The global economy was flashing danger signs long before the pandemic. For one thing, many countries were clamouring to get hold of as much gold as possible. For the past decade, they have been buying new reserves and bringing it home from overseas storage to an extent never seen in modern times. Then just before the pandemic, there was a pause. What does all this mean?
Central banks added 650 tons to their reserves in 2019, the second highest shift in 50 years, after the 656 tons added in 2018. Before the 2007-09 financial crisis, central banks were net sellers of gold worldwide for decades. Leading the recent spree has been China, Russia, Turkey, Kazakhstan and Uzbekistan.
Central bank gold buying 1971-2019
We have also seen a large effort by central banks to repatriate their gold from other countries, mostly from storage in New York and London.
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Venezuela started repatriating its gold in 2011, shipping 160 tonnes from New York. A third of its holdings remain in London, but only because the Bank of England won’t repatriate them – declaring it doesn’t recognise the government in Caracas. Venezuela has now made this the subject of a legal claim.
Top 20 national gold reserves
Then came Eastern Europe. In 2018, Hungary announced it would repatriate nearly 3 tons of gold from London, while greatly boosting its reserves. Poland repatriated 100 tons from London a year later, about half of its national reserve. Next was Romania, while Slovakia and Serbia have been considering moving gold home from England too.