Eastern European Nations Buy And Repatriate Gold Due to Growing Risks to Euro and Dollar
The comments below are an edited and abridged synopsis of an article by Mark O’Byrne
Gold is a hot topic among nationalist leaders in eastern Europe.
Last week, Poland’s government completed the repatriation of 100 tons of the metal. In Hungary, Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of his reserves.
Russia and China have taken steps to diversify their reserves away from the dollar amid flaring geopolitical tensions with the US.
Former Slovak Premier Robert Fico, who has a shot at returning to power, is urging his parliament to bring home gold currently stored in the UK. He said Brexit and the risk of a global economic crisis put that gold in a dangerous situation.
Sometimes your international partners can betray you, Fico said, citing a 1938 pact by France, Britain, Italy and Germany allowing Hitler to annex a chunk what was then Czechoslovakia and, more recently, the Bank of England’s refusal to return Venezuela’s gold because of political differences.
He wants to demonstrate the strength of his nation’s $586 billion economy—the largest in the EU’s east. Poland has doubled its gold holdings in the past two years and now has the region’s biggest stockpile.
Hungary has been an active buyer, too. Gold reserves surged 10-fold last year, setting the clamor for the metal in the countries around it in motion.
Serbia’s Aleksandar Vucic ordered its central bank to boost reserves and prompted the purchase of nine tons in October. Vucic said gold is necessary because “we see in which direction the crisis in the world is moving.”
For the no-nonsense leaders that have come to dominate eastern Europe, the main benefit may be the message to voters that hefty holdings of the precious metal conveys.
“Gold is a symbol,” said Vuk Vukovic, a political economist in Zagreb. “When states purchase it, people everywhere see it as a sign of economic sovereignty.”