Poland adds gold to reserves again

Poland added gold to its reserves again in September added, according to new figures released by the IMF earlier this week. The central bank added 4.4 tonnes to its gold stockpile, raising the country's total supply to around 117 tonnes. That's the highest level in more than 35 years.

In July and August, Poland's central bank restarted operations for the first time since 1998 buy gold. Over the course of two months, she added about 9 tons to her stockpile. With this new September purchase, the value of the central bank's gold holdings rises to around $4.5 billion. As a result, Poland holds more than 4% of its reserves in precious metals.

Poland expands gold reserve

It is not clear why Poland's central bank is adding precious metal to its reserves again after all these years, because an official explanation has not yet been forthcoming. As we wrote earlier, it may have to do with the relatively low Gold price, but that will not have been the main reason.

For central banks, gold is a form of reserve that provides stability in times of economic and political uncertainty. After all, the precious metal has no counterparty risk and no currency risk, making it a safe buffer in times of crisis.

Poland belongs to an increasing number of countries that are expanding their gold reserves or bringing them back to their own countries, from which we can conclude that there is still uncertainty in several countries about the sustainability of the current international monetary and financial system.

Preparing for the euro?

Another possibility is that Poland expands its gold reserves in preparation for future participation in the euro. All countries that are members of the European Union will eventually have to adopt the euro as soon as they meet all the conditions and have gone through the ERM II exchange rate mechanism. This is speculation for the time being, although Poland's Deputy Minister of Finance Expressed that the country intends to introduce the single currency in the long term.

This week it was announced that Hungary has also added gold to its reserves. In October, the country increased its gold reserves tenfold, from just over 3 tons to 31.5 tons. According to the Hungarian central bank, this investment should make a positive contribution to financial stability and confidence in Hungary.

This contribution was made from Geotrendlines