GPI 2019 special report: Gold

The extent of central bank gold holdings distinguishes them from other public investors, such as public pension and sovereign funds. The World Gold Council states that official institutions hold around 17% of gold. As part of OMFIF’s study with State Street Global Advisors on trends in global reserves management, we estimate that, while public pension funds hold only around 0.5% of their assets in commodities in general, 9.5% of global official reserves were allocated to gold as of end-2017. As of year-end 2018, gold made up 10.5% of global central bank reserves, down slightly from 10.6% in the fourth quarter of 2017.

The most significant holders of gold are those economies that used to hold it for policy reasons. Developed economies with now-floating exchange rates make up 53% of the global economy and hold 68% of the global official gold share. Most of these economies have kept their share stable over the past decade – the US, Italy and Switzerland, for instance, have not changed their tonnage holdings of gold. However, some central banks have been active gold purchasers. The trend started around the time of the 2008 financial crisis and grants key insight into the strategic importance of gold as a reserve asset and foreign policy tool.

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