Hungary expands gold reserves to 94.5 tonnes

The central bank of Hungary has increased its gold reserves extensive from 31.5 to 94.5 tonnes. The country is tripling its gold reserves due to rising global debt and fears of higher inflation. Under these circumstances, it is even more important to hold gold as a safe haven, the central bank writes in an explanation of the decision. In 2018, the country also bought a lot of gold and decided to increase its stockpile repatriate.

With this major purchase, the country rises from 56th to 36th place in the ranking of countries with the largest gold reserves. Of all the countries in the region, Hungary now has the third largest gold reserves. There is now 0.31 troy ounces of gold in the vault for every inhabitant of the country, the largest amount of all Central and Eastern European countries.

'Gold reserves as a crucial reserve'

Hungary's central bank has significantly expanded its gold reserves in recent years. At the beginning of 2018, the country only had 3.1 tonnes, which was not stored domestically. It was repatriated from the Bank of England in early 2018 and continued throughout that year. Supplemented up to 31.5 tonnes. That was already a significant step, but now the central bank has tripled its gold reserves. On its website we read the following explanation:

"Throughout history, gold has fulfilled different functions in different financial systems. Although gold lost some of its significance from the point of view of monetary policy in the 1970s, its role as a traditional reserve has remained crucial.

Since it does not involve credit or counterparty risks, gold facilitates the strengthening of countries' confidence in all economic situations. As a result, it is still one of the most crucial reserves in the world alongside government bonds.

In recent years, gold's role in the international reserves of several central banks has been strengthened. At 656 tonnes, the demand for gold among central banks reached record highs in 2018 and also in 2019 (669 tonnes)."

Hungary expands gold reserves to 94.5 tonnes

Hungary restores gold reserves

The Hungarian central bank has had a gold reserve since its foundation in 1924. Until the Second World War, the country managed to expand this stock, but towards the end of the war, the central bank decided to increase its reserve of about 30 tons of bars and Gold Coins to Austria by train.

After the war, Hungary got the gold back, which allowed the country to rebuild its economy after the war. It served as collateral for the introduction of a new currency, the forint. Due to a political transition, the central bank then continued to reduce its gold reserves to a low of only 3.1 tonnes. After that, the stock remained at that level for a long period of time. Based on new insights, the central bank decided to buy gold again in 2018.

This contribution comes from Geotrendlines