As a gold-producing country, maintaining a gold portfolio within our reserves has been a natural strategy – allowing gold to be converted into foreign exchange liquidity when necessary. Not only does it play a role within the liquidity tranche, but the Bank of Mongolia also introduced a dedicated gold reserve portfolio beginning in 2025, with the goal of gradually building it into a long-term strategic asset portfolio.
Within our strategic asset allocation framework, gold is treated separately from other reserve currencies to minimise market price volatility shocks, which could potentially trigger costly and unstable rebalancing. The overall tranche size is determined by market outlook and risk-return optimisation techniques, while tactical decisions are influenced by domestic gold supply trends and prevailing market conditions.
Our trading team closely monitors key macroeconomic and financial market indicators that reflect international policy developments and associated risks. Additionally, we focus on enhancing our capacity to manage gold in both allocated and unallocated forms, working in collaboration with the London Bullion Market Association clearing banks and central banks.
Amid rising economic uncertainty and geopolitical tensions, the importance of gold as a portfolio diversifier has grown. We regard gold as a strategic asset that supports risk mitigation and strengthens financial security in rapidly evolving global conditions. As a response, the Bank of Mongolia is further enhancing its gold reserve management framework to bolster the country’s financial resilience while adhering to international best practices.
Gold as a reserve accumulation tool
Maintaining a sufficient level of foreign reserves is essential for safeguarding economic and financial stability, as well as providing a buffer against external shocks and uncertainties. Within the policy framework to maintain and increase foreign reserves, the Bank of Mongolia annually purchases around 18-20 tonnes of domestically mined gold from large mining companies as well as artisanal and small-scale gold miners through the commercial banks. Efforts are focused on improving overall supply chain operations, enhancing the domestic gold purchase programme and increasing accessibility for local producers and artisanal miners.
We also aim to acquire a higher volume of responsibly sourced domestic gold for our reserves by streamlining operational procedures, such as offering international market prices, promoting formalisation and strengthening partnerships throughout the gold supply chain.
International co-operation plays a central role in this approach. The Bank of Mongolia has integrated global best practices into its domestic gold operations through collaboration with the World Gold Council. In 2024, we reinforced our commitment to responsible gold management by becoming a signatory to the WGC’s 12 London Principles. The principles provide a framework for governance, risk management, transparency and ethical sourcing, guiding the continuing efforts to modernise its domestic gold purchase programme.
To ensure compliance with these standards, the Bank of Mongolia exclusively partners with internationally licenced entities for logistics, storage, refining and transactions, and only engages with LBMA Good Delivery–accredited refineries, which apply comprehensive due diligence to uphold responsible mining standards.
Through these integrated measures, the Bank of Mongolia is strengthening its commitment to responsible gold reserve management, promoting economic stability and ensuring that Mongolia’s gold reserves meet the highest global standards for quality, ethics and transparency.
Tuvshingerel Tumenbayar is Acting Director, Reserve Management, Financial Markets, and Azjargal Amarsaikhan is Senior Economist, Reserve Management, Financial Markets at Bank of Mongolia.
This article was originally published in OMFIF’s Global Public Investor 2025 report.
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