Where and why Central Banks choose to keep their gold reserves? Sweden edition..

Came across this press release from Riksbank (Sweden’s central bank).

The Riksbank has a gold reserve that amounts in total to 125.7 tonnes of gold. Storing all of the gold in the same place would entail too much of a security risk, so the Riksbank stores the gold in different locations around the world. This distribution is to make it possible to convert the gold to liquid assets and to spread risk. Almost half of the gold reserve is stored in the United Kingdom, where the world’s largest commercial gold market, the London Bullion Market, is based. This market is the most liquid and central marketplace for trading bullion.

Only gold bars that are classed as London Good Delivery (LGD) bars are acceptable for trading on the London Bullion Market. This classification entails specific requirements regarding the shape, weight, gold content and refiners of the bars. Gold bars that deviate from the LGD standard cannot be traded on this market and therefore have lower liquidity. To ensure that the Riksbank has the most liquid gold reserve possible, in 2017 the Riksbank upgraded the part of its gold reserve that did not meet the LGD standard by replacing these bars with new gold bars that do meet the standard. This exchange comprised 15.6 tonnes of gold. A few gold bars that have particular significance for Sweden’s economic history and the cultural heritage maintained by Swedish authorities have been preserved in their original form. These gold bars are now stored in Sweden.
There are more details here. The central bank has moved gold holding from SNB to BoE:
During 2017, the Riksbank also transferred 0.8 tonnes of gold from the Swiss National Bank to the Riksbank’s account held at the Bank of England.Otherwise, both the geographical allocation of the gold and the gold reserve’s total size measured in tonnes are unchanged. All in all, the measures implemented in 2017 mean that the liquidity of the gold reserve has been strengthened.
The central bankers usually lecture the public on the follies of holding gold as an investment. But they continue to hold and even figure where to hold…

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: