Gold reserves are significant for any country’s currency.
A gold reserve is a gold owned by a country to boost a country’s economy, especially during a period of hyperinflation.
How does having gold reserves impact any country?
Any country that exports gold or has a huge gold reserve will inevitably experience a rise in its currency as the price of gold increases. This price rise of gold increases the trade or helps balance the trade deficit. It also leads to an increase in the country’s exports.
On the other side, if any country lacks gold in its reserves and is a massive importer of it, they have a weaker economy whenever the gold price increases.
In 2020, the top 10 countries traded more than one metric ton of gold, emphasizing just how important this metal is in the world economy.
According to the WGC (World Gold Council) data from April 2021, central banks bought about 273 tons of gold in 2020. International Monetary Fund is not a country; thus, it is not included in the list. However, if it were, it would be in the third position with 2,814 tons of gold in its safe.
Read more about buying, selling, or stocking gold here.
Over the years, the top countries with the largest gold reserves have not changed.
The largest gold reserves in the world are as follows:
- The United States of America, with 8,133.5 tons of gold
The USA has held its first position in gold reserves for several years. Gold makes up 79% of the USA’s foreign reserve (the only countries above this are Venezuela with 82.4% and Portugal with 80.1%). It has nearly the stock of the following top three countries combined.
Fort Knox is the United States Bullion Depository, a heavily defended vault building near the United States Army Post in Kentucky. The Bullion Depository houses most of the country’s gold reserves and valuable items. All of these federal depositories are overlooked by the United States Mint Police. The United States Treasury Department presides over Fort Knox.
- Germany, with 3,362.4 tons of gold
Gold makes up 74.5% of the foreign reserves in Germany. The gold reserves of Germany are kept at Deutsche Bundesbank in Frankfurt am Main, the New York branch of the Federal Reserve Bank of the US, and the Bank of England in London. In 2017, Germany received a repatriation return of about 674 tons of gold from Banque de France and the Federal Reserve Bank of New York.
- Italy, with 2,451.8 tons of gold
69.3% of foreign reserves in Italy are gold. Italy has also held its position in the top 10 largest gold reserves in the world for quite some time now. The European Central Bank or ECB’s President Mario Draghi has contributed to it. The President stated that it gives them a cushion against the fluctuation of US dollars.
Like every Eurosystem national central bank, the Bank of Italy looks after the country’s gold reserves, the national currency, and a small part of the ECB’s.
Most of the gold in the vaults is kept in the form of bars, but some coins are also there.
- France, with 2,436.2 tons of gold
About 64.5% of the foreign reserves in France are gold. In recent years, France has sold only a tiny amount of its gold, and there are talks of ending it entirely. France’s far-right National Front leader, Marine Le Pen, wants to stop the sale of gold but also wishes to repatriate the entire sum from a foreign land. It falls after the International Monetary Fund (IMF).
- Russia, with 2,298.5 tons of gold
For the past seven years, Russia has become the second largest buyer of gold in the world (Turkey has the first spot as it bought 134 tons of gold for the second consecutive year). It has led to surpassing China in the list of one of the top countries with the largest gold reserves in 2018. Only 22% of its total holdings are gold for Russia. It also bought 227 tons of gold to expand its currency from US dollars.
Russia has determinedly tried to expand its currencies from US dollars to gold and other foreign currencies in the last three years as its relationship with the western parts grows sour. Russia sold most of its American treasuries to buy this enormous amount of gold.
- China, with 1,958.3 tons of gold
After 2009, China became secretive about the country’s gold activity. Since 2015, the People’s Bank of China has started to share its monthly gold purchasing projects. Although China is in the top 10 most extensive gold reserves list, only 3.3% of its foreign reserves of it account for gold.
However, in 2021, China opened the doors to national and international trade of gold in the country to support its economy. About 150 metric tons of gold will be shipped to China in April or May.
- Switzerland, with 1,040 tons of gold
As it traded with both Allies and Axis countries, this neutral country in World War II became the epicenter of all European gold trades. Nowadays, it primarily trades with Hong Kong and China. Switzerland’s foreign reserves hold 5.4% of gold in its safe. It is also the world’s largest gold reserve per capita.
- Japan, with 765.2 tons of gold
The third largest economy in the world has gold worth $43 billion. This data came from a report in February 2021. However, this number has come down from the previous $46 billion. 3.1% of foreign reserves in Japan are gold.
- India, with 686.8 tons of gold.
It is not a surprise that this South Asian country is on this list as it is the second largest consumer of gold. India saw a rise in gold reserves in the last quarter of 2020 as the wedding season kicked in. It grew from 676.61 tons to 686.8 tons. Data from the Reserve Bank of India revealed that during the last week of December 2020, the gold reserves increased by $1.008 to $37.020 billion. Yet only 6.5% of India’s foreign reserves are gold.
- The Netherlands, with 612.4 tons of gold
67.4% accounts for gold in the Netherlands’ foreign reserves. The Dutch Central Bank recently announced that it would be moving its vaults from Amsterdam to Camp New Amsterdam. Its changes are due to the troublesome security measures of the location.