commodities of 2022

Top 10 Best and Worst-Performing Commodities of 2022

Hard commodities had a roller coaster year in 2022.

While prices for some commodities stabilized after skyrocketing on the heels of the pandemic, others delivered stellar returns. Behind the volatility was a plethora of factors, including the Russia-Ukraine war, the global economic slump, and a drop in China’s demand for materials.

This chart uses price data from TradingEconomics to highlight the 10 best and worst performing hard commodities of 2022. It excludes soft commodities like agricultural products and meat.

Energy Crisis Sets Coal on Fire

The global economic rebound of 2021, which set the fastest post-recession growth pace in the last 80 years, sparked coal prices as energy demand increased. Russia’s invasion of Ukraine ignited the spark, with coal prices exploding 157% in 2022.

Consequently, coal was the best performing commodity in 2022, far outperforming the other nine top commodities by returns.

RankCommodity2022 Returns
#1Coal157%
#2Lithium87%
#3Nickel43%
#4Titanium27%
#5Heating oil21%
#6Uranium12%
#7Platinum9%
#8Molybdenum4%
#9Iron ore1%
#10Gold1%

Lithium (carbonate) and nickel prices continue to be supercharged by the demand for EVs and batteries. Since the beginning of 2021, lithium prices have increased 11-fold, and remain elevated at more than $70,000 per tonne.

As a result of high prices for lithium, nickel, and other battery metals, the average cost of lithium-ion battery packs increased in 2022, for the first time since 2010. Battery pack prices are expected to increase in 2023 as well, before falling in 2024.

The year was also positive for uranium as countries revived their nuclear power plans to combat the energy crunch. Notably, Germany extended the lifetime of three plants that were set to shut down in 2022, and Japan announced accelerated restarts for several idle reactors.

What About Crude Oil?

Crude oil is by far the biggest commodity market, and oil prices were the talk of the town for much of 2022.

Following Russia’s invasion of Ukraine, WTI crude oil prices rose to their highest level since 2013 by May 2022. However, between June and the end of December, prices fell from around $116 per barrel to $80 per barrel (a 31% fall). Overall, in 2022, crude oil delivered a -3% return.

The erasure of oil’s initial gains can be attributed to the slowdown in economic growth globally, in addition to strict COVID-19 lockdowns in China.

The 10 Biggest Commodity Drawdowns

The negative returns for most commodities can be largely attributed to prices stabilizing at lower levels after bullish runs in 2021 and the beginning of 2022.

RankCommodity2022 Returns
#1Magnesium-54%
#2Tin-37%
#3Propane-37%
#4Rubber-26%
#5Cobalt-26%
#6Natural Gas TTF-20%
#7Naphtha-19%
#8Zinc-18%
#9Copper-16%
#10Aluminum-16%

For example, magnesium prices more than halved in 2022, declining from an all-time high in September 2021. Similarly, tin prices also normalized after rising due to unprecedented demand from the electronics sector during the economic rebound from the pandemic.

The volatility in European natural gas (TTF gas) was one of the highlights of the year. Prices rose to around €340 per megawatt-hour in August as the region looked to cut its reliance on Russia. However, they have since fallen due to milder temperatures in winter and the overall drop in energy demand. Still, on average, TTF prices were 150% higher in 2022 than in 2021.

Copper prices are known to reflect the state of the global economy. It’s safe to say that they did so in 2022, falling 16% as economic growth slowed down and China’s economic activity came to a halt at various times due to Zero-COVID policies.

How Will Commodities Perform in 2023?

According to Goldman Sachs, commodity markets have a bullish outlook for 2023, mainly due to underinvestment and the lack of supply response in 2022.

Rising interest rates worldwide increased the cost of capital in 2022, which drained money from commodity markets. Therefore, supply shortages are expected to persist. As China reopens and eases its lockdown measures, the demand for hard commodities is likely to rebound, putting upward pressure on prices.

J.P. Morgan has similar expectations. The bank expects oil prices to rise due to an increase in demand but projects a “transitional year” for base metals, with prices expected to remain relatively stable. The outlook for precious metals is more positive, with gold prices expected to hover around $1,860 per ounce towards the end of 2023.

Of course, commodity markets are volatile. With various geopolitical and macroeconomic moving parts, it’ll be interesting to see what this year has in store for fuels and metals.

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