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Central Bank Gold: Central Bankers Reveal Why They’re “All In” on the Yellow Metal

Isaac Nuriani    |
Dec 15, 2023
  • Official admits central banks prize gold for “a number of” reasons.
  • Central banks have been yearly net purchasers of gold ever since the financial crisis.
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The pace at which the world’s central banks have been accumulating gold has been nothing short of relentless. 

Central banks bought more gold in 2022 than in any other year up to that point: 1,078 metric tons.[1] And given the pace at which central banks are continuing to buy gold this year, it’s very possible 2023 will see a new record total set in calendar-year gold demand; through the end of the third quarter, central banks had purchased 800 metric tons of the metal. That’s 14% higher than the total at the end of Q3 2022, and the highest total on record for gold-buying during the first nine months of the year.[2] 

And it appears that focused effort to keep buying the yellow metal isn’t going to end any time soon. According to the World Gold Council’s 2023 Central Bank Gold Reserves Survey, 70% of central banks surveyed said they expect gold reserves among central banks worldwide to increase in the next 12 months.[3] Analysts at the World Gold Council recently confirmed they expect to see continued vigorous buying on the part of central banks, even if it turns out to be at a relatively slower rate than the record pace at which they’ve been buying gold this year and last.[4]  

Perhaps as impressive – and even more meaningful – than the acutely high purchase totals that central banks have racked up both this year and last…is for how long central banks have been net buyers of the metal. Through 2022, central banks were net buyers of gold for 13 straight calendar years, which means, given the demonstrated pace of gold-buying so far this year, 2023 will most certainly end as the 14th straight net-buying year.[5]  

So, why is it that central banks are buying all this gold? 

One reason is the near single-minded effort on the part of some nations – China and Russia, notably – and their associated central banks to lower their exposure to the dollar…to de-dollarize, as it’s called. The thinking is that by lowering their exposure to the dollar, which is the world’s reserve currency, they will, in turn, lower their exposure to both the potential economic sanctions applied though the American financial system as well as the potentially negative implications of U.S. fiscal and monetary policy.[6] 

But is that the only reason central banks are devouring gold as fast as they can? Hardly.  

According to the previously referenced 2023 Central Bank Gold Reserves Survey, among the most popular reasons for the especially warm embrace of gold by central banks are its “performance during times of crisis,” its capacity to serve as a “long-term store of value/inflation hedge,” and its perceived role as an “effective portfolio diversifier.”[7] 

In a recent interview, a senior official at the Dutch central bank essentially validated these sentiments personally, candidly expressing the enthusiasm for gold – and the reasons for it – one normally doesn’t hear told by central bankers.  

This week, we’re going to “listen in” on portions of that interview. We’re also going to look at comments made by another top European central banker whose passion for gold may be even greater.  

It’s not typical to hear central bankers directly extoll what they see as the significant virtues of gold. It’s almost as though gold-buying is meant to be a secret among the central-bank community. But if that’s what it is meant to be, it appears to be a secret no more. And as central banks continue to buy gold in enormous quantities and even spend more time publicly discussing its perceived benefits, it’s possible their words and deeds together may help to further cultivate a perception of gold as an asset worthy of being seen as a core component of any portfolio. 

Central-Bank Official: Gold’s Reputation as a Store of Value Is One of the Reasons Central Banks Own It 

De Nederlandsche Bank (DNB) is the Dutch central bank. And one visit to the DNB’s official website will tip you off as to in just how much high regard that Dutch central banks hold gold. 

“The gold stock mainly functions as a reserve asset.” The DNB explains, “and as an anchor of trust.”[8] 

There you have it; a central bank essentially admitting to the world that while it traffics in elastic currency as a means to more nimbly manage the economy, it also makes sure to keep a healthy supply of gold on hand as a “just in case.” 

“The gold standard has been abandoned,” the DNB site notes elsewhere, “but the gold stock still functions as an anchor of trust.”[9] 

But as it turns out, the DNB’s affection for gold goes well beyond a declaration at its official website. In a recent interview with the Dutch financial daily Het Financieele Dagblad (The Financial Times), Aerdt Houben, Director of Financial Markets for the DNB, went on at length about just how important gold is to the Netherlands’ central bank, implying that the world’s other central banks see it essentially the same way. 

When challenged by interviewer Anna Dijkman why countries keep “substantial reserves” of gold in spite of the fact that the metal has had no material role in the monetary system for many decades, Houben unhesitatingly responded: 

The beauty of gold is that it’s stable in value, it retains its value. That’s one of the reasons why central banks hold gold. Gold has intrinsic value unlike a dollar or any other currency, let alone Bitcoin. Gold has value on its own. It’s a fungible product. It’s a liquid product, you can buy and sell it almost anywhere in the world.[10] 

Note that Houben did not just say that gold’s property as an expected store of value is why the DNB owns it…but why all central banks own it. 

Houben continued to “spill the beans” about central banks’ universal regard for the yellow metal. 

“There are a number of things that make gold very attractive to central banks. Gold is like solidified confidence for the central bank. It’s something that has historically fulfilled that role. If we ever unexpectedly have to create a new currency or a systemic risk arises, the public can have confidence in DNB because whatever money we issue, we can back it with the same value in gold.”[11] 

During the interview, Houben revealed that right now the DNB owns the equivalent of 4% of Netherlands GDP in gold.[12] Other Western European nations have even more. For example, France, Germany and Italy each have roughly 5% of their respective GDPs in gold reserves.[13]  

Poland’s Top Central Banker: Owning Significant Quantities of Gold Makes Us “a More Credible Country” 

Another European central banker – Easter European, in this case – has been especially outspoken about the enormous value his nation places in gold as – in the words of the DNB – “an anchor of trust.” 

The National Bank of Poland (NBP) has been on what can be fairly termed a gold buying spree of late; this year alone, the NBP has increased its gold holdings by 100 metric tons, which represents an increase in gold reserves by more than 40%.[14] 

Commenting on the NBP’s voracious consumption of gold, NBP President Adam Glapiński recently said, “This makes Poland a more credible country, we have a better standing in all ratings, we are a very serious partner and we will continue to buy gold,” adding, “The dream is to reach 20 percent.”[15] 

The “20 percent” he’s referring to? It’s the percentage of total NBP reserves in gold. As of October, that figure was 11%.[16] 

To be clear, Glapiński’s interest in growing the NBP’s gold reserves is not a new phenomenon. In 2019, he declared, “The gold symbolizes the strength of the country” as he worked to repatriate 100 tons of Polish gold that was being stored by the Bank of England.[17]  

In 2021, in an article for Capital Finance International, Glapiński detailed the critical role that gold plays in optimizing the reserves of the NBP – and, by implication, the reserves of all central banks: 

The underlying idea is simple: if the FX reserves are not deployed to combat some financial stability or balance-of-payments emergency, they are to be preserved, preferably increased and passed on to another generation.[18] 

Glapiński added: 

With such a strict investment mandate, it is perhaps no wonder that NBP considers gold as a special component of its official reserve assets. After all, the characteristics of gold are very well aligned with the precautionary role of maintaining foreign reserves and preserving capital in the long term, weathering periods of stress and varied market conditions.[19] 

The candor of both Glapiński and Houben about the degree to which modern central banks look to gold as a linchpin of national economic security is both revealing and refreshing. 

“Refreshing” because it helps to confirm from real, live central-bank officials what observers of a decade-plus of net gold purchases have suspected: that gold is, in fact, viewed by those charged with overseeing their economies as essential to not only managing risk, but ensuring those economies remain functional should the most serious forms of that risk actually come to pass. 

Is there a lesson here for individual retirement savers? Perhaps. 

Let’s discuss that briefly as we finish up this week. 

Central Banks’ Current Gold-Buying Run Began in the Wake of the Financial Crisis 

Fourteen consecutive years of net gold purchasing says a great deal about just how much central banks value gold as components of their all-important reserves.  

What might say even more is when the streak began: in the wake of the global financial crisis. 

That’s right. The first year of the current, ongoing string of net-gold-buying years was 2010…the first calendar year following what often is referred to as the “2007-2009 financial crisis.”[20] 

The crisis itself was bad enough. But some might suggest the “cure” – essentially unrestrained deficit spending that largely has continued to this day – ultimately could prove even worse for the stability of the global economy. 

Since the financial crisis, which saw the historic introduction of hyper-accommodative quantitative easing (QE) in the United States, the average ratio of public debt to debt to GDP among the world’s countries have risen from 40% to 60% on average. Among wealthier nations, the increase has been even more significant, rising to 85% on average (in the U.S., public debt to GDP is now 98%).[21]    

For a variety of reasons, experts say, the global debt outlook isn’t going to improve anytime soon. “High public debts are not going to decline significantly for the foreseeable future,” economists Serkan Arslanalp and Barry Eichengreen wrote earlier this year. “Countries are going to have to live with this new reality as a semipermanent state of affairs.”[22] 

Indeed, debt and debt ratios are projected to rise much higher over the long term. In the U.S., for example, analysts at the Penn Wharton Budget Model suggest the ratio of public debt to GDP could reach between 175% and 200% sometime in the next 20 years….with potentially dire consequences for the global economy if those levels are, in fact, reached.[23] 

In his interview with Het Financieele Dagblad, DNB’s Aerdt Houben suggested that central banks are buying gold in part because, as he put it, “Gold has intrinsic value unlike a dollar or any other currency.” This matters for nations at risk from massive indebtedness (either their own or that of another country) and the fiscal instability it can bring – which, basically, is all of them, in one way or another. 

And as nations and central banks go when it comes to the potential fallout from massive indebtedness, so go individual retirement savers. Many savers have hedged their holdings against the risks of fiscal failure, financial crisis and potential dollar uncertainty in the way central banks clearly are thinking about it. 

Does that mean those retirement savers should be “all in” on gold the way central banks seem to be? Ultimately, they’ll have to decide for themselves. But given that many of the reasons cited by central banks for buying gold also are applicable to individual savers, adding gold – or silver – to one’s core holdings might be at least a reasonable consideration. 



[1] Gold.org, “Gold Demand Trends Q1 2023” (May 5, 2023, accessed 12/14/23). 
[2] Gold.org, “Gold Demand Trends Q3 2023” (October 31, 2023, accessed 12/14/23). 
[3] Gold.org, “2023 Central Bank Gold Reserves Survey” (May 30, 2023, accessed 12/14/23). 
[4] Gold.org, “Gold Outlook 2024” (December 7, 2023, accessed 12/14/23). 
[5] Gold.org, “Gold Demand Trends Full Year 2022” (January 31, 2023, accessed 12/14/23). 
[6] Congressional Research Service, “De-Dollarization Efforts in China and Russia” (July 23, 2021, accessed 12/14/23). 
[7] Gold.org, “2023 Central Bank Gold Reserves Survey.” 
[8] DNB.nl, “Gold” (accessed 12/14/23). 
[9] Ibid. 
[10] FD.nl, “Toegevoegde Waarde: Waarom ligt er nog goud bij De Nederlandsche Bank?” (October 7, 2023, accessed 12/14/23). 
[11] Ibid. 
[12] Ibid. 
[13] Banque de France, “Behind the Bank’s doors” (accessed 12/14/23); CEIC, “Germany’s Gold Reserves” (accessed 12/14/23); CEIC, “Italy’s Gold Reserves” (accessed 12/14/23).   
[14] Krishan Gopaul, Gold.org, “Central banks’ summer of buying continues into October” (December 5, 2023, accessed 12/14/23). 
[15] Gold.org, “Gold Demand Trends Q3 2023.” 
[16] Ibid. 
[17] Marek Strzelecki and Dorota Bartyzel, Bloomberg.com, “Poland Repatriates 100 Tons of Gold From Bank of England Storage” (November 25, 2019, accessed 12/14/23). 
[18] CFI.co, “Investing for the Long-term: Gold as a Pillar of NBP’s Reserve Management Strategy” (July 12, 2021, accessed 12/14/23). 
[19] Ibid. 
[20] Anjan Thakor, The Review of Corporate Finance Studies, “The Financial Crisis of 2007–2009: Why Did It Happen and What Did We Learn?” (May 13, 2015, accessed 12/14/23). 
[21] Courtenay Brown, Axios.com, “Why the world’s big debt loads may be here to stay” (August 29, 2023, accessed 12/14/23); Penn Wharton Budget Model, “When Does Federal Debt Reach Unsustainable Levels?” (October 6, 2023, accessed 12/14/23). 
[22] Serkan Arslanalp and Barry Eichengreen, KansasCityFed.org, “Living with High Public Debt” (August 2023, accessed 12/14/23). 
[23] Penn Wharton Budget Model, “When Does Federal Debt Reach Unsustainable Levels?” 

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