Gold grab: Germany, China, and Russia leading charge
In a world in which currency devaluation has become the chief weapon against growing deflationary forces, numerous nations are making concerted efforts to stock up on gold reserves and keep it closer at hand for emergencies.
According to the Bloomberg news agency, which cited International Monetary Fund statistics for December, the former Soviet republic of Kazakhstan was the biggest buyer in the last month of 2015, padding its gold reserves by 16% versus a year earlier with a purchase of 7.13 million ounces.
Another 200-ton year for China?: The major buyers in the past few years continue to be Russia and China. Beijing added 19 metric tons in December, increasing its second-half 2015 purchases by more than 100 tons, while Russia acquired even more, increasing its total reserves by 208.4 tons over 2015.
Their gold investments have become a familiar theme, according to the World Gold Council, and with the Russian ruble weakening and China expected to devalue the yuan further to stimulate its economy, bullion should continue to be an important financial hedge.
In fact, Barclays is predicting that the Peoples Bank of China likely will buy as much as 216 more tons of gold this year. Its continued focus on acquiring bullion is particularly impressive given that Chinas total forex reserve has recorded large declines in the past year, it said.
Well still see central banks as net buyers, saidDaniel Hynes of the Australia & New Zealand Banking Group Ltd. Markets have been so volatile over the past six months, I suspect there may be some component of safe haven-buying, but essentially its related to diversification.
Germany hauled back 210 tons in 2015: Meanwhile, other central banks are working to tighten control over their existing gold holdings. Germanys Bundesbank has been at the forefront of a recent movement in which sovereign nations are repatriating their gold held in elsewhere, such as New York, Paris, and London. Germanys gold, for example, wound up being stored in other countries largely as a precautionary measure during the Cold War era, when the Soviet threat loomed larger. With concerns growing about the European Unions stability and economic health, Germans have recently clamored for the return of their national treasure, which totals 3,381 tons, the second-largest sovereign bullion reserve after the U.S.
Now the Bundesbank has announced the transfer of about 110 metric tons of gold from Paris and just under 100 tons from New York to its Frankfurt vaults in 2015. It plans to bring another 307 tons of the precious metal home in the next five years, Bloomberg noted.That means slightly more than half of Germanys gold will be held within the country by 2020, about a third at the Federal Reserve and the remaining 13% at the Bank of England.
In safe hands is paramount principle: The latest moves now mean that over 3 years from January 2013 to December 2015, the Bundesbank has retrieved 366 tonnes of gold back to home soil (189 tonnes from New York (5 tonnes in 2013, 85 tonnes in 2014, and between 99-100 tonnes in 2015), as well as 177 tonnes from Paris (32 tonnes in 2013, 35 tonnes in 2014, and 110 tonnes in 2015), Ronan Manly of BullionStar wrote. The latest transfers still leave 110 tonnes of gold to shift out of New York in the future and 196.4 tonnes to move the short distance from Paris to Frankfurt.
Proof that it is still in safe hands is important for many Germans, Reuters added. The Bundesbank said all gold bars are thoroughly and exhaustively inspected and verified on arrival.
Whether in Asia or Europe or elsewhere around the world, central banks are increasingly concerned about acquiring golden protection from rampant currency wars and devaluations, and they are not settling for third parties to store their sovereign wealth any longer. Individuals should be taking a page from this precautionary book and follow suit by acquiring adequate gold allocations and keeping the metal in safe, secure, and accessible storage.