Washington: As European countries review where they keep their reserves in the face of geopolitical and economic uncertainty, the Netherlands has moved around 86 tonnes of gold from North America to London.
The Netherlands had around 313 tonnes of gold stored in the United States and Canada. Of this, about 86 tonnes was moved to London. Germany’s Bundesbank had previously moved more than 216 tonnes of gold from overseas locations. This included 111 tonnes from New York and 105 tonnes from Paris. The transfers were completed over several years, with the programme ending in 2016. The institution, which is based in central London and is around 300 years old, holds about 400,000 gold bars worth more than £200 billion. It sold around 59 tonnes of gold in New York and bought additional stock in London. Central banks have added an average of about 1,000 tonnes of gold every year over the past four years, according to the World Gold Council. That is roughly twice the average of 500 tonnes a year recorded during the previous decade.
Because it is one of the world’s main centres for gold trading, london was chosen. Because of the security involved, companies that handle international gold shipments generally do not disclose details of their operations. France announced earlier this year that it had brought back gold reserves held in the United States.
De Nederlandsche Bank (DNB), the Dutch central bank, said this week that it had shifted gold held in the United States and Canada to the United Kingdom. DNB said keeping the metal in London would make it easier to access and use during a crisis. Goldman Sachs research analysts Lina Thomas and Dan Struven said, “During the Cold War, some European central banks moved part of their gold reserves to New York. Wars and trade tensions were “influencing some of these decisions”, although they were not the main reason behind every move, according to financial experts. They said they don’t think that there is some big catastrophe coming. But according to them, people are getting a better understanding of how to manage their reserve assets, how to grow them and what can be done to get the most out of those assets. DNB Governor Olaf Sleijpen said the Netherlands hoped its gold would never have to be used in a crisis. But we need to strengthen our ability and preparedness to deal with crises,” he said. Struven said, “Where to store a country’s gold is becoming one of the most important issues for storage managers. However, over 27 tonnes was “physically shipped” from the United States and Canada to Zeist in the Netherlands. I can sell it in London and buy it in New York, on the same day, at the same time, effectively transferring it without any other logistical movement,” Struven said. Experts said increasing geo-political and economic uncertainty, along with the growing role of gold as a ‘strategic reserved wealth’, is driving this trend.
The transfer took place between March and August, with the gold now stored in the vaults of the Bank of England. The decision comes as countries reassess how they manage their reserves as trade tensions, military confrontation and economic uncertainty increase. European central banks have also made changes to the location of their gold in recent years. Inflation, interest rates and the need to keep gold in locations where it can be traded fast also play a part in decisions about where reserves should be stored. “We hope that these will never have to be used. If a central bank needs to buy or sell gold fast during a crisis, having the metal in London can make that process easier. The Bank of England is the world’s largest gold custodian. A World Gold Council industry survey found that the Bank of England continues to be one of the most important locations for gold storage. However, central banks are also spreading their reserves across different locations. The Netherlands used more than one method to move its reserves. This meant that this amount did not need to be physically transported across the Atlantic. An equal amount was then sent from Zeist to London. Moving large quantities of gold across borders requires extensive planning and security arrangements. The most standard way to move a gold holding from one location to another is to sell it in one place and buy it elsewhere. “Let’s say I want my gold in New York and I have it in London. Only a small number of companies manage gold shipments across international borders. There are reports that there is a rise in demand for gold from institutions such as central banks in recent times. As national central banks accumulate record amounts of bullion, many are questioning whether to hold their assets in international vaults like the Bank of England or bring them back home for maximum sovereignty.
Gold has also been moved between countries during earlier periods of geopolitical uncertainty.
The trend dates back to the 2008 international financial crisis and is expected to continue into the coming year. The price crossed $5,000 per ounce in January. Experts expect it to reach $4,900 per ounce by the end of 2026, around $300 above its August price.
Experts said over the past half century, gold prices have risen much faster than the Consumer Price Index (CPI). Storing gold domestically also comes with costs. Domestic storage requires spending on security, audit infrastructure and insurance. These costs can be higher for smaller central banks. Reaching a series of record highs, gold prices have also surged dramatically in recent years. Several factors have supported gold prices, including the view among investors that gold is a safe asset during periods of financial and geopolitical uncertainty. Inflation and interest rates also influence demand for the metal. The CPI is a benchmark measure used to track inflation.
Gold has fallen from the record level reached earlier this year, but its price is still historically high.
