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Central banks continue to buy gold and added 31 tonnes of gold to their reserves in the first month of the new year. This is what the World Gold Council based on new figures from the IMF. The purchases were very concentrated, because they were entirely accounted for by Turkey, China and Kazakhstan. How much gold did these countries buy?
Turkey was the largest buyer on the market in January with the purchase of 23 tonnes of gold. While the country is burdened by skyrocketing inflation, the central bank is structurally adding gold to its reserves. Last year, the Turkish central bank was also the largest buyer of the precious metal. With January's purchase, the country's total gold reserves rose to 565 tons.
As we see in a Earlier article although the central bank of Turkey is not only buying a lot of gold. Private individuals are also buying more and more Gold Coins and Gold bars to protect their assets from high inflation. Last year, the country imported no less than 188 tonnes of gold from Switzerland. In the first month of this year, this was already 58.3 tonnes of gold. From this we can deduce that wealthy Turks also Buy gold to protect their purchasing power. Gold that has less counterparty risk than, for example, a bank account in euros or US dollars.
Central banks bought a net 31 tonnes of gold in January (Source: World Gold Council)
China's central bank reported a gold purchase of 15 tonnes to the IMF in January, while it had already added a total of 62 tonnes to its reserves in November and December. According to official statistics, the Chinese central bank now has a gold reserve of 2,025 tonnes, equivalent to 3.7% of its total reserves.
According to research by gold market analyst Jan Nieuwenhuijs, China's national gold reserves are likely to be more than twice as big as this official figure. That's because the central bank has also made a lot of gold purchases over the past three decades that have not been passed on to the IMF. In the 1990s, for example, the Chinese central bank bought a lot of gold from European central banks through so-called over the counter Transactions. This gold has been traded outside the market, in order to prevent the Gold price would rise sharply.
Kazakhstan's central bank bought 4 tonnes of gold in January, bringing its total gold holdings to 356 tonnes. This country has also added a lot of precious metal to its reserves in recent years, but sometimes sells gold to get currency reserves.
This was the case, for example, with Uzbekistan, where the central bank currently holds 66% of its reserves in gold. In January, the country needed more foreign exchange reserves and sold 12 tonnes of gold, bringing global central banks' net gold purchases to 31 tonnes.
The European Central Bank (ECB) reported a 2-tonne increase in its gold holdings in January. This was not a purchase, but a transfer of gold from the central bank of Croatia. Countries participating in the euro must deposit part of their gold reserves with the ECB. As of this year, Croatia has also become part of the currency union. The Croatian central bank already had the necessary gold at the end of last year Purchased.
Last year, central banks bought a Record quantity gold. Whether that record will be surpassed in 2023 is impossible to say in advance. What is certain, however, is that many central banks will continue to buy gold this year to provide more protection and diversification in reserves. Unlike currency reserves, physical gold has no counterparty risk, which is definitely an advantage in a world of increasing political and geopolitical tensions.
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