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Gold ‘white whales’: which countries monopolize the massive purchases of the precious metal | markets

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The commitment of US Federal Reserve for containing the rise in prices has led to the strength of the dollar against other currencies and the weakness of gold. The safe-haven asset par excellence is being weighed down by the rise in sovereign debt yields. The ounce of gold is trading at $1,620, April 2020 levels and 21% below the highs seen in June of that same year.

Geopolitical instability and the weakness of major currencies against the dollar has caused central bank demand for gold to skyrocket so far this year. Central banks bought between June and September almost 400 tons of goldthree times more than in the same period of 2021, according to data from the World Gold Council (WGC), an amount that raises the acquisitions made during the year to 673 tons, levels not seen since 1967. Until 1971 the dollar was backed by the precious metal and the gold standard was ended.

The main central banks, be it the Fed, the ECB or the Bank of England, disclose to the International Monetary Fund (IMF) the acquisitions they make or the changes in their balance sheets. Not so other more opaque central banks that tend not to disclose this information.

The operators of raw materials pointed out yesterday that one or several white whales –in jargon, a large investor who does not disclose his name– would have acquired just over 75% of those 400 tons. What country or central bank has the capacity for such a purchase?

If carried out by a single central bank, it would not be a small disbursement. Back in 2007, the Government of José Luis Rodríguez Zapatero decided to sell 32% of gold reserves from Spain, about 4.3 million troy ounces (about 133.7 tons) and obtained an approximate profit of 2,180 million euros – an ounce of gold was trading at around 650 dollars at the time. Now, the market is looking at the central banks of Russia, China, India or the countries of the Persian Gulf, the most opaque when it comes to providing information. The current high uncertainty, with a war in Ukraine and strong global trade tensions, would be behind the increase in purchases.

In the case of China, Bloomberg points out, there are rare occasions when it announces acquisitions of the precious metal, but it would be in a position to make a strong acquisition. His ongoing trade disputes with the US would have led him to try to find an alternative to his dollar reserves.

Russia, meanwhile, has been a regular buyer of gold for years and is the world’s second largest producer of the precious metal. But sanctions imposed by the West are penalizing the sale of Russian gold. Oil-exporting countries are another option, benefiting from the rise in crude oil prices. Furthermore, the central banks of Turkey, Uzbekistan and India are the largest buyers of gold in 2022. Although the United States and Germany are the two largest holders, with 8,133 and 3,355 million tons.

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