Mankind has obsessed over gold for thousands of years, and it has played a huge role in the founding and the running of our biggest civilizations. But in the modern world, when paper money and online transactions seem to dominate, who is buying all of the gold, and who are the most important gold buyers in the world?
Countries Love Gold
Believe it or not, the biggest investors of gold are the biggest countries in the world. They invest in gold as a way of safeguarding their economy, and they have done this for hundreds of years. It may also come as a surprise to learn that the majority of this gold is not stored within those countries. For instance, the New York Federal Reserve holds over half a million gold bars, totaling close to 6,500 tons, but not all of this is the property of the United States government. In fact, a very small minority of it is owned by the US government and US investors.
It has been estimated that 98% of this gold is owned by foreign countries and investors, including some of the richest countries in the world. But despite this, the United States still has more gold to its name than any other country, and in the Spring of 2016, this total haul was estimated at over 8,000 tons. The top five countries are:
- United States (8,133 tons)
- Germany (3,381 tons)
- Italy (2,451 tons)
- France (2,435 tons)
- China (1,808 tons*)
*There is actually a lot of debate about China’s true total, as many have suggested that they are stockpiling much more than they claim, with some estimating that China could actually be top of this list if they were honest about their stockpile. Other countries with a large amount of gold include Russia and Switzerland, both of which have more than 1,000 tons, and India, who have over 500 tons and climbing.
The International Monetary Fund
If we were to put the International Monetary Fund on the above list, they would bump China out of the top five and would slot in ahead of Italy, with just under 3,000 tons in their possession. The International Monetary Fund, or “IMF” for short, was founded as a way to stabilize international exchange rates, and to assist with the development of rising third-world and struggling first-world countries (mainly through the commissioning of loans). There are a total of 185 member countries, and the gold supply is there as a means of keeping these members in check and making sure they remain stable financially, while also helping to regulate the gold market and to keep the economies of these countries secure.
One of the main policies adopted by the IMF requires them to maintain a large stockpile of gold at all times, which they do as a way of combatting “unforeseen circumstances”. They have taken it upon themselves to create stability in the gold markets, so it will never be in their best interests to sell off large proportions of this gold in order to make a quick profit.
With so much gold in their possession, these investors will always reconsider selling off vast quantities, because doing so will cause the rest of their investment to plummet in value. Understanding this, as well as the fact that the gold owned by one country is often stored in another, and that the IMF are major players, makes you realize just how interconnected all global economies are. They rely on one another to remain stable, and any mistakes made by one, are to the detriment of all. It almost makes you feel a little more confident about the state of the world, and the potential for global conflicts, because money drives the decisions that leaders make, and global conflict is simply not in their best financial interests.
Seeing just how much these countries have invested in gold is somewhat of a confidence boost as well, as they are the ones that can cause its value to diminish, and yet they are the ones that rely on it staying strong. It also puts your own collection of several ounces into perspective.