by Mike Maharrey, Gold Seek:
In a region fraught with geopolitical turmoil, Eastern European central banks are loading up on gold.
Poland, Hungary, and the Czech Republic have been among the top gold buyers this year, with Poland leading the way.
As a Bloomberg report put it, “Striving for a sense of security is a powerful motive in a region that’s been ravaged by Europe’s wars of the past — and that now finds itself next door to the continent’s deadliest conflict since World War II.”
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The National Bank of Poland is this year’s top gold-buying central bank.
According to a statement by National Bank of Poland Governor Adam Glapiński in September, the county held 420 tons of gold “on behalf of all Poles.” Gold makes up about 16 percent of the country’s total reserves. Glapiński has committed to increasing gold holdings to 20 percent of reserves.
Only 10 countries hold more gold than Poland. Glapiński noted that Poland has bigger gold reserves than Great Britain, adding that Poland “has thus entered the exclusive club of the world’s largest gold reserve holders.” He called gold and hard currency reserves “crucial” to protecting the economy against catastrophic events.
The National Bank of Poland began aggressively increasing its gold reserve in 2021 when Glapiński announced a plan to buy 100 tons of the yellow metal. The central bank reached that goal last fall and continued its buying spree.
When he announced the initial 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.”
Glapiński also pointed out that “Gold is free from credit risk and cannot be devalued by any country’s economic policy. Besides, it is extremely durable, virtually indestructible.”
The Czech Republic has also been stockpiling gold at a slow but steady pace. Czech National Bank chief Ales Michl has committed to doubling the country’s gold reserves to 100 tons in the next three years. He has increased Czech gold holding five-hold since taking the reins of the central bank in 2022.
Earlier this year, Michl told Bloomberg TV, “We need to reduce volatility. And for that, we need an asset with zero correlation to stocks, and that asset is gold.”
Hungary has also been stockpiling gold. It made a large 16-ton purchase in September.
