Ireland buys gold for the first time since 2009

Ireland has gold in its reserves for the first time since 2009 added. The central bank bought a total of two tonnes of gold in September and October, expanding its gold holdings to 258,000 troy ounces. That is about 8 tonnes of gold, good for a market value of €383 million. With this purchase, the share of gold in the country's total reserves rises to 3.5%, which is still relatively low compared to other countries in the European monetary union.

The central bank did not want to comment on its decision to buy gold, but it does fit into a broader trend. In recent years, several European countries have added gold to their reserves, such as Poland, Hungary and Serbia. Central banks buy gold as a form of diversification, because it has no counterparty risk. A gold stock also provides solid collateral with which to build a new financial system. The governor of the Irish central bank, Gabriel Makhlouf, warned last week that policymakers should not be too complacent about inflation.

Development of Ireland's gold stock

Ireland buys gold

The timing of the purchase of gold is striking. In August, Ireland received a tranche of almost €4 billion in Special Drawing Rights (SDRs) from the IMF. In the months that followed, the central bank began buying gold to increase the share of precious metals in total reserves. As a result of this tranche from the IMF, the percentage of gold in total reserves had fallen below 3%. With new purchases, Ireland is strengthening its position in gold.

Central banks have increased their gold purchases again this year, after they bought less gold last year. At that time, some countries were forced to temporarily suspend their purchase programmes due to the corona crisis. In the first half of this year, central banks worldwide made net purchases of 333.2 tonnes. That was 39% more than the average over this period over the past five years.

This contribution comes from Geotrendlines