Singapore Is the World’s Largest Central Bank Gold Buyer

The year 2010 marked a major inflection in central bank gold purchases and the overall level of gold reserves held by central banks and finance ministries on a global basis. In 1950, the United States held about 20,000 metric tonnes of gold bullion.

By 1970, the U.S. gold hoard had shrunk to 9,000 metric tonnes. That gold did not disappear; it was delivered to Germany, France, Italy, Japan, and other trading partners to cover U.S. trade deficits under the old gold standard. Beginning in 1970, gold held by central banks and finance ministries declined significantly.

The U.S. sold 1,000 tonnes between 1970 and 1980 and encouraged the IMF to sell about 1,000 tonnes also in a failed effort to suppress the price of gold. After 1980, the U.S. did not sell any more gold, but encouraged the UK to sell over 300 tonnes in 1999.

Then Switzerland sold another 1,000 tonnes between 2000 and 2010. The IMF sold 400 tonnes in 2010 also. Canada sold 100% of its gold reserves, which were not that high to begin with.

All of these efforts to suppress gold prices ultimately failed. Gold hit a then-all-time high of $1,950 per ounce in 2011 (that record was surpassed in recent years at $2,060 per ounce in 2020).

Finally, in 2009 the central banks threw in the towel and became net buyers of gold bullion. The increases have been spectacular, resulting in a rise in total official gold holdings from about 32,000 tonnes in 2008 to 35,000 tonnes today.

What’s different today is the composition of the gold holders. The U.S. has not increased its holdings since the 1950s. Nor have other major gold holders such as France and Italy. Instead, the increases are in Russia, China, Vietnam, Mexico, Vietnam and many other emerging market countries.

Many of those countries with the largest increases are members of the BRICS+ currency union that will soon announce a new gold-linked currency to challenge the role of the U.S. dollar in global payments and reserves. As reported in this article, we have a new champion in the gold purchase arena.

In just the first three months of 2023, Singapore purchased an amazing 68.7 tonnes of gold bullion making Singapore the world’s largest central bank gold buyer for the first quarter. And Singapore was not alone.

Overall, the first quarter of 2023 was the strongest quarter on record for central bank gold purchases with central banks buying a combined total of 228 tonnes. One can speculate about whether this gold buying is an aspect of de-dollarization, preparation for the new BRICS+ gold-backed currency or simple prudence in an uncertain world. But the trend is undeniable.

Central banks generally know more about what is going on behind the scenes in the global monetary system than anyone. If they’re hoarding gold, maybe you should too.

 

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