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Central Banks with an appetite for gold. Polish NBP also

INVESTINGCentral Banks with an appetite for gold. Polish NBP also

Central banks around the world have been steadily increasing their gold reserves for over a decade, but their appetite for this precious metal has significantly grown in the last two years, and this trend doesn’t seem to be changing anytime soon. Notably, one of the global leaders in gold acquisition is the National Bank of Poland.

Last week, the price of gold fluctuated within a range of 20 US dollars per ounce – on Monday 19 February, the price hovered around 2018 USD/oz, and by Friday 23 February, it had risen to approximately 2038 USD/oz.

“We also had a stable situation in the Polish currency – we saw increases at the beginning of last week, but ultimately the price changed little over the last 7 days, ending the week around 8100 PLN per ounce” explains Michał Tekliński, a gold market expert at Goldsaver.pl.

Inflation shocks worldwide, escalating geopolitical risks, aggressive interest rate hikes in developed markets – all these factors are making both individual and institutional investors increasingly turn their attention towards gold, resulting in its growing attractiveness and share in investment portfolios.

This is also the case for central banks, which for some time now have been major players in the global gold market, steadily increasing its share in their foreign exchange reserves. Their appetite has especially intensified in the last two years – both in 2022 and in 2023, they increased their gold purchases by more than 1000 tons each year.

Analysts at ANZ (Australia and New Zealand Banking Group) recently noted that the share of gold purchases by central banks in global demand for the metal has tripled over the last two years. According to the annual report of the World Gold Council, central bank’s purchases of gold in 2023 accounted for more than 23% of the global demand for this metal.

“Successfully emerging data clearly show that banks bought record amounts of gold in the past two years. They were primarily the ones “consuming” investment gold, much more so than in previous years. Until recently, it was estimated that their purchases accounted for about 10% of annual mining, but in the past two years this rate has increased to 25-30%” explains the expert from Goldsaver.pl.

And this is probably not the end, as according to analysts, the appetite of central banks will not decrease in the coming years.

“By 2030, many banks from developing countries will want to reach a level of about 10% of their reserves amassed in gold. This means that central banks will be buying a lot for the next 6 years, remaining one of the main players, and their purchases will greatly affect the price of the metal. Everything therefore indicates that gold is poised for an increasingly interesting time” adds Michał Tekliński.

Only China buys more than the National Bank of Poland (NBP)

As recently announced by the head of the National Bank of Poland, the country will continue its policy of increasing gold reserves. Last year alone, the NBP enriched its resources by 130 tons of gold. This places Poland second in the world in terms of scale of purchases of this metal, only behind China, which enriched its reserves by nearly 225 tons in 2023.

At the end of 2023, Poland’s official gold reserves amounted to 358.7 tons, valued at $23.5 billion. Meanwhile, the total value of Poland’s reserve assets at the end of January 2024 is nearly $190 billion. This means that the share of gold in the foreign exchange reserves is estimated at about 12.4%. For comparison, this figure was just 8% in 2021.

Prof. Adam Glapiński announced that gold is expected to ultimately account for as much as 20% of our country’s official reserve assets. These 20% constitute, as emphasized by the head of NBP, an indicator characteristic of the most affluent, safe, and credible countries in international commerce. To achieve this goal, Poland would need to buy an additional 220 tons of gold, assuming the current level of reserves and the current gold price.

Poland with the largest silver reserves in the world

According to the most recent data from the United States Geological Survey, Poland has become the world leader in silver reserves, surpassing China, Australia, and Peru. As stated in the report, as of January 2024, Poland holds 170,000 tons of silver, valued at over 500 billion Polish Zloty.

“Poland is neither the largest producer nor exporter, as we are surpassed by Mexico, China, or Peru, but according to this report we have the largest amount of silver ore. This is a quite interesting result, considering that the Polish company KGHM was known for many years primarily as the largest copper producer. Silver is also mined along with copper and this adds up to this fantastic result” comments Michał Tekliński.

It’s worth noting that Poland’s silver reserves have more than doubled over the past year. According to a similar report from the U.S. Geological Survey in January 2023, Poland held 65,000 tons of silver. This means that over the course of a year, these reserves increased by 105,000 tons.

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