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The World’s Biggest Buyers of Gold Are Now Among East European Central Banks

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The World’s Biggest Buyers of Gold Are Now Among East European Central Banks

(Bloomberg) — Earlier this year, the Czech Republic’s central bank chief flew to London to have a look at a swelling stack of gold bars stored in the Bank of England’s concrete-encased vaults beneath Threadneedle Street.

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Ales Michl’s mission to inspect the precious metal held for the Czech National Bank was part of the governor’s stated ambition to double the country’s stockpile to 100 metric tons in the next three years. It’s increased fivefold since he took office in 2022 with an aim to diversify the bank’s reserves.

“We need to reduce volatility,” Michl, who grew animated when queried on the subject, told Bloomberg Television earlier this month. “And for that, we need an asset with zero correlation to stocks, and that asset is gold.”

The Czech policymaker isn’t alone in accelerating bullion purchases. Peers from Warsaw to Belgrade are joining the gold rush as a way to diversify investments and bet on future price increases, making eastern Europe one of the biggest buyers of the metal and helping to drive the gold rally.

Central banks around the world are stocking their gold arsenals as a shield against external shocks such as prospective trade wars brought on by Donald Trump’s second presidency and geopolitical tensions in Ukraine and the Middle East. But eastern European monetary guardians have made a particular show of topping up their gold piles.

In addition to Michl’s foray to London, his counterpart in Warsaw has penned a movie script on the history of Polish gold. Serbian authorities hauled their stockpile held abroad home to keep it safer in Belgrade — and help cut storage costs.

Striving for a sense of security is a powerful motive in a region that’s been ravaged by Europe’s wars of the past — and that now finds itself next door to the continent’s deadliest conflict since World War II.

‘An Exclusive Club’

Poland, which shares a border with Ukraine and is a staunch supporter of Kyiv’s war aims, was the largest buyer of gold globally in the second quarter, according to the World Gold Council’s latest data.

Poland’s central bank governor, Adam Glapinski, said gold and hard currency reserves are crucial to protecting the economy against catastrophic events. He increased bullion holdings to some 420 tons as of September, about half the stockpile of India or Japan.

“We are entering the exclusive club of the world’s biggest gold owners,” Glapinski gloated during a news conference last month, reinforcing his aim to raise gold’s share to 20% of all reserves.

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