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Central banks globally continued to gobble up gold in November, adding another net 44 tons to their reserves, according to the most recent data compiled by the World Gold Council.

Turkey was the biggest gold buyer in November, increasing its reserves by 25 tons as it continued to unwind the big sales it made earlier in 2023.

The Turkish central bank sold 160 tons of gold last spring but returned to buying in the third quarter of 2023. According to the World Gold Council, the big gold sale was a specific response to local market dynamics and didn’t appear to reflect a change in the Turkish central bank’s long-term gold strategy. The Turkish central bank sold gold into the local market to satisfy demand after the government imposed import quotas in an attempt to improve its current account balance. The country is running a significant trade deficit.

Although the Turkish government reinstated gold import quotas in early August, so far, there haven't been a repeat of sales into the local market to meet elevated demand.

China continued to add gold to its reserves at a steady pace in November with a 12-ton purchase. It was the 13^th straight month of gold buying for the People’s Bank of China.

Since the beginning of the year, the Chinese central bank has increased its official reserves by 216 tons, and it has added 267 tons since it resumed official purchases in November 2022.

There has long been speculation that China owns far more gold than it officially reveals. As Jim Rickards pointed out on Mises Daily back in 2015, many analysts believe that China keeps several thousand tons of gold “off the books” in a separate entity called the State Administration for Foreign Exchange (SAFE). 

Also, at the end of 2022, there were large unreported increases in central bank gold holdings.  Central banks that often fail to report purchases include China and Russia. Many analysts believe China was the mystery buyer stockpiling gold to minimize exposure to the dollar.

In 2021, Bank of Poland President Adam Glapiński announced a plan to expand the country’s gold reserves by 100 tons. The central bank reached that goal last month.

Glapiński recently indicated the Bank of Poland will continue to add gold to its holdings and that appears to be the case. The Polish central bank made its biggest purchase of 2023 in November, adding 19 tons of gold to its reserves.

This makes Poland a more credible country, we have a better standing in all ratings, we are a very serious partner and we will continue to buy gold. The dream is to reach 20 percent, Glapiński said.

When he announced the plan to expand its gold reserves, Glapiński said holding gold was a matter of financial security and stability.

Gold will retain its value even when someone cuts off the power to the global financial system, destroying traditional assets based on electronic accounting records. Of course, we do not assume that this will happen. But as the saying goes – forewarned is always insured. And the central bank is required to be prepared for even the most unfavorable circumstances. That is why we see a special place for gold in our foreign exchange management process.

Other significant gold buyers in October included:

• Czech Republic – 3 tons
• Kyrgyz Republic – 1 ton

There were two notable gold sellers in November.

The Central Bank of Uzbekistan unloaded another 11 tons of gold during the month. That follows on the heels of an 11-ton sale in October. The National Bank of Kazakhstan also continued its recent selling, lowering its reserves by 3 tons. 

It is not uncommon for banks that buy from domestic production – such as Uzbekistan and Kazakhstan – to switch between buying and selling.

November’s central bank gold buying continues a trend we’ve seen for well over two years. In the third quarter, central banks charted the second-highest Q3 gold buying total on record, only coming in behind Q3 2022. 

The World Gold Council said it’s “all but certain that central banks are on course for another colossal year of buying,” after a record-setting 2022.

The strength of buying has, to some degree, exceeded our expectations. While we were confident that central banks would remain net purchasers in 2022, we thought it unlikely that it would match last year’s record buying volume. Should buying continue to be strong in Q4, the full-year total could get closer than we anticipated. Nevertheless, the historically high level of buying in Q4 2022 may be difficult to top.

Total central bank gold buying in 2022 came in at 1,136 tons. It was the highest level of net purchases on record dating back to 1950, including since the suspension of dollar convertibility into gold in 1971. It was the 13th straight year of net central bank gold purchases.

According to the 2023 Central Bank Gold Reserve Survey released by the World Gold Council, 24 percent of central banks indicated they planned to add more gold to their reserves over the preceding 12 months. Seventy-one percent of central banks surveyed believe the overall level of global reserves will increase in the next 12 months. That was a 10-point increase over the 2022 survey.

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