Checkpoint Asia

Central Banks Bought a Record 500 Tonnes of Gold This Year Through August

$25 billion worth, half of that bought by Russia and China

Russia a record holder with 21% of its reserves now in gold

Two of the biggest gold purchasers this year bought a total of 251 tonnes of the yellow metal combined, INTL FCStone reported.

“China and Russia have added a reported (and estimated) 251t of gold so far this year,” wrote Rhona O’Connell, INTL FCStone head of market analysis for the EMEA and Asia regions.

China added 106 tonnes of gold to its official reserves in 2019, while Russia acquired an additional 145 tonnes.

“Russian central bank has reported that its holdings fell by $1.63bn in September, but translating this into tonnage basis the finals LBMA prices of the months this works out at a gain of 30.5t, to 2,258t,” O’Connell explained.

Globally, central banks around the world added nearly 500 tonnes of gold to their reserves between January and August, which puts 2019 on the map to be a record year for central bank gold buying, O’Connell added.

The biggest buyers aside from China and Russia this year have been Turkey, Poland, and Kazakhstan, the World Gold Council said in its most recent report.

O’Connell cited three reasons behind increased gold purchases — safety, liquidity, and return.

“The unweighted average holding [of gold] in the official sector as of end Q2 2019 was 12%,” she said. “Russia is currently at 21%, China at 3% and Switzerland at 6%.”

O’Connell also combined total official sector purchases with ETFs and got some impressive results.

“Between them they have absorbed 884t of gold in the first three quarters of this year … This is a record since the inception of the ETFs and the full year figures are likely to exceed the numbers to date unless the market goes into reverse,” she noted.

Source: Kitco