Central banks are not slowing down and are doubling their demand for gold, setting a new record in the first quarter of 2024. According to data from the World Gold Council, the total reached 290 tons. In recent months, additional tons of this precious metal have also been added to the National Bank of Poland’s reserves. As of April, it held monetary gold worth $27 billion in its reserves. Its share in our reserve assets now exceeds 13%. Thanks to last year’s intensive purchases by the NBP, we have moved up eight places in the global ranking year-on-year. Who is ahead of us?
Polish Reality
The last pause in gold purchases was merely a break before a sprint towards the goal of having a 20% share of gold in Poland’s reserves, as recently announced. At the end of April 2024, the National Bank of Poland had monetary gold worth $27 billion in its reserves, accounting for 13% of the national reserves. Thus, there is 7% left to reach the goal, according to the World Gold Council.
Currently, we rank 14th in the global ranking of central banks in terms of gold reserves. Ahead of us are, among others, the USA (8,133.46 tons), Germany (3,352.31 tons), Italy (2,451.84 tons), and France (2,436.91 tons). We hold a podium position (3rd place) in the Central and Eastern Europe region, only behind Russia (2,332.74 tons) and Turkey (570.30 tons).
It is worth noting that exactly a year ago we were in 22nd place in the global ranking. Thanks to the intensive purchases made by the National Bank of Poland last year, we moved up eight positions. In the Central and Eastern Europe region, our position remained unchanged.
Global Purchases
The long-term trend of gold purchases by central banks has not only persisted but is still dominated by banks from emerging markets. Ten central banks reported increasing their gold reserves (by a ton or more) in the first quarter, all of which have shown activity in recent quarters.
Despite the high bar set over the past two years, voracious gold purchases are likely to continue in 2024, even in the face of rising gold prices. Official global gold reserves increased by 290 net tons, the highest amount for the first quarter in the World Gold Council’s data series dating back to 2000. This is 1% more than the previous first-quarter record set in 2023 (286 tons) and 69% more than the five-year quarterly average (171 tons).
Who made the largest purchases? On the podium are Turkey, China, and India, which respectively bought 30 tons, 27 tons, and 18 tons. In Europe, both the Czech National Bank (5 tons) and the National Bank of Poland (1 ton) reported increases in their gold reserves during this period.
Monetary gold is an ideal element for diversifying the reserve structure. In the long term, it maintains purchasing power, and when stored under one’s control, it is free from counterparty risk. Additionally, it is a highly liquid asset that can be converted into any currency almost instantly, with demand for this metal present virtually worldwide. Undoubtedly, its possession raises the level of security, says Tomasz Gessner, chief analyst at Tavex. Monetary gold, as an asset that has been with us for thousands of years and has demonstrated its ability to preserve purchasing power, in contrast to fiat currencies, is seen as an element that enhances a country’s status in the eyes of global investment capital, he adds.
