In the third quarter of 2022, central banks around the world added $20 billion worth of gold to their international reserve portfolios.
This represented the largest quarterly increase in official demand for gold in the full 55 years, the World Gold Council observed, according to a working paper prepared by specialists from the International Monetary Fund (IMF).
Mexico stood out among the 10 main buyers and sellers of gold in the official sector from the end of 1999 to the end of 2021, reflects ongoing research published by the agency for comment and discussion, although it does not necessarily represent the views of the IMF, its executive board, or agency management.
Data from the Bank of Mexico (Banxico) point out that the value of international reserves denominated in gold closed 2022 with an increase.
The position of said assets in gold ended last year at the equivalent of 7 billion dollars, with a volume of 6.86 million troy ounces of fine gold.
Although it did not manage to exceed the historical maximum reported in 2020, for more than 7,579 million dollars, its value has risen compared to the 4,500 million dollars it represented in 2011, when Banxico made the largest purchase of gold to diversify. such assets.
The 7 billion dollars of gold reserves represent 3.5% of the total international reserves, whose balance by 2022 was located at 199 thousand 94 million dollars.
Of the total reserves, 178 thousand 220 million dollars are in foreign currency in convertible currencies, prevailing the US dollar, and in Special Drawing Rights of the IMF there are 15 thousand 891 million dollars.
world ranking
Gold still represents about 10% of total international reserves worldwide and a proportion that has increased slowly in recent years, is mentioned in the IMF document.
On average, gold represents 17% of official reserves for advanced economies and 7% for emerging markets. Portugal is in first place of the 20 main gold holdings as a percentage of official reserves, with 69% and 12.3 million troy ounces as part of its international reserves.
Kazakhstan has 68% of its reserves in gold, equivalent to 12.9 million troy ounces; Germany, 66%, with 108 million ounces, and the United States, 66%, with 26.5 million ounces. For the entire euro zone, gold reserves represent 53%, with 346.4 million ounces.
But if you measure this precious metal as a world holding, The United States is in first place, with 23% of the total.
Although Switzerland, Russia, and China rank seventh, fifth, and sixth, respectively, their reserve assets as a percentage of gross domestic product (GDP) outstrip it, at 137%, 36%, and 20%, compared to just 3% for the US. .
Is it no longer a relic?
The document entitled “Gold as an international reserve: Is it no longer a barbarian relic?” underlines that This metal is seen as a safe haven and desirable reserve asset in periods of high economic, financial and geopolitical uncertainty, and when currency yields are low.
Furthermore, it is popularly seen as a hedge against inflation and to diversify the investment portfolio in a volatile environment.
It is favored out of custom and tradition, as central banks and governments have long held onto their gold reserves.
International organizations, mainly the IMF and the Bank for International Settlements (BIS), accounted for approximately 10% of official gold holdings.
The case of Russia
The research reports that gold is perceived as a safe and desirable reserve asset when countries are subject to financial restrictions and sanctions, and when financial investments are potentially subject to freezes and seizures. Hence, he stresses that the G7 countries’ decision to freeze the Bank of Russia’s foreign exchange reserves drew attention to whether such assets could be kept in another way better protected from sanctions.
It is mentioned that the Bank of Russia accelerated its gold purchases following its 2014 annexation of Crimea, while in 2021 it confirmed that its gold was now fully vaulted at home, just as Venezuela repatriated it at the time.
The investigation raises a question on the air if, given the risk of sanctions, the possession of gold also appears.
Themes
Read Also
Get the latest news in your email
Everything you need to know to start your day
Registering implies accepting the Terms and Conditions
