While the global monetary system no longer uses gold to back paper money, many countries still have huge hoards of this precious metal. It’s a safe haven for investors during times of uncertainty and a liquid asset that can be used to diversify wealth reserves.
Central banks around the world are turning from net sellers to buyers of gold, a move that has helped to push prices higher. Here are the top 10 nations with the most gold in their vaults.
1. United States
The United States is the world’s largest holder of gold reserves with nearly 8,134 tons. It holds almost 2.5 times as much as Germany, and more than twice as much as Italy and Russia combined.
Gold is an essential commodity, used in a number of applications such as computers, communication systems and jet aircraft engines. It also plays a vital role in international finance as a form of currency backing and affecting exchange rates.
The People’s Bank of China holds the sixth-largest gold reserves in the world, according to the World Gold Council. But it’s hard to know exactly how much China has because of state secrecy.
Despite this, China is a major buyer of the metal in times of stress to protect against falling currencies and high interest rates. This is why it’s the third largest gold importer worldwide, behind Germany and Italy.
Choosing the right country to invest in gold requires careful consideration of its trading and storage infrastructure as well as tax and import/export policies. Some jurisdictions, like Switzerland, have a strong reputation for being safe havens for bullion investors and have established storage facilities with safety features.
India ranks 10th in the list of countries with the most gold reserves. The country’s central bank has been buying a lot of the yellow metal, which is an important asset for the economy.
It is also a safe haven during economic crises as it can regain its value even if the currency falls. Moreover, the price of gold can increase a country’s exports, which in turn can boost its currency’s value.
The Indian central bank has accumulated over 100 tonnes of gold over the past two years. It is a sign of its growing popularity as an investment vehicle, according to data from the World Gold Council.
Switzerland is an independent, neutral nation with a strong banking sector. It has a federal system of government, which is divided into 26 cantons.
It is renowned for its banking secrecy, and has long been a favourite tax haven for the world’s richest people.
Switzerland holds the eighth largest gold reserves in the world, with holdings of 1040 tonnes. During the 2000s, however, Switzerland sold off 1550 tonnes of its gold. This is believed to have helped increase the price of gold.
Canada is one of the world’s leading trading nations, with vast oil reserves and a strong service sector. It also boasts a healthy economy and a growing population.
Although Canada may be a major producer of gold, it hasn’t been buying the metal for years, and its holdings have steadily declined. Now, the country has just 3.4 tonnes of gold in its reserves.
Peru is one of the largest gold producers in Latin America, but it’s also a major source of illegal mining. Its mining industry, which includes artisanal and small-scale operations, has contributed to forest loss in the Amazon.
But the country’s mining sector has benefited from higher prices for gold. It was boosted in the 1990s by President Alberto Fujimori, who ushered in a free-market reform program and opened up all sectors of the economy to foreign investment.
But the country’s politics have been marred by high-profile corruption scandals and a fragmented political class. Insufficiently regulated campaign financing remains a problem.
7. South Africa
The country of South Africa is home to one of the world’s largest gold reserves. This is largely due to its history of exploration and the wealth it has generated from the discovery of resources in far-off places.
After the first European settlers arrived in the Cape Colony, they discovered diamonds and gold. These discoveries spurred wealth and immigration from Europe.
This heightened tensions between the local Native Africans and the influx of Europeans. This contributed to the Second Boer War in 1899.