Indian households hold the largest private holdings of gold in the world, with an estimated 24,000 metric tons. That figure exceeds the combined official gold reserves of the United States, Germany, Italy, France, China and Russia. Basically, it's the Canadian version of John Paulson. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions achieve financial freedom through our website, podcasts, books, newspaper columns, radio shows and premium investment services.
You are reading a free article with opinions that may differ from The Motley Fool's premium investment services. Become a Motley Fool member today for instant access to our top analyst recommendations, in-depth research, investment resources and more. Learn more There are many reasons why people buy gold. Some invest in the precious metal to protect themselves from inflation, even though one of the most common myths about investing in gold is that it can overcome inflation.
Others buy it because of a cultural tradition or because they think that gold is a safe investment. Meanwhile, some buy it with speculation that its price will continue to rise. No matter the reason, the main thought that drives this purchase is that gold is valuable and will be even more so in the future due to the many factors that influence the price of gold. We'll explore the many motivations behind investing in gold by looking at some of the biggest gold investors in the world.
To further illustrate how rare and valuable gold is, the U.S. The Geological Survey estimates that there are about 57,000 tons still in the ground to extract. Dig it up and melt it, and the extra gold bucket available would only be as tall as an adult giraffe. While there is a small industrial demand for this gold, most of it goes to jewelry and investment in the form of coins and bars, and the latter are often held by gold ETFs, as well as the official sector, such as governments.
Contains about 5% of the world's gold. This reserve is greater than that of the next three gold-holding countries (Germany, Italy and France) combined. It has the largest cache of gold controlled by the government, the largest holder of non-governmental gold is the International Monetary Fund (IMF), which is a group of 189 countries working together to promote monetary cooperation. The IMF currently has 2,184 ounces of gold, which places it between Germany and Italy on a global scale.
The IMF has acquired its gold reserves in several ways. After its founding in 1944, the IMF received 25% of its initial quota replacements in the form of gold and required members to pay a quarter of all subsequent quota increases in gold. In addition to that, member countries can pay interest and credits owed to the IMF in gold, as well as sell their gold to the organization to purchase the currency of another member. While Indians tend to buy gold in the form of jewels and Germans in the form of coins and bars, a growing number of other investors have chosen to invest the precious metal through an ETF, the largest of which is the SPDR Gold Trust (GLD 0.75%).
Gold price data in US dollars by yCharts So, although you may not be the biggest investor in the gold market, it seems to be the best option for long-term investors. The other group of gold buyers wants to profit from its price movement. This type includes hedge funds such as Paulson's, which typically buy ETFs such as SPDR Gold Trust, as they can quickly get in and out of that vehicle. That ease of use is why it was at one point the most valuable ETF in the world, because speculators invested in the fund as the price of gold rose in the hope of benefiting from that momentum.
Now, it's not even in the top 10 because gold's brightness has diminished as its price has dropped from the peak. The decision to buy gold is often deeply personal. Many do so because they believe it will hold its value better than a government-backed currency in the coming years due to inflationary fears or other concerns. Others will invest in gold because they believe it is a sign of wealth.
Then there are those who want to speculate that the price of precious metal will rise due to any number of catalysts. Because people invest in gold for different reasons, it's first important to know why you want to buy it. If buying gold will help you sleep more soundly at night or fulfill a deep cultural or personal desire, then, of course, do not hesitate to buy it. Meanwhile, if you see catalysts on the horizon that should push your price up, it's worth considering a gold ETF.
However, if you are looking for an investment that will grow your wealth in the long term, gold is probably not the best option. Market-leading stocks with our award-winning service. Invest Better with The Motley Fool. Get stock recommendations, portfolio guidance and more from The Motley Fool's premium services.
Make the world smarter, happier and richer. The United States has the largest arsenal of gold reserves in the world by a considerable margin. The government has almost as many reserves as the three major gold-holding countries combined (Germany, Italy and France). Russia completes the top five.
The International Monetary Fund (IMF) is reported to have more gold reserves than Italy but less than Germany. Gold has served as a medium of exchange, to varying degrees, for thousands of years. For much of the 17th to 20th centuries, paper money issued by national governments was denominated in terms of gold and acted as a legal claim for physical gold. International trade was done with gold.
For this reason, countries needed to maintain a gold reserve for economic and political reasons. No contemporary government demands that all its money be backed by gold. However, governments still harbor huge piles of ingots as a security measure against hyperinflation or other economic calamity. In fact, every year, governments increase their gold reserves, which are measured in terms of metric tons, by hundreds of tons.
For companies, gold represents a commodity asset used in medicine, jewelry and electronics. For many investors, both institutional and retail, gold is a protection against inflation or recession. It continues to protect gold that belongs to other countries. The Federal Reserve Bank of New York is the custodian of gold owned by foreign governments, foreign central banks and official international organizations.
Inside a vault at the Federal Reserve Bank of New York. It is known to contain the largest amount of gold in the world. Gold reserves by country. S&P Global.
Russia's Central Bank Attempts to Increase Gold Exports by Paying Below Market Price. Board of Governors of the Federal Reserve System. Does the Federal Reserve own or does it have gold?. Sweden is not an obvious choice as a major player in the gold market, but this Scandinavian country actually owns 125.72 tons of gold bars.
However, he doesn't keep all his shares at home. In addition to Sweden's central bank, the Riksbank, the country's gold is also held by the Bank of England, the Bank of Canada, the United States Federal Reserve Bank and the Swiss National Bank. During the gold standard eras of the 19th and early 20th centuries, national governments assumed the obligation to exchange the national currency for a certain amount of gold. Supporting Western fiat currency, even partially with gold, would mean a dramatic upward revaluation of gold, in the tens of thousands.
The Netherlands is ranked number 10 in the gold reserves ranking, with 612.45 tons of gold in its stocks. According to an estimate by the World Gold Congress, humans have extracted 187,200 tons of gold from the earth. Those looking for a safe place to store their gold often settle in Singapore, because the country has not been marred by any major corruption scandals, crime is low, as are taxes, and gold storage costs are incredibly competitive. SPDR Gold Trust is one of several ETFs that hold physical gold in vaults for investors to provide them with an easy and low-cost way to invest in the precious metal.
Global Bullion is among the best online gold traders for those looking to buy gold with the lowest premiums above the spot. The move was not surprising, as the World Gold Council anticipated that central banks would be net buyers of gold following the stellar performance of the precious metal during the COVID-19 pandemic. The figure came from the World Gold Council (WGC), which estimated that India's household gold reserves at that time were 11 percent higher than the 18,000 tonnes it had previously set. The following table, courtesy of the World Gold Council, shows the top 19 gold owners, as well as their foreign exchange reserves and their percentage of allocation to gold.
While Indians collectively own the largest amount of gold in the world, German investors have become the biggest buyers of gold in recent years. . .