Central Bank Gold Buying Continued Unabated In June

Aug. 02, 2019 4:07 AM ETGLD, IAU, PHYS, SGOL, UGLDF, UGL, DGP, GLL, GLDI, OUNZ, DZZ, DGL, DGLD, DGZ, BAR, GLDW, UBG, QGLDX, AAAU, GLDM, IAUF, PHYS:CA5 Comments
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Summary

  • Globally, central banks added a net 126.5 tons of gold to their reserves last month.
  • Poland accounted for the bulk of the big June increase in central bank gold reserves.
  • That brings total reported central bank gold purchases on the year to approximately 378 net tons.

By SchiffGold

Central banks continued to buy gold in June, according to the latest data released by the World Gold Council.

Globally, central banks added a net 126.5 tons of gold to their reserves last month, led by the announcement of a 94.9 increase in Polish gold reserves. That brings total reported central bank gold purchases on the year to approximately 378 net tons.

The World Gold Council bases its data on information submitted to the International Monetary Fund.

We reported on Poland's big increase in gold reserves earlier this month. The National Bank of Poland began accumulating gold last year when it added 7 tons of the yellow metal to its reserves in June and another 3 tons in August. At the time, it was the largest gold purchase by Poland since 1998, and it was the first EU country to add a significant amount of gold to its reserves since 1983. According to a statement released by the National Bank of Poland, it bought another 15.7 tons through the final months of 2018 and nearly 100 tons through the first half of this year.

Poland accounted for the bulk of the big June increase in central bank gold reserves, but even without its 94.9 tons, central banks globally increased their holdings by a healthy net 31.6 tons last month. That compares with a 35.8-ton increase in May.

Apart from Poland, Russia was the biggest buyer, adding 16.9 tons of gold to its reserves. That brings its announced gold purchases for the year to 94 tons.

China continued to add to its reserves, buying 10.3 tons of yellow metal last month. It was the seventh straight month of gold purchases for the People's Bank of China. That brought its gold purchases year to date to 74.1 tons.

Other gold buyers in June were:

  • Kazakhstan - 4.4 tons
  • Kyrgyz Republic - 0.4 tons
  • Turkey - 11.3 tons

There were a few sellers last month. After buying more than 23 tons over the previous three months, Uzbekistan sold 10.9 tons. Germans and the Eurozone each sold a little over 1 ton of gold, and Argentina sold the 6.8 tons it purchased in April.

According to the World Gold Council, a total of 11 central banks have increased their gold reserves by at least 1 ton through the first half of 2109.

Central bank gold purchases in April continue a trend we saw through 2018. In total, the world's central banks accumulated 651.5 tons of gold last year. The World Gold Council noted that 2018 marked the highest level of annual net central bank gold purchases since the suspension of dollar convertibility into gold in 1971, and the second-highest annual total on record.

A move to minimize exposure to the US dollar, especially by countries like Russia and China, is driving this central bank gold-buying spree.

Peter Schiff has talked about central bank gold buying. He has noted that the US went off the gold standard in 1971, but he thinks the world is going to go back on it.

"The days where the dollar is the reserve currency are numbered, and we're going back to basics. You know, everything old is new again. Gold was money in the past and it will be money again in the future, and central banks that are smart enough to read that writing on the wall are increasing their gold reserves now."

Editor's Note: The summary bullets for this article were chosen by Seeking Alpha editors.

This article was written by

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SchiffGold is a full-service, discount precious metals dealer specializing in investment-grade gold and silver bullion. We offer a range of related services, from vault storage partners to physical gold IRAs. Renowned investor Peter Schiff founded SchiffGold in 2010 to provide a trustworthy source of bullion for his brokerage clients. Peter has always advised long-term investment in physical precious metals as an inflation-proof store of value. Unfortunately, he found far too many gold buyers were getting swindled by big companies pushing numismatics at high markups. SchiffGold is his answer — an honest gold dealer that sells only the most liquid bullion products in the world at the lowest possible prices.

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