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According to the World Gold Council (WGS), for the third year in a row, central banks have been purchasing more than a thousand tons of gold in their reserves: in 2022 they purchased 1082 tons, in 2023 – 1037 tons, in 2024 – 1045 tons. As Louise Street, senior market analyst at WGS, noted, the steadily growing demand of regulators for the precious metal is primarily due to geopolitical and macroeconomic uncertainty.
The world leader in gold reserves (8,133.46 tons) is the United States, more than half of which is located in the underground vaults of the former Fort Knox military base in Kentucky, which Elon Musk is preparing to audit. The second position is occupied by Germany (3,351.53 tons), about half of its gold is contained in the Bundesbank in Frankfurt. Italy ranks third (2,451.84 tons), France ranks fourth (2,437), Russia ranks fifth (2,335.9), and China ranks sixth (2,279.56 tons).
As for the volume of gold purchases by the population, China (815.5 tons) is the leader here (according to WGS data for last year), followed by India (802.8), the USA (209.9) and Turkey (153.1). Russian individuals purchased 75.7 tons of yellow metal, 6% more than in 2023 (71.2 tons). Russians’ interest in him continues to grow.
“Every year, gold sets new records, both in dollar and ruble terms,” says Alexey Vyazovsky, Vice President of the Golden Board company. – In 2007, the “George the Victorious” coin, for example, cost 3-4 thousand rubles, today it is under 70 thousand. The “buy-hold” strategy has fully justified itself based on my experience. Therefore, I have been and remain a proponent of physical gold, in particular, coins: our bars are numbered, it is inconvenient for consumers to deal with them. The MHI (depersonalized metal account) has its own risks: it does not fall under the deposit insurance system; some technical failures are possible; obligations to you may be violated in the most malicious way.”
According to Vyazovsky, in 2022, the Bank of Russia abandoned the practice of purchasing gold, which it had been following for 15 years, acquiring 200-250 tons per year in its reserves and thereby providing tangible support to the domestic gold mining industry. The current indicator of the value of the gold reserves of the Russian Federation is the result, in fact, of an accounting revaluation: the price in dollars, to which the ruble exchange rate is linked (strengthened), has predictably increased. China has become the main buyer of the yellow metal in the world. Apparently, Beijing has learned a lesson from the sad Russian experience with the sanctioned seizure of Central Bank funds (primarily in euros), and is now forcefully reorganizing the structure of its gold reserves in favor of gold. Since this asset is physically stored on the territory of the country, it cannot be confiscated or frozen from the outside.”
“Central banks buy gold even at high prices, as it is a strategic asset that reduces dependence on foreign currencies, protects against inflation and remains a reserve in the face of sanctions risks,” said Oleg Kalmanovich, chief analyst at Neomarkets. – Yes, this is not the most liquid instrument, but regulators are thinking for decades ahead, not for the short term.
But it is important for individuals to understand that gold is expensive now, and it is risky to buy it at its peak. If you want to add it to your personal portfolio, it is better to do it gradually, averaging the price.
According to Kalmanovich, not only physical gold can be considered, but also more liquid instruments such as ETFs or anonymized metal accounts. ETFs or exchange–traded funds allow you to invest in gold through stocks that are traded on the stock exchange, and an MHI is a bank account where gold is counted in grams, but without physical delivery. Both tools are convenient because they can be quickly sold and earned by increasing the price of gold without problems with the storage of bullion.
“Physical gold acts as a safety anchor in the face of growing geopolitical risks, sanctions pressure and uncertainty around the dollar system,” said Vladislav Antonov, a financial analyst at BitRiver. – Yes, gold is less liquid than Treasury bonds, but its value is independent of anyone’s obligations. Central banks are not so much speculating on the price as they are strengthening the sovereignty of reserves. As for Russian individuals, gold is definitely not a tool for making money for them, but rather a “safety cushion”. Its share in the portfolio should be moderate (5-15%) in order not to lose profitability in growing markets. If you are a qualified investor, then it is quite possible to buy gold on the Moscow Stock Exchange (having a brokerage account) or coins “George the Victorious”. If there is no clear understanding of investing in gold, your option is to deposit in a bank.”
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