The Dutch central bank has moved tons of its gold reserves out of North America, citing the need to better prepare the country for severe crises.
September 6, 2569 - The BBC reported that the Dutch central bank, De Nederlandsche Bank, has moved approximately 86 tons of gold, out of a total of about 313 tons stored in the United States and Canada, to London. The reason given was concern over increasing geopolitical instability and to ensure the gold is readily available in case of a crisis.
This move clearly reflects a response to the unstable and uncertain global situation, where trade wars and military conflicts are prompting countries to take precautionary measures and store gold closer to their home countries.
Earlier this year, France announced it had moved its gold reserves out of the United States back to its own country. Meanwhile, the German central bank (Bundesbank) moved more than 216 tons of gold from overseas storage facilities over several years, ending in 2016 – 111 tons from New York and 105 tons from Paris.
Lina Thomas and Dan Stroifeen, research analysts from Goldman Sachs, told the BBC that such strategies have been used before during times of global instability. During the Cold War, some European Central Banks moved some of their gold reserves to New York.
Joseph Cavatoni, senior market strategist at the World Gold Council, told the BBC that while war and trade tensions influenced some of these decisions, they were not the most significant factors. Inflation, interest rates, and the ability to store gold in readily tradable locations also played a role.
“I don’t feel like a catastrophe is imminent, but what I think is that people are becoming more knowledgeable about how to manage their asset reserves. They are accumulating reserves and are thinking more efficiently about how to maximize the use of those assets,” Cavatoni told the BBC.
Meanwhile, the Dutch central bank stated that gold moved out of the United States and Canada between March and August of this year is currently stored in vaults at the Bank of England.
Olaf Slippen, Governor of the Bank of the Netherlands, said, “We expect that we will not need to use this gold at all, but we need to strengthen our resilience and preparedness.”
London is seen as the ideal location, given its status as a major global trading hub, for quick buying or selling of gold during crises. This makes the Bank of England a popular gold custodian, being one of the world's largest gold depositaries. Beneath this 300-year-old institution in central London lies approximately 400,000 gold bars, valued at over £200,000 billion.
The BBC, citing an industry survey by the World Gold Council, indicates that the Bank of England remains the most popular place to store gold in vaults. However, central banks are increasingly diversifying their gold holdings.
Thomas and Stroifer from Goldman Sachs said that deciding where the country's gold reserves should be stored is becoming a critical issue for reserve managers because, in the modern world, there are many ways to move valuable assets. The Netherlands sold about 59 tons of gold in New York and bought more in London, meaning that portion of the gold didn't necessarily have to be transported across the Atlantic Ocean.
However, more than 27 tons of gold were physically transported from the United States and Canada to Zest, Netherlands, and a similar amount was shipped from Zest to London.
Companies offering this type of service typically do not disclose details about their operations because security measures and planning must be extremely stringent to avoid the risk of a real-life gold heist like the one in the movie The Italian Job.
Cavatoni from the World Gold Council said one standard approach to moving gold reserves is to sell the commodity in one place and buy it in another. “Let’s say we want to store gold in New York, but we currently have gold in London. We can sell it in London and buy it in New York on the same day and at the same time. In practice, this is essentially an accounting transfer, without needing to change the actual logistical processes.”
Only a few companies handle the cross-border transportation of gold. One of them is Brink's Global Services, which told the BBC that it has recently seen increased demand from clients such as central banks.
Nader Antar, Executive Vice President of Brink's, said, “Intensifying geopolitical and economic uncertainty, coupled with the growing role of gold as a strategic reserve asset, appears to be contributing factors to this trend.”
The reason gold safeguards have become a key concern for central banks is that they are continuously purchasing more gold. However, Thomas and Stroifern from Goldman Sachs note that storing gold domestically comes with costs.
Both stated that “domestic safeguarding requires investment in physical security systems, auditing infrastructure, and insurance, which can be disproportionately expensive for smaller central banks.”
Over the past four years, central banks around the world have accumulated an average of 1,000 tons of gold per year, a significant increase from the average of 500 tons per year in the previous decade, according to the World Gold Council.
This trend has been present since the global financial crisis and is expected to intensify further next year. In recent years, gold has garnered significant attention, with prices soaring to record highs several times, surpassing $5,000 per ounce in January.
There are several reasons why the value of gold has increased, but a key factor is its psychological status as a safe haven asset. People tend to invest in gold during periods of financial and geopolitical turmoil, often caused by trade wars and military conflicts.
Inflation and interest rates also influence the popularity of gold. Because gold is a limited supply and has been valued for thousands of years, it possesses a certain degree of resistance to rising prices and is therefore considered a good investment.
Investment bank Charles Schwab stated, "Over the past half-century, gold prices have risen far faster than the Consumer Price Index (CPI), the most closely monitored indicator of inflation."
Although gold prices have fallen from their all-time highs reached earlier this year, they remain at high levels compared to historical data.
According to researchers from Goldman Sachs, the price of gold will rise to $4,900, or £3,624, per troy ounce by the end of 2026, higher than the $300 level seen in August. Thomas and Stroifer from Goldman Sachs added that demand for gold from central banks is also a significant reason for the surge in gold prices.
Reference: www.bbc.com
Read news related to All European economic situations can be found here.
