WILL


CENTRAL BANKS


CONTINUE TO BUY GOLD?


Total 2022 central bank purchases of 1,136 tons of gold represented a 152% increase over 2021. This was the largest quantity of net central bank gold annual purchases since the suspension of the U.S. dollar convertibility into gold in 1971, and also was the second-highest annual quantity on record. The previous record was in 1950. Buying dipped slightly during the coronavirus pandemic but accelerated in the second half of 2022, with central banks buying 862 tonnes between July and December, according to the World Gold Council. Central banks as a group purchased more gold in the third quarter of 2022 than ever before, which was a record 399 tonnes. Central banks in December of


Figure 1: Central bank gold: Last 10 years’ addition


5,000 4,000 3,000 2,000 1,000 0


Oct-2012 Oct-2014 Oct-2016 Oct-2018 Oct-2020 Oct-2022 Source: Bullion Vault via World Gold Council, Metals Focus


2000 1800 1600 1400 1200 1000


2022 finished the year with reported net purchases of 28 tons of gold. On a global basis, central banks added to net reserves for 13 consecutive years, and in that period they bought over 6,800 tons of gold. (Figure 1 below.)


Central banks hold gold because it has a long history of holding its value through turbulent times. In addition, gold ownership enables central banks to diversify away from assets such as U.S. Treasuries and fiat currencies.


According to the World Gold Council, there are two primary drivers behind central bank gold purchases - its performance during times of political and economic instability


14 | ADMISI - The Ghost In The Machine | Q1 Edition 2023


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