While a great deal of media attention is paid to the share of the dollar vs. other currencies in central bank reserves around the world (the out-of-date known figure for the dollar is 58% in mid-2022), more attention should be paid to the share of gold in those central bank reserves; it gives those banks greater capacities for foreign exchange balancing, trade balancing, and international credit including currency swap lines.
The World Gold Council’s report of Jan. 31, 2023, on demand for gold by central banks in 2022, found that it was 152% higher than (two and one-half times as large as) in 2021; and moreover, that two-thirds of that central bank gold buying took place in the 3rd and 4th quarters of 2022, after the monster sanctions attack on Russia had been “digested” by other central banks. The current global average of gold’s share in central bank reserves is 46%. The Council reports that in its year-end survey this past January, 70% of central banks officially expected gold’s share to increase in 2023 and 2024.
The Council reported the buying in the second half of 2022 was primarily from “emerging market” (as they call the developing nations) central banks, with the focus on China, India and Turkey. This is significant because their share of gold in reserves has been far lower than that in the “industrialized” nations’ central banks. France’s share is 58.6%, for example; Germany’s 66.3%; Italy’s 63.6%. The Reserve Bank of India’s share of gold in reserves, by contrast, was 8.1%, and the People’s Bank of China’s gold share was 3.55%. So it is these major developing country central banks that are really shifting their reserves towards gold. (https://www.gold.org/goldhub/data/2023-central-bank-gold-reserves-survey )
