Understanding the significance of gold reserves in global economics

Gold reserves, maintaining its strong position within total reserves, are a valuable asset. Gold stands out as an important reserve asset for all central banks due to its security, liquidity, and yield characteristics, which are the fundamental investment objectives of central banks.

Therefore, central banks have consistently held gold as a reserve alongside domestic and foreign currencies.

COUNTRIES WITH THE HIGHEST GOLD RESERVES

Interesting results emerge from the data released by the World Gold Council for the year 2023.

Namely;

The United States takes the first place among the top 10 countries with the highest gold reserves, with 8,133.46 tons of gold, followed by Germany with 3,352.65 tons of gold reserves in second place, and Italy with 2,451.84 tons of gold reserves in third place.

Following these three countries are France (2,436.97 tons), Russia (2,332.74 tons), China (2,235.39 tons), Switzerland (1,040.00 tons), Japan (845.97 tons), India (803.58 tons), and the Netherlands (612.45 tons).

Türkiye ranks tenth in the world with its 540.19 tons of gold reserves.

COUNTRIES WITH THE HIGHEST GOLD RESERVES ARE HIGH-INCOME COUNTRIES

Among the countries with the highest gold reserves, the United States, Germany, Italy, France, Switzerland, Japan, and the Netherlands are classified as high-income countries, while Türkiye, Russia, and China are in the upper bracket of the middle-income group, and India is in the lower segment of the middle-income group.

Thus, it is observed that high-income wealthy countries accumulate more gold.

As of the end of 2023, the total official gold reserves of central banks worldwide amounted to 35,927 tons, equivalent to 15% of the total central bank reserves, including foreign exchange and local currency.

WHY ARE GOLD RESERVES IMPORTANT?

Gold reserves serve as insurance for national economies during times of economic crisis when the local currency depreciates and there is a need for foreign exchange reserves but access to foreign currency is difficult.

Especially during periods of economic crisis and heavy depreciation of the local currency, existing gold reserves will be crucially important for countries to both repay their debts and avoid printing money without backing.

Therefore, it is clear that accumulating gold reserves as an alternative to currencies such as the dollar and euro, especially for countries that do not have their local currency as a reserve currency, will provide significant security for their economies.