Central Bank Gold Holdings Expand at Fastest Pace Since 1964
Source: Bloomberg, Nicholas Larkin (3/18/10)
"Gold is quietly, at the edge, becoming the world's second reservable currency. . ."
Combined holdings rose 425.4 metric tons to 30,116.9 tons, an increase worth $13.3 billion at last year's average price, according to the data. India, Russia and China said last year they added to reserves. The expansion was the first since 1988, the data from the London-based council show.
Central banks, holding about 18% of all gold ever mined, are expanding their holdings for the first time in a generation as investors in exchange-traded funds amass bullion as an alternative to currencies. Holdings in the SPDR Gold Trust, the biggest ETF backed by the metal, are at 1,115.5 tons, more than the holdings of Switzerland.
"There's clearly been a renaissance of gold in central bankers' minds," said Nick Moore, an analyst at Royal Bank of Scotland Group Plc. "It's not just been central banks taking on gold, but a general shift for physical gold in the investment sector."
Official reserves of central banks and governments may expand by another 187 to 218 tons this year, CPM Group forecast last month. The council's data also includes the holdings of the IMF, European Central Bank and other international and regional bodies.
Gold climbed 24% last year, reaching a record $1,226.56 an ounce in December. World holdings rose 527 tons in 1964 and climbed 832.7 tons the year before that, according to the London-based industry group.
"Gold is quietly, at the edge, becoming the world's second reservable currency, supplanting the euro and rivaling the dollar," Dennis Gartman, a Suffolk, Virginia-based economist and hedge-fund manager, said in his Gartman Letter today. "The trend shall continue months, if not years, into the future."