In 2010, the world’s central banks stopped selling gold and started accumulating it. As gold provides a hedge against economic uncertainty and currency manipulation, the action of these central banks gives us insight as to which countries are most capable of handling an economic storm.
Here’s what you’ll learn in this article:
- Data from Gold.org - courtesy of the International Monetary Fund’s International Financial Statistics - shows the U.S. by far has the world’s largest gold reserves, followed by Germany and the IMF. Two rivals of the U.S., Russia and China, come in and 6th and 7th, respectively.
- China and Russia have been some of the most aggressive buyers of gold in recent years. Both Russia and China top the list of the most aggressive gold buyers since 2014.
- Although China is the world’s largest producer of gold, its overall gold stores have been anemic compared to its competitors, especially as it relates to total economy size.
- Recently, the price of gold has moved up, especially as trade talks between the U.S. and China have put some fear into the markets and sent investors looking for safe havens.
A common theme in economics is “those who own the gold make the rules.” Recent statistics suggest a large disparity between the top gold holders in the world and those governments holding less of the yellow metal.
The Ranking of the World’s Top Gold Owners
1. United States - 8,133 tonnes - $373,430,444,426
2. Germany - 3,369 tonnes - $154,711,817,616
3. IMF - 2,814 tonnes - $129,198,164,458
4. Italy - 2,451 tonnes - $112,568,606,829
5. France - 2,436 tonnes - $111,843,187,142
6. Russia - 2,168 tonnes - $99,552,373,843
7. China - 1,885 tonnes - $86,568,279,703
Understanding the Power of Gold Across the World
According to the latest IMF statistics, the United States remains the largest holder of gold, holding some 8,133 tonnes of it in its stores. Most other countries fall below the 3,000 tonne mark, with the IMF taking third place on the list.
Gold is famous amongst investors for being a safe haven asset--a place to which money can flow when there’s uncertainty in the stock market or in currencies. Those countries with large storehouses of gold have access to a stable asset that tends to weather financial storms.
In recent years, there’s been a shift. Russia and China are fast becoming the world’s top buyers of gold, with their central banks rapidly turning to the yellow metal since 2014. We see that reflected in the rankings, where both countries rank among the top 7 holders of gold.
According to Investing.com, the price of gold has increased recently, especially with the trade wars between the U.S. and China. As investors grow increasingly uncertain about the economic future of each country’s economies, a flight to gold tends to drive up demand and, with it, prices. This increases the value of each country’s gold stores, as well.
With gold where it is, those countries with large gold reserves are in good shape. But you can watch how each country looks for more independence from global currencies (as China moves away from the dollar by buying gold) based on the movement of these numbers.
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Data: Table 1.1