In Recent Years, Central Banks Have Increased Their Gold Purchases—Often in Secret
Waleed Farouk
In recent years, central banks have significantly ramped up their gold purchases—many of which have been carried out in complete secrecy. Gold has regained a strategic position in the portfolios of central banks around the world, but what's particularly striking is the growing number of "hidden" or undisclosed purchases. This trend has sparked widespread questions in economic and financial circles: Why are some countries keeping their gold buying under wraps? And what do they aim to achieve through this secrecy?
Rising Purchases, Murky Details
According to the World Gold Council, central bank gold purchases have reached their highest levels in decades over the past two years. A large portion of these operations were not publicly disclosed at the time, categorized under "unreported entities."
In its latest report, the Council noted that around 20% of central bank gold purchases in 2023 were made without revealing the identities of the buying parties—an unprecedented rate since the collapse of the Bretton Woods system.
Central banks added 1,037 tonnes of gold to their reserves in 2023, marking the second-largest annual purchase in history after 2022. The upward trend continued in 2024, with purchases totaling 1,045 tonnes. China was among the most prominent buyers, boosting its gold reserves for 17 consecutive months.
Known buyers include China, Russia, Turkey, and India, but the increase in undisclosed purchases suggests that other nations are quietly moving for reasons that may be economic, political, or strategic.
Why Are Central Banks Buying Gold—And Why in Secret?
1. Diversification and Risk Hedging
Central banks view gold as a safe-haven asset and a reliable store of value, especially during times of economic crisis and geopolitical instability. Gold helps diversify a country's foreign reserves, reducing dependence on a single currency like the U.S. dollar. This diversification provides protection against inflation and currency fluctuations, and it also reduces the risk of asset freezes or seizures in case of economic sanctions.
2. Geopolitical Tensions and Distrust in the Dollar
Amid the growing use of the U.S. dollar as an economic weapon, some countries have sought to diversify away from the American financial system. Following the freezing of Russia's foreign reserves in 2022, many central banks realized that the U.S. dollar could be weaponized. This realization has led numerous nations—particularly emerging economies—to seek alternatives. Gold, being politically neutral, offers a safe option amid these tensions.
3. De-dollarization
Gold is now seen as a strategic alternative to the Western-led financial system. Some countries—especially China and Russia—have been stockpiling gold as part of efforts to build a new, more dollar-independent monetary system. BRICS countries, in particular, are aiming to reduce the dominance of the U.S. dollar in global finance. Large-scale gold purchases are part of a broader strategy to strengthen local currencies and reduce reliance on the dollar in international trade. This reflects a desire to construct a more multipolar world order.
4. Currency Protection
Some nations, such as Egypt and Turkey, are buying gold to protect their local currencies from devaluation and to diversify their investments. In the event of a crisis, gold can easily be converted into any currency, providing central banks with liquidity and flexibility.
Additionally, some central banks opt to purchase gold secretly to avoid causing panic or negative expectations in their domestic markets. Announcing large gold acquisitions might be interpreted as a signal of weakness or lack of confidence in the local currency or financial system—something governments are keen to avoid.
Who Are the 'Unknown Buyers'?
While countries like China and India have been gradually disclosing their purchases, other players—possibly from Asia, the Middle East, or Latin America—prefer to stay in the shadows, at least until they've secured their targeted quantities.
Data analysis suggests that these "undisclosed buyers" may be aiming to bolster financial independence amid geopolitical tensions, support their currencies amid inflationary pressures or economic stress, and safeguard their reserves from risks tied to the global financial system.
Many central banks, especially China's, reportedly conduct their gold purchases in strict secrecy. It is believed that about two-thirds of these transactions go unreported officially. This discretion aims to avoid impacting global gold prices, maintain market stability, and prevent attention being drawn to their reserve diversification strategies.
What Could This Trend Mean?
Ultimately, this movement could be part of a structural shift in the global financial system. Confidence in traditional paper-based assets is waning, and gold is reemerging as a 'silent anchor' in global monetary policy. If this trend continues, we could be entering a new phase where the global economic power map is redrawn—not just on the ground or in energy markets, but also in gold vaults.
The rising trend of central bank gold buying—particularly when done in secrecy—reflects a strategic shift in reserve management. Fears over geopolitical conflict, distrust in the dollar, and the need for asset diversification are driving banks to strengthen their holdings in gold as a safe and reliable haven in an uncertain world. This trend is expected to continue, potentially impacting global gold prices in the near future.
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