Source: World Gold Council/Bloomberg
Central banks around the world are buying gold in record quantities, in a bid to weather economic uncertainty and rising inflation. Demand was up 28% year-over-year in the third quarter, and central banks purchased more gold this year than they have since 1967.
The desire for gold is being driven by investors looking for safer assets amid rapid inflation and sanctions against Russia. “Gold is often called the ultimate fear asset,” said Travis Simon, alternatives investment specialist at Mercer, in a recent interview.
Countries with emerging economies were the most likely to stock up on gold as an inflation hedge. Turkey was the top reported buyer this year, as the country’s inflation rate rose to 85% in October, while the lira fell by 29% this year (and 44% in 2021). Turkey also purchased the most gold in the third quarter of 2022, followed by Uzbekistan, which has been hurt by sanctions against its largest trading partner.
Venezuela has the highest percentage (82%) of gold holdings as a share of its reserves, a result of inflation rising above 300% and hyperinflation rates in previous years that rendered the bolívar almost worthless. Uzbekistan has the second-highest share of gold (65%), followed by Kazakhstan (63%).