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Central Bank Gold Rush: Survey Supports Uptick

Isaac Nuriani    |
Jun 28, 2024
  • Vigorous central bank gold rush expected to continue for years.
  • More than four in five central banks see global gold reserves rising in the next year.
  • World Gold Council: Central banks recognize gold’s importance as a strategic asset.
  • Clear majority of central banks say dollar will keep losing share of global reserves.
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One of the more compelling stories of what might be called the “Gold Rush of 2022 to 2024” concerns the degree to which central banks around the world have been accumulating the metal and, consequently, providing it with valuable price support…particularly in the face of what is supposed to have been an adverse interest rate climate for precious metals. 

From spring 2022 through summer 2023, the Federal Reserve raised interest rates 11 separate times for a total of 525 basis points. It was the fastest rate hike regime in about four decades and put the benchmark federal funds rate at 5.25% to 5.50%, which is its highest level in 23 years.[1] 

Precious metals historically don’t like rate hike regimes. That’s because precious metals are rocks, fundamentally, and rocks don’t pay interest. So, when rates start rising, those assets that DO pay interest can appear more enticing. 

But a funny thing has happened on the way to the highest interest rates in decades: this time around, precious metals haven’t wilted under the pressure of tighter monetary policy. As a matter of fact, gold and silver have outperformed numerous popular “mainstream” assets since the beginning of 2022 – a period over which the metals ostensibly should have suffered at the hands of higher interest rates.[2] 

Strategists say one of the primary reasons for the high octane performance in an acutely adverse rate climate is the relentless acquisition of gold by the world’s central banks.[3] 

Central banks have been annual net purchasers of gold since 2010, but beginning in 2022, their gold-buying went to another level entirely. That year, central banks acquired a record-high 1,082 metric tons, and then nearly matched the total in 2023.[4] 

So, what’s THAT all about? After all, central banks’ principal function is to optimize their economies by regulating the fiat-money supply. Why would they, of all entities, buy so much heavy, clunky gold? 

Because, as it turns out, having the ability to print money at will can’t always solve the problems faced by economies and financial systems. Sometimes it can even be the cause of those problems. And because gold has managed to retain, after thousands of years, the time-honored properties that can help it hedge against uncertainty as well as against the risks inherent in fiat-currency-based monetary systems, central banks are finding the metal to be especially useful right now. 

Indeed, as furiously as central banks have been purchasing gold for the last couple of years, it appears they could be planning to make an even greater commitment to the metal in the coming years; this according to the World Gold Council’s just-published 2024 Central Bank Gold Reserves Survey 

That in itself is big news. But I suggest there’s even bigger news contained in this year’s survey results: namely, the significantly greater embrace of gold by not only the central banks of emerging market economies – which has been an ongoing trend – but now by the central banks of advanced economies. 

And why might that be such big news? 

We’re going to talk about it as we spend time this week detailing and explaining the highlights of the 2024 Central Bank Gold Reserves Survey. 

81% of Central Banks Expect Gold Reserves to Rise in the Next 12 Months  

The world may not be made of gold. But central banks are behaving as though it is – or will be. 

The increasing volume of central bank gold purchases that began as the impacts of the 2008 financial crisis were continuing to grind their way through the global economy reached a crescendo in the last couple of years. And based on the results of the 2024 Central Bank Gold Reserves Survey, that volume may grow louder still. 

“Extraordinary market pressure, unprecedented economic uncertainty and political upheavals around the world have kept gold front of mind for central banks,” said Shaokai Fan, World Gold Council’s global head of central banks and head of Asia-Pacific.[5] 

That may be an understatement. Among the more compelling pieces of data that emerged from this year’s survey results is that more than four in five of the institutions expect central bank gold reserves, overall, to increase over the next 12 months.[6] And keep in mind that expectation comes subsequent to central banks adding gold at or near record levels during the previous two calendar years. 

Notably, that particular piece of data also represents the continuation of an upward trend that’s been in motion for several years now. In 2021, 52% of central banks said they expected to see gold reserves increase in the following year. In 2022, that percentage was up to 61%. In 2023, it moved up to 71%. And now the percentage is up to 81%. In fact, this year’s result is the highest percentage of central banks to say they expect a 12-month increase in overall gold reserves since the question was first asked in 2019.[7] 

That’s not all. Beyond the faith that central banks have in their community, as a whole, expanding current gold reserves, 29% of central banks said they expect their own share of gold reserves to grow larger over the next 12 months. That also represents the highest percentage to say so since 2019.[8] 

And it’s not just the near term over which central banks expect gold’s share of global reserves to expand. According to the survey results, 69% of central banks see that share rising over the next five years, as well.[9] 

Once again, that, too, represents the continuation of what has been a steadily rising trend – in 2022, 46% of central banks said they expected global gold reserves to rise in the subsequent five years, while 62% said so in 2023.[10] 

And there’s something else that’s especially interesting:  

A breakdown of this data on the distinguishing basis of “emerging market and developing economy” central banks and those of advanced economies finds that a full 75% of developing economy central banks expect this percentage to increase.[11] No surprise there. 

What may be a surprise, however, is the percentage of advanced economies that say the same thing: 57%, which is a big increase from the 38% that said it just last year.[12] 

Why is that so notable? 

A large portion of the most active central bank gold buyers in recent years have represented emerging/developing markets.[13] In the opinion of experts, it’s those markets that see themselves as having a particular vulnerability to economic and geopolitical upheaval as well as dollar-based risks.[14] For them, the properties that make gold such a reliable store of value for nation-states, including its tendency toward universal acceptance and nearly complete lack of counterparty risk, are especially attractive. 

However, select responses to the survey, such as the one about the anticipated percentage of gold reserves five years hence, suggest that advanced economy central banks now may be placing greater importance on the retention of gold in global reserves. 

And it’s what that possibly says about where all central banks – those representative of both developing and advanced economies – see the global economic risk environment, going forward, that ultimately may be the most important piece of information to come from this year’s survey. 

To continue connecting those dots, let’s look at why central banks are buying all this gold. 

Central Banks’ #1 Reason for Owning Gold: “Store of Value” and Hedge Asset 

We’ve obviously established that central bank gold demand has reached its highest levels in history, and that this vigorous demand is expected to persist, based on the outlook presented in the 2024 Central Bank Gold Reserves Survey. 

As for the reason for this level of demand, the survey tells us that, as well. And, in a nutshell, it’s all about risk management. 

The top reason? Gold’s capacity to serve as a “long-term store of value/inflation hedge.” Eighty-eight percent of central banks identified that as a factor in deciding to own gold as a part of their reserves.[15]  

That was followed by gold’s “performance during times of crisis.” It was identified by 82% of central banks as a factor in choosing to own gold.[16]  

Third on the list is gold’s potential as an “effective portfolio diversifier,” which was named by 75% of central banks. And fourth on the list? That gold has “no default risk,” which is another way of saying that it has no counterparty risk.[17] 

Other features of gold identified by a clear majority of central banks as relevant factors in owning the metal include its high degree of liquidity and its potential as a geopolitical diversifier.[18] 

There’s obviously a theme here: “hedge”; “crisis”; “diversifier”; “risk.” Central banks unquestionably are looking to gold as a way to help reduce their exposure to the negative potential impacts of uncertainty – all kinds of uncertainty.  

And so here’s the first part of the real punchline: With a majority of central banks representing advanced economies now saying they expect overall gold reserves to rise in the coming years, it suggests that the complete range of central banks anticipates the possibility that uncertainty and risk could grow even more pronounced from here. 

Majority of Advanced-Economy Central Banks: Dollar’s Share of Reserves Will Decline 

Here’s the second part of the punchline: 62% of central banks think the dollar’s share of total reserve assets will be smaller five years from now. What’s more, a clear majority of both emerging/developing market central banks (64%) and advanced economy central banks (56%) share that outlook.[19] 

Once again, in the same way it’s unsurprising that a significant number of emerging economy central banks see gold as a share of overall reserves rising in the coming years, it’s not a shock that a substantial majority of those institutions also think the dollar’s share of reserve assets will decline.  

But as for a majority of advanced economies also projecting that decline…just as a majority now forecasts gold to occupy a greater share of reserves in the coming years? That, as the World Gold Council makes clear, IS worthy of a double-take: 

It is notable…that the percentage of advanced economy respondents who believe that the US dollar’s share of global reserves will fall has increased from 46% in 2023 to 56% in 2024 – reflecting increased pessimism even among advanced economy respondents about the US dollar’s future share of global reserves.[20] 

Put another way, here’s the latest forecast of a majority of both emerging market and advanced economy central banks: More uncertainty, fewer dollars…and more gold. 

“While influences like price may temporarily slow down purchases in the near term, World Gold Council’s Shaokai Fan said, “the broader trend remains in place, as managers recognize gold’s role as a strategic asset in the face of ongoing uncertainty.”[21] 

To be clear, the uncertainty that Shaoki Fan speaks of poses the same general risks to individual investors as it does central banks. Individual investors may not always think in terms of alternative “real” assets, such as physical gold and silver, when it comes to assembling their portfolios. But precious metals – and the hedge potential they offer – are, in fact, readily available to them in the same way they’re available to central banks. And they’re even accessible on a tax-advantaged basis, through a gold IRA (consult with a qualified advisor on the tax implications of an IRA for you and your situation). 

Whether the geoeconomic landscape ultimately evolves the way central banks suspect it will remains to be seen. But if it does, that means it will evolve in basically the same way for all investors…both large and small. Central banks have decided their preparations will include continuing to add even more gold to their reserves. The question others are left to answer is:  

“How will we prepare?” 



[1] David Lynch, Washington Post, “Fed’s higher interest rates do not get all the credit for lower inflation” (June 15, 2024, accessed 6/27/24); Scott Horsley, NPR.org, “Fed keeps interest rates at 23-year high” (May 1, 2024, accessed 6/27/24). 
[2] StockCharts.com (accessed 6/27/24). 
[3] Joseph Hoppe, Wall Street Journal, “Gold Futures Hit New Record on Central Bank Buying, Safe-Haven Demand” (April 12, 2024, accessed 6/27/24). 
[4] World Gold Council, “Gold Demand Trends Full Year 2023” (January 31, 2024, accessed 6/27/24). 
[5] Hoppe, Wall Street Journal, “Gold Futures Hit New Record.” 
[6] World Gold Council, “2024 Central Bank Gold Reserves Survey” (June 18, 2024, accessed 6/27/24). 
[7] Ibid. 
[8] Ibid. 
[9] Ibid. 
[10] Ibid. 
[11] Ibid. 
[12] Ibid. 
[13] World Gold Council, “Gold Demand Trends Full Year 2023.” 
[14] Ivan Castano, The Street, “Why central banks are buying and selling gold” (October 6, 2023, accessed 6/27/24). 
[15] World Gold Council, “2024 Central Bank Gold Reserves Survey.” 
[16] Ibid. 
[17] Ibid. 
[18] Ibid. 
[19] Ibid. 
[20] Ibid. 
[21] Hoppe, “Gold Futures Hit New Record.” 

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