By last year the share of gold in the world’s official reserves had plunged to a record low of 10.3 per cent, down from 32.7 per cent in 1989. Today the picture looks decidedly different: sales in Europe have slowed to a crawl and Asian banks have started swapping their dollars for gold.
The clearest indicator of the current trend is India’s announcement that it has bought 200 tonnes of gold – roughly 8 per cent of the world’s annual gold mine supply – from the International Monetary Fund at a cost of $6.7bn. The Reserve Bank of India’s purchase comes only months after China revealed it had secretly almost doubled its bullion reserves over the past six years to become the world’s fifth-biggest holder.
Bullion prices, which hit a 23-year low of $250 an ounce in 1999 following large gold sales from the Bank of England, have now surged to a record $1,087. Washington, which has not sold gold for the past two decades, is the world’s largest holder, with about 8,100 tonnes, equal to more than 77 per cent of its official reserves.