Among the countries with the largest gold reserves in the world, the United States ranks first by a considerable margin. In fact, the US government has as large reserves in the top 5 as the next three: Germany, Italy and France – combined.
hey International Monetary Fund It has more gold reserves than Italy, but less than Germany. These days, governments do not require their currencies to be backed or backed by gold, but they still hoard large amounts to protect themselves from extreme inflation or other economic disasters.
How are gold deposits formed?
To varying degrees, gold has served as a bargaining chip for thousands of years. For much of the 17th to 20th centuries, paper money issued by national governments was determined by gold, and served as a legal claim on gold.
International trade was done using gold. For that reason, countries needed to maintain gold reserves for economic and political reasons.
Contemporary governments do not require all their currency to be backed by gold. Nevertheless, countries store large amounts of gold to guard against extreme inflation or other economic disasters. In fact, these reserves increase every year, and are measured in tons.
In trade, gold represents commodity assets used in medicine, jewelry, and electronics. For many investors, gold is a fund against inflation and recession.
Countries with the largest gold reserves
1. United States
During the Bretton Woods system of international exchange, when the United States offered to hold other countries’ gold in exchange for the dollar, it was reported that 90% to 95% of all the world’s gold reserves were in American vaults. Decades later, the United States still holds the majority of it. Gold constitutes more than 75% of its foreign reserves.
Germany ranks second among the countries with the largest gold reserves, and it holds the Deutsche Bundesbank in Frankfurt am Main, the United States Federal Reserve Bank branch in New York, and the Bank of England in London.
The eurozone crisis prompted some members of the Italian government to sell some of their gold reserves to raise funds, but those plans never materialised.
Former French President Charles de Gaulle was partly responsible for the collapse of the Bretton Woods system, when he betrayed the US and began exchanging dollars for gold in the Fort Knox reserves.
Then-President Richard Nixon, who knew that the fixed rate of $35 an ounce of gold was too low, eventually forced the US to withdraw from the gold standard, ending the era of automatic convertibility of the dollar into gold.
Russia overtook China among the countries with the highest gold reserves in 2018. The increase in gold reserves in Russia was seen as an attempt to diversify the economy beyond US investments. Russia mainly sold to the US Treasury to buy gold.