Gold reserve
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A gold reserve is the gold held by a central bank or nation intended as a store of value and as a guarantee to redeem promises to pay depositors, note holders (e.g., paper money), or trading peers, or to secure a currency.
At the end of 2004, central banks and investment funds held 19% of all above-ground gold as bank reserve assets.
It has been estimated that all the gold mined by the end of 2011 totalled 171,300 tonnes.[1] At a price of US$1500 per troy ounce, reached on 12 April 2013, one tonne of gold has a value of approximately US$48.2 million. The total value of all gold ever mined would exceed US$8.2 trillion at that valuation.[note 1]
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IMF gold holdings[edit]
As of June 2009, the International Monetary Fund held 3,217 tonnes (103.4 million troy ounces) of gold,[2] which had been constant for several years. In the third quarter of 2009, the IMF announced that it will sell one eighth of its holdings, a maximum of 403.3 tonnes, based on a new income model agreed upon in April 2008, and subsequently announced the sale of 200 tonnes to India, 10 tonnes to Sri Lanka,[3] a further 10 tonnes of gold were also sold to Bangladesh Bank in September 2010 and 2 tonnes to the Bank of Mauritius.[4] These gold sales were conducted in stages at prevailing market prices.
The IMF maintains an internal book value of its gold that is far below market value. In 2000, this book value was XDR 35, or about US$47 per troy ounce.[5] An attempt to revalue the gold reserve to today's value has met resistance for different reasons. For example, Canada is against the idea of revaluing the reserve, as it may be a prelude to selling the gold on the open market and therefore depressing gold prices.[6]
Gold reserves and their relevance in war times (Example from WW II)[edit]
Preserving the gold reserves is of intrinsic value to nations and therefore highly relevant in contexts of crisis and war. A typical example is a secret memorandum by the Chief of staff from October 1939, at the beginning of World War II. The military and the Secret Service laid out “measures to be taken in the event of an invasion of Holland and Belgium by Germany” and presented them to the War Cabinet:
- “It will be for the Treasury in collaboration with the Bank of England, and the Foreign Office, to examine the possible means of getting the bullion and negotiable securities into the same place of safety. The transport of many hundreds of tons of bullion presents a difficult problem and the loading would take a long time. The ideal would of course be to have the gold transferred to this country or to the United States of America. [...] The gold reserves of Belgium and Holland amount to about £ 70 million and £ 110 million respectively. [Foot]Note: H. M. Treasury has particularly requested that this information, which is highly confidential should in no circumstances be divulged. The total weight of this bullion amounts to about 1800 tons and its evacuation would be a matter of the utmost importance would present a considerable problem if it had to be undertaken in a hurry when transport facilities were disorganised. At present this gold is believed to be stored at Brussels and The Hague respectively, neither of which is very well placed for its rapid evacuation in an emergency.”[7]
The Belgian government rushed to get the gold out of the country into a safe place: Dakar. After the Germans had occupied Belgium and France in 1940 they demanded the gold reserve back. Vichy French officials took care of the transport and in 1941 handed almost 5,000 boxes with 221 tons of gold[8] over to officials of the German Reichsbank.
Officially reported gold holdings[edit]
The International Monetary Fund regularly maintains statistics of national assets as reported by various countries. These data are used by the World Gold Council to periodically rank and report the gold holdings of countries and official organizations.
The gold listed for each of the countries in the table may not be physically stored in the country listed, as central banks generally have not allowed independent audits of their reserves.
Privately held gold[edit]
As of October 2009, gold exchange-traded funds held 1,750 tonnes of gold for private and institutional investors.[12]
| Rank | Name | Type | Gold (Tonnes) |
|---|---|---|---|
| 1 | SPDR Gold Shares | ETF | 1,239 |
| 2 | ETF Securities Gold Funds | ETF | 259.79 |
| 3 | ZKB Physical Gold | ETF | 195.53 |
| 4 | COMEX Gold Trust | ETF | 137.61 |
| 5 | Julius Baer Physical Gold Fund | ETF | 93.50 |
| 6 | Central Fund of Canada | CEF | 52.71[14] |
| 7 | NewGold ETF | ETF | 47.75 |
| 8 | Sprott Physical Gold Trust | CEF | 32.27 |
| 9 | ETFS Physical Swiss Gold Shares | ETF | 27.97 |
| 10 | Bullionvault | Bailment | 37.1[15] |
| 11 | Central Gold Trust | CEF | 18.81[16] |
| 12 | GoldMoney | Bailment | 19.55[17] |
World gold holdings[edit]
| Holding | Percentage |
|---|---|
| Jewellery | 52% |
| Central banks | 18% |
| Investment (bars, coins) | 16% |
| Industrial | 12% |
| Unaccounted | 2% |
See also[edit]
- Federal Reserve Bank of New York
- Gold as an investment
- List of countries by gold production
- Moscow gold, the reserves of the Bank of Spain sent to the Soviet Union during the Spanish Civil War.
- Peak Gold
- Silver as an investment
- Sovereign wealth fund
- Strategic Petroleum Reserve
- United States Bullion Depository
- Vaulted gold
Notes[edit]
- ^ One tonne is equal to approximately 32,150.75 troy ounces.
References[edit]
- ^ FAQs > Investment > World Gold Council
- ^ "Gold in the IMF". International Monetary Fund. 2009-09-18.
- ^ "Press Release: IMF Announces Sale of 10 Metric Tons of Gold to the Central Bank of Sri Lanka". Imf.org. Retrieved 2012-01-08.
- ^ "Press Release: IMF Announces Sale of 2 Metric Tons of Gold to the Bank of Mauritius". Imf.org. Retrieved 2012-01-08.
- ^ "IMF completes off-market gold sales". 2000-04-07.
- ^ "BBC NEWS | Business | Gold falls on IMF sale concerns"
- ^ Memorandum by War Cabinet Secretary E. E. Bridges from October 6, 1939, Secret: Holland and Belgium: Measures to be taken in the event of an invasion by Germany. P. 1 and 4. National Archives
- ^ Other sources report only 41 tons.
- ^ "Gold Demand Trends Full year 2012", "Top 40 reported official gold holdings" is on page 15 of the pdf file.
- ^ a b Russia, Turkey raise gold holdings in Feb - IMF, Reuters, 2013-03-16
- ^ Nepali gov't adopts new gold policy, Xinhua, 2010-09-25
- ^ [1]
- ^ "FACTBOX-Precious metals holdings of exchange-traded products | News by Country | Reuters". Af.reuters.com. 2011-06-06. Retrieved 2012-01-08.
- ^ "Central Fund's Net Asset Value". Centralfund.com. 2000-03-16. Retrieved 2012-01-08.
- ^ "Daily Audit - Allocated Gold Bar Lists and Bank Statements". BullionVault.com. 2011-12-21. Retrieved 2012-01-08.
- ^ "GoldTrust's Net Asset Value". Gold-trust.com. 2000-03-16. Retrieved 2012-01-08.
- ^ "Total Gold, Silver, Platinum, Palladium and Currencies in GoldMoney". Goldmoney.com. 2011-12-30. Retrieved 2012-01-08.
- ^ "DollarDaze Economic Commentary Blog - Gold, Oil, Stocks, Investments, Currencies, and the Federal Reserve: Two Methods for Estimating the Price of Gold by Mike Hewitt". Dollardaze.org. Retrieved 2012-01-08.
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