Central Banks Start Q4 Buying More Gold
The comments below are an edited and abridged synopsis of an article by SchiffGold
After adding a historically high amount of gold to reserves in the third quarter, central banks kicked off Q4 by buying more. Central banks added 31 tons of gold in October; their total gold holdings are now at the highest level since 1974.
In October, the UAE added just over 9 tons to its gold reserves (for a total of 18 tons this year). Turkey bought roughly 9 tons; Uzbekistan bought 9 tons; Kazakhstan bought 3 tons; Qatar bought 1 ton; and Cambodia bought 2 tons as of the end of September.
India owns 781 tons of gold; it is the ninth largest gold-holding country in the world. Since resuming buying in late 2017, India has purchased over 200 tons of gold.
These numbers reflect officially reported gold purchases, but there were unreported increases in gold holdings in the third quarter. Central banks that often fail to report purchases include China and Russia. Many analysts believe China is the mystery buyer stockpiling gold to minimize exposure to the US dollar.
Central banks are stocking up on gold because bullion has one crucial advantage: Unlike bonds, it doesn’t bind you to a relationship with an unreliable counterparty.
Including the mystery purchases, central banks added 393.3 tons of gold (net) in Q3 alone, with the total for 2022 at roughly 704 tons. That’s higher than any annual increase in central bank gold purchases since 1967.
Central banks added 463 tons of gold to global reserves in 2021. That was 82% higher than in 2020.
Last year was the 12th consecutive year of net purchases. Over that time, central banks have bought a net total of 5,692 tons of gold.
After record years in 2018 and 2019, central bank gold-buying slowed in 2020 with net purchases totaling about 273 tons. The lower rate of purchases in 2020 was expected, given the strength of central bank buying in 2018 and 2019. The economic chaos caused by the coronavirus pandemic has also affected the market.