by Peter Schiff, Schiff Gold:
After setting a record through the first half of the year, central banks continued to gobble up gold in the third quarter.
Globally, central banks added a net 337 tons of gold in Q3, the second-highest third-quarter total on record behind 2022.
Through the first nine months of the year, central banks bought a net of 800 tons of gold. That’s 14% more than through the same period in 2022.
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The People’s Bank of China led the way, adding another 78 tons of gold to its holdings in the quarter. The Chinese central bank has bought gold for 11 straight months. Since the beginning of the year, the People’s Bank of China has increased its reserves by 181 tons, and it has added 232 tons since it resumed official purchases in November 2022. As of the end of September, China officially held 2,192 tons of gold, making up 4% of its total reserves.
China has a history of adding to reserves and then going silent.
The People’s Bank of China accumulated 1,448 tons of gold between 2002 and 2019, and then reported nothing for more than two years before resuming reporting last fall. Many speculate that the Chinese continued to add gold to its holdings off the books during those silent years.
In fact, there has always been speculation that China holds far more gold than it officially reveals. As Jim Rickards pointed out on Mises Daily back in 2015, many people speculate that China keeps several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE).
Last year, there were large unreported increases in central bank gold holdings. Central banks that often fail to report purchases include China and Russia. Many analysts believe China is the mystery buyer stockpiling gold to minimize exposure to the dollar.
The National Bank of Poland continued its buying spree in Q3 with a 57-ton increase to its gold reserves. That’s in addition to the 48 tons it bought in the second quarter. Year-to-date, Poland has bought 105 tons of gold, in line with a plan to add 100 tons to its reserves Bank of Poland President Adam Glapiński announced in 2021. The country currently holds about 11% of its reserves in gold. Glapiński recently indicated the buying will likely continue.
“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. The dream is to reach 20 percent,” Glapiński said.
When he announced the plan to expand its gold reserves, Glapiński said holding gold was a matter of financial security and stability.
Gold will retain its value even when someone cuts off the power to the global financial system, destroying traditional assets based on electronic accounting records. Of course, we do not assume that this will happen. But as the saying goes – forewarned is always insured. And the central bank is required to be prepared for even the most unfavorable circumstances. That is why we see a special place for gold in our foreign exchange management process.”
Turkey sold 160 tons of gold last spring but returned to buying in the third quarter. The Turkish central bank bought 39 tons of gold in Q3, and its total reserves recovered to 668 tons.
