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Charted: 30 Years of Central Bank Gold Demand

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central bank gold demand over 30 years

30 Years of Central Bank Gold Demand

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Did you know that nearly one-fifth of all the gold ever mined is held by central banks?

Besides investors and jewelry consumers, central banks are a major source of gold demand. In fact, in 2022, central banks snapped up gold at the fastest pace since 1967.

However, the record gold purchases of 2022 are in stark contrast to the 1990s and early 2000s, when central banks were net sellers of gold.

The above infographic uses data from the World Gold Council to show 30 years of central bank gold demand, highlighting how official attitudes toward gold have changed in the last 30 years.

Why Do Central Banks Buy Gold?

Gold plays an important role in the financial reserves of numerous nations. Here are three of the reasons why central banks hold gold:

  • Balancing foreign exchange reserves
    Central banks have long held gold as part of their reserves to manage risk from currency holdings and to promote stability during economic turmoil.
  • Hedging against fiat currencies
    Gold offers a hedge against the eroding purchasing power of currencies (mainly the U.S. dollar) due to inflation.
  • Diversifying portfolios
    Gold has an inverse correlation with the U.S. dollar. When the dollar falls in value, gold prices tend to rise, protecting central banks from volatility.
  • The Switch from Selling to Buying

    In the 1990s and early 2000s, central banks were net sellers of gold.

    There were several reasons behind the selling, including good macroeconomic conditions and a downward trend in gold prices. Due to strong economic growth, gold’s safe-haven properties were less valuable, and low returns made it unattractive as an investment.

    Central bank attitudes toward gold started changing following the 1997 Asian financial crisis and then later, the 2007–08 financial crisis. Since 2010, central banks have been net buyers of gold on an annual basis.

    Here’s a look at the 10 largest official buyers of gold from the end of 1999 to end of 2021:

    Rank CountryAmount of
    Gold Bought (tonnes)
    % of
    All Buying
    #1🇷🇺 Russia 1,88828%
    #2🇨🇳 China 1,55223%
    #3🇹🇷 Türkiye 5418%
    #4🇮🇳 India 3956%
    #5🇰🇿 Kazakhstan 3455%
    #6🇺🇿 Uzbekistan 3115%
    #7🇸🇦 Saudi Arabia 1803%
    #8🇹🇭 Thailand 1682%
    #9🇵🇱 Poland1282%
    #10🇲🇽 Mexico 1152%
    Total5,62384%

    Source: IMF

    The top 10 official buyers of gold between end-1999 and end-2021 represent 84% of all the gold bought by central banks during this period.

    Russia and China—arguably the United States’ top geopolitical rivals—have been the largest gold buyers over the last two decades. Russia, in particular, accelerated its gold purchases after being hit by Western sanctions following its annexation of Crimea in 2014.

    Interestingly, the majority of nations on the above list are emerging economies. These countries have likely been stockpiling gold to hedge against financial and geopolitical risks affecting currencies, primarily the U.S. dollar.

    Meanwhile, European nations including Switzerland, France, Netherlands, and the UK were the largest sellers of gold between 1999 and 2021, under the Central Bank Gold Agreement (CBGA) framework.

    Which Central Banks Bought Gold in 2022?

    In 2022, central banks bought a record 1,136 tonnes of gold, worth around $70 billion.

    Country2022 Gold Purchases (tonnes)% of Total
    🇹🇷 Türkiye14813%
    🇨🇳 China 625%
    🇪🇬 Egypt 474%
    🇶🇦 Qatar333%
    🇮🇶 Iraq 343%
    🇮🇳 India 333%
    🇦🇪 UAE 252%
    🇰🇬 Kyrgyzstan 61%
    🇹🇯 Tajikistan 40.4%
    🇪🇨 Ecuador 30.3%
    🌍 Unreported 74165%
    Total1,136100%

    Türkiye, experiencing 86% year-over-year inflation as of October 2022, was the largest buyer, adding 148 tonnes to its reserves. China continued its gold-buying spree with 62 tonnes added in the months of November and December, amid rising geopolitical tensions with the United States.

    Overall, emerging markets continued the trend that started in the 2000s, accounting for the bulk of gold purchases. Meanwhile, a significant two-thirds, or 741 tonnes of official gold purchases were unreported in 2022.

    According to analysts, unreported gold purchases are likely to have come from countries like China and Russia, who are looking to de-dollarize global trade to circumvent Western sanctions.

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Mining

Charted: The Value Gap Between the Gold Price and Gold Miners

While the price of gold has reached new record highs in 2024, gold mining stocks are still far from their 2011 peaks.

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Line chart comparing gold price and gold mining stocks since 2000.

The Value Gap Between the Gold Price and Gold Miners

This was originally posted on our Voronoi app. Download the app for free on Apple or Android and discover incredible data-driven charts from a variety of trusted sources.

Although the price of gold has reached new record highs in 2024, gold miners are still far from their 2011 peaks.

In this graphic, we illustrate the evolution of gold prices since 2000 compared to the NYSE Arca Gold BUGS Index (HUI), which consists of the largest and most widely held public gold production companies. The data was compiled by Incrementum AG.

Mining Stocks Lag Far Behind

In April 2024, gold reached a new record high as Federal Reserve Chair Jerome Powell signaled policymakers may delay interest rate cuts until clearer signs of declining inflation materialize.

Additionally, with elections occurring in more than 60 countries in 2024 and ongoing conflicts in Ukraine and Gaza, central banks are continuing to buy gold to strengthen their reserves, creating momentum for the metal.

Traditionally known as a hedge against inflation and a safe haven during times of political and economic uncertainty, gold has climbed over 11% so far this year.

According to Business Insider, gold miners experienced their best performance in a year in March 2024. During that month, the gold mining sector outperformed all other U.S. industries, surpassing even the performance of semiconductor stocks.

Still, physical gold has outperformed shares of gold-mining companies over the past three years by one of the largest margins in decades.

YearGold PriceNYSE Arca Gold BUGS Index (HUI)
2023$2,062.92$243.31
2022$1,824.32$229.75
2021$1,828.60$258.87
2020$1,895.10$299.64
2019$1,523.00$241.94
2018$1,281.65$160.58
2017$1,296.50$192.31
2016$1,151.70$182.31
2015$1,060.20$111.18
2014$1,199.25$164.03
2013$1,201.50$197.70
2012$1,664.00$444.22
2011$1,574.50$498.73
2010$1,410.25$573.32
2009$1,104.00$429.91
2008$865.00$302.41
2007$836.50$409.37
2006$635.70$338.24
2005$513.00$276.90
2004$438.00$215.33
2003$417.25$242.93
2002$342.75$145.12
2001$276.50$65.20
2000$272.65$40.97

Among the largest companies on the NYSE Arca Gold BUGS Index, Colorado-based Newmont has experienced a 24% drop in its share price over the past year. Similarly, Canadian Barrick Gold also saw a decline of 6.5% over the past 12 months.

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