People buy gold for a variety of reasons. Some people invest in gold to protect themselves against inflation, even though one of the most popular misconceptions about gold investment is that it may outperform inflation. Others purchase it as a cultural custom or because they believe gold is a secure investment.
Meanwhile, other investors believe it will continue to climb in value. Whatever the reason, the underlying assumption is that yellow metal is precious and will be even more expensive in the future because of the numerous factors that affect the value of gold. The gold market is one that continues to boom.
In this article, we’ll look at several of the world’s largest gold investors to learn about the many reasons for investing in gold.
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What Will I Learn?
- How Much Gold Does The World Gold Council Thinks The world Has?
- The Biggest Yellow Metal Investor in the World
- A Noteworthy Gold Investor
- The Golden Culture
- The Gold Standard in Gold Investments
- Who's Stockpiling Gold in the World's Gold Reserves?
How Much Gold Does The World Gold Council Thinks The world Has?
According to the World Gold Council, humanity has extracted 187,200 tonnes of earth’s gold. In context, if we melted the gold and molded it into a square, it would easily fit in the center of a baseball diamond.
The US Geological Survey believes that around 57,000 tonnes of gold remain on the earth to mine, demonstrating how valuable and rare gold is. If you dig it out and melt it, the cube of newly available gold will only be as tall as an average giraffe. Despite its modest size, that cube is worth a stunning $8 trillion at the gold’s current price of roughly $1,340 per ounce.
Each year, the mining sector extracts less than 3,500 tonnes of gold, or around 112 million ounces, with Barrick Gold producing the most, at 5.53 million ounces. In the meantime, another 1,300 tonnes are getting recycled each year. That estimates the price of gold at around $170 billion each year, which pales in contrast to the $1.7 trillion oil industry.
Although there is limited industrial use for gold, the vast majority of it is an investment and jewelry in the form of gold coins and bars, the former of which is frequently kept by gold ETFs and the official sector, such as governments.
The Biggest Yellow Metal Investor in the World
The United States government is the world’s largest holder of gold. Uncle Sam possessed 8,133.5 tonnes of gold (260 million oz) hidden in vaults across the country, including Fort Knox, which contains 147.3 million ounces. The nation’s gold reserves are worth around $350 billion at the current price of $1,340 per ounce.
While that appears to be a large sum, it would barely make a hole in the $21 trillion federal debt, let alone contribute to the $3.8 trillion yearly budget. Indeed, selling gold from the country’s reserves would barely cover a year’s interest payments, which stood at around $230 billion in 2015.
The United States has around 5% of the planet’s gold. That amount is more significant than the combined gold holdings of the three greatest gold-holding nations (Germany, Italy, and France).
A Noteworthy Gold Investor
While the United States has the most prominent government gold stockpile, the International Monetary Fund, a consortium of 189 nations that work together to establish monetary cooperation, is the biggest non-governmental holder of gold.
The IMF obtained its gold reserve through a variety of methods. When the IMF started working in 1944, it received 25% of its first quota substitutions in gold and demanded that members pay a fourth of any following quota adjustments. Today, the IMF has 2,184 oz of gold, putting it in the same league as Italy and Germany on the global scale.
Furthermore, member nations can pay interest and credits to the IMF in gold and sell their precious metals to the institution to buy the currency from another country.
The Golden Culture
Whereas government-related institutions and central banks are the leading gold investors, most precious metal is converted annually into gold jewelry. This industry consumes over 2,000 tonnes of gold annually, or around $85 billion.
Although Americans have a penchant for gold, their need is insignificant to India’s gold-buying inclinations. According to numerous estimates, Indian households own the most gold globally, estimated at 26,500 tonnes, or approximately 850 million ounces, worth roughly $1.1 trillion.
Diwali is the most important Hindu festival. (According to the latest census, Hindus account for over 80% of the Indian population.) The five-day Diwali holiday frequently includes purchasing gold, which many Indians regard as a prestige symbol of prosperity. Diwali and weddings may be driving all of this gold buying.
Because gold is precious in India, most people use it at weddings. Due to these two criteria, Indians often spend over 8% of their yearly income on gold.
The Gold Standard in Gold Investments
While Indians like to acquire gold as jewelry and Germans choose gold coins and bars, an increasing number of other gold buyers have decided to invest in gold through an ETF, the biggest of that is the SPDR Gold Trust (GLD -0.50%).
This ETF offers investors a liquid, secure, transparent, flexible, and cost-effective alternative to purchasing, storing, and insuring actual gold. That is why well-known investors such as John Paulson and George Soros have previously used this instrument to execute bullish gold wagers. Paulson’s investment firm once held over $1.5 billion in gold through these mining stocks and ETFs.
Another thing buyers should understand about SPDR Gold Trust is that it possesses physical gold bullion, which the HSBC Bank’s London vault keeps safe and secure. As of April 18, 2018, it had 69,300 overall gold bars weighing around 27.8 million ounces (953 tonnes) and valued at approximately $37 billion.
One ETF that stores actual gold in safes for investors is the SPDR Gold Trust, which offers investors a simple, affordable method to participate in precious metal investments. The second biggest is the iShares Gold Trust, which had about $11.6 billion worth of gold distributed among several vaults worldwide.
Aside from the size and location of its gold, this ETF differs in the fees it costs investors, which are 0.25% annually against 0.40% for the SPDR Gold Trust. Due to these decreased costs, the iShares Gold Trust ETF’s value has matched gold more closely throughout time.
While it may not be the largest gold investor, it is the better alternative for long-term investors to consider.
Who's Stockpiling Gold in the World's Gold Reserves?
Gold has traditionally been regarded as the ideal financial asset, but never more so than during periods of fear and financial crisis, which we are currently experiencing.
Although the ‘gold standard is no longer needed to determine the worth of currencies, precious metals are still beneficial, and several central banks keep them in their vaults. Gold provides security because it is not affected by political adjustments or economic changes and is a liquid asset that can be converted into cash if needed.
Using the most recent GoldHub data, here are the eight countries with the most gold in 2022. All monetary values are in US dollars.
1. United States: 8,133.47 Tonnes
Unsurprisingly, the United States possesses the most gold metals on the planet, with a whopping 8,133.47 tonnes of physical gold. That’s approximately the same amount Germany, Russia, and Italy put together! Most of this gold is housed at depositories throughout America, like the United States Bullion Depository, also known as Fort Knox, around the world. The total value of American reserves exceeds $712 billion (£542 billion).
2. Germany 3.355.14 Tonnes
Germany has the second most gold in the world, with 3,355.14 tonnes, slightly declining from 3,359.09 tonnes at the beginning of 2022. At least the majority of this loot was purchased in Frankfurt from 2013 to 2017. Concerns about its gold getting into Soviet hands during the Cold War caused the dispersion of the stash worldwide. Many sources believed that the Federal Reserve Bank of NY, the Banque de France, and the Central Bank of England split the gold.
3. Italy 2,451.84 Tonnes
Italy has more gold than France. Unlike in most nations, where gold reserves are held by the government and maintained by the central bank, the Banca d’Italia regulates Italy’s gold and stores it in vaults in Rome and at the Federal Reserve Bank of NY, the Swiss National Bank, and the Bank of England. In February 2019, the government announced that it would “not sell an ounce” of its gold stockpiles to close budget gaps. The nation’s stocks have stayed unchanged, as promised.
4. France 2,436.50 Tonnes
France has a gold stockpile of 2,436.50 tonnes, which France obtained from the 1950s through the 1960s. While some of its holdings are maintained abroad, Banque de France keeps most of its gold safe. It has added 0.03 tonnes to its inventories since Q4 of 2021 and another 0.03 tonnes during Q1 of this year.
5. Russia: 2,298.53 Tonnes
Russia is obsessed with gold and has spent roughly $40 billion (£28.7 billion) in the last five years to increase its holdings, allowing it to surpass China in the ranks and reduce its dependency on the US dollar. It boosted its gold reserves by 6.22 tonnes in the Q3 of 2021, the sixth-greatest rise in the world. Furthermore, it boasts a multibillion-dollar gold mining sector, which implies that this metal-rich nation does not need to rely on gold imports.
6. China 1,948.31 Tonnes
China’s gold reserves total 1,948.31 tonnes. According to investment management US Global Investors, it is also the world’s largest gold producer, responsible for 12% of global mining production. The expanding prosperity of the country’s middle class has bolstered local demand for gold.
7. Switzerland: 1,040 Tonnes
Switzerland now holds 1,040 tonnes of gold, bringing the total to four figures. Their gold is safe and secure in the United States, at the Central Bank of Canada and the Bank of England. In 2014, a referendum determined if the Swiss National Bank should increase its official gold holdings from 7% to 20%. The status quo was maintained, with 78% of voters opposing the SNB raising its stake.
1. Which Country Has the Most Gold Unofficially?
India has long been a gold enthusiast. With its large population and numerous gold-encrusted temples, India might have 20,000 tonnes of gold held by individuals, valued at more than $1 Trillion.
The Padmanabhaswamy temple in Kerala has gold worth $22 billion. There is also one large vault yet to be uncovered and numerous similar temples throughout India.
2. What Country Has the Most Unmined Gold?
Australia might hold the world’s most significant gold mine deposits. Many sources believe that in 2021, the United States gold reserves mines amount to approximately 3,000 metric tonnes. As a result, the United States is one of the top countries in terms of gold mining reserves.
3. Is China Hoarding Gold?
According to renowned analyst and trader Francis Hunt, a fascinating pattern of gold price movements in the market has paved the way for China to store a massive amount of precious metal.
Purchasing gold is frequently a profoundly personal decision. Many people do so because they believe it will keep its worth better than the government-backed currency in the upcoming years due to inflation worries or other factors.
Others will buy gold because they think it represents wealth. Then some people believe that the precious metal’s value will rise due to several triggers.
Since people buy gold for various reasons, it’s critical to understand why you want to buy it in the first place. If purchasing gold will make you sleep better at night or satisfy a solid cultural or personal longing, go ahead and do it.
Meanwhile, if you perceive triggers in the future that may cause gold prices to rise, a gold ETF is essential to consider. However, if you’re searching for a long-term investment that will increase your wealth, there are better choices than gold.