Key Points
- Central banks globally have been aggressively accumulating gold reserves, hitting record levels in 2024.
- Leading this gold accumulation are the National Bank of Poland, the Central Bank of Turkey, and the Reserve Bank of India.
In the face of global market uncertainty, central banks have been stockpiling gold reserves at an unprecedented rate. According to a recent report by Kobeissi Letter, central banks worldwide purchased a record 483 tonnes of gold in the first half of 2024.
This figure surpasses the previous record of 460 tonnes set in the first half of 2023 by 5%. In the second quarter of 2024 alone, central banks amassed an impressive 183 tonnes of gold, marking a 6% increase year over year.
Leading the Gold Accumulation
Among the central banks, the National Bank of Poland, the Central Bank of Turkey, and the Reserve Bank of India have been at the forefront of this gold accumulation. Adam Glapinski, the president of the National Bank of Poland, announced in late August that the bank intends to continue purchasing gold, aiming to increase its share to 20% of the country’s reserves.
This gold accumulation could also be a strategic move towards de-dollarization. Spencer Hakimian, the founder of Tolou Capital Management, suggested that countries like China, India, Russia, and Saudi Arabia are moving away from holding Western reserve assets, noting that “gold is the only neutral and stable reserve asset”.
BRICS and Gold-Backed Stablecoin
The BRICS nations bloc is reportedly working on a stablecoin that may be backed by gold. Interest in this project has also been shown by Iran, Egypt, Ethiopia, and the United Arab Emirates, potentially leading to increased demand for the asset.
As a result of this massive accumulation, gold has seen one of its best runs in history, gaining 23% since the beginning of 2024. Nonetheless, Bitcoin has outperformed gold with a 37% increase in the same period.
Despite the global market uncertainty, Bitcoin has not performed as well as gold in the last quarter. The steady ascent of gold contrasts with the subpar returns of Bitcoin during the same period.
