Rating of countries by gold and foreign exchange reserves for 2021

Hello, dear readers of the Tyulyagin ! In today's article you will learn what gold and foreign exchange reserves are, why countries accumulate them and what they are needed for. In addition, I will provide a rating and list of countries with the largest volume of gold and foreign exchange reserves in the world.

What are gold and foreign exchange reserves?

Gold and foreign exchange reserves (GRE) are highly liquid assets that are under the control of the state, namely under the control of their financial regulators - usually the Central Bank or the Ministry of Finance. These highly liquid assets include monetary gold, reserve foreign currencies, SDRs and the reserve position of the International Monetary Fund, to which the owner of the country can turn and receive funds upon request.

Gold and foreign exchange reserves, or international reserves as they are also called, are one of the most effective and liquid instruments that the state has to provide the country’s currency. However, it is not the only one; in addition, the Central Bank also has external and internal loans and deposits, securities and fixed assets on its balance sheet to provide the country’s currency.

So will there be an audit?

No one knows exactly how much gold is stored in the United States. An audit is required to clarify this issue. A random inspection was carried out in 2012, the results of this inspection amazed everyone with their brevity.

The report said that the test was successful, the gold was counted and its value was equal to a certain number of millions, and the total amount was several hundred tons. That's all the information. So nothing concrete is known.

But the now-elected new President Trump has promised to look into this issue. He is sure that there really is no gold anymore. The new US president, as he himself put it, will strive to restore the former value of his country's currency.

I would like to note that Russia is one of the few countries whose gold reserves are stored exclusively in Russia.

Composition and structure of gold and foreign exchange reserves

A few decades ago, the main component of the country's gold and foreign exchange reserves was the country's monetary gold, or in other words, precious stones and metals, which, in addition to gold in bars and coins, included silver, platinum, palladium and diamonds.

However, with the departure from the gold standard and the conclusion of the Bretton Woods agreement, the United States began to actively promote the dollar as a key reserve currency on the world stage. Later they came to their senses in Europe and also created their own single reserve currency - the euro.

That is, since 1944, many countries began to include reserve currencies in their gold and foreign currency reserves in addition to gold. In addition to the dollar and euro, reserve currencies also include the British pound, Japanese yen, Swiss franc, and from 2021, the Chinese yuan. However, the largest share in the basket of reserve currencies is occupied by the dollar and the euro; for 2021, their shares are 61.6 and 20.69 percent, respectively.

In addition to reserve currencies, there are SDRs or SDRs - special drawing rights - this is an artificial reserve payment instrument created by the IMF. as well as state quotas in the IMF, in another way - the reserve position. The IMF's reserve position is the government's reserves contributed to the international monetary fund at the time of its accession.

Thus, the structure of gold and foreign exchange reserves includes:

• monetary gold
• reserve currencies
• SDR (SDR)
• reserve position in the International Monetary Fund

The key share in the country's gold and currency reserves is usually occupied by gold and reserve currencies. Until now, the country's gold reserves are of utmost importance. It is believed that the larger the share of gold in reserves, the more stable the exchange rate of the national currency.

Placer deposits

Secondary type gold reserves arose in the process of various mechanical and chemical impacts on primary type gold deposits.

Gold particles moved from mountainous areas to plains as a result of the following natural phenomena:

1. Groundwater movements.
2. Wind.
3. Rock falls, etc.

Rains and mountain rivers carried mountain rocks closer to their foot. When colliding with boulders and other magma formations, they were crushed, displacing gold particles. Gold is inert in relation to other chemical units, so it settled in its pure form in various bodies of water (rivers, lakes, etc.).

Although the source of gold is the same, there is a significant difference between placer gold deposits and bedrock deposits.

Over millions of years of formation of the earth's surface, it is almost impossible to track the migration of gold deposits.

There are fewer primary placer deposits, but it is easier to detect their locations, because they are visible on the surface. At the same time, they are easier to develop, while searching for and extracting mine gold is a much more labor-intensive process.

Why are gold and foreign exchange reserves needed and why do countries accumulate them?

The main generally accepted role of gold and foreign exchange reserves is considered to be ensuring the stability of the national currency exchange rate, as well as the stability of the entire financial situation of the state. Gold and foreign currency reserves are an indicator and guarantee that the country will fulfill its obligations.

Gold and foreign exchange reserves are much more important for countries with economies isolated from the outside world. Since such countries rely less on credits and borrowings from other countries and the International Monetary Fund.

It cannot be completely stated that a large volume of gold and foreign currency reserves will always ensure a stable exchange rate of the country’s national currency. Much depends on the general state of the economy of each specific country, its development and orientation. However, the state of gold and foreign currency reserves always indirectly affects the main macroeconomic indicators, including the exchange rate, the size of the country's balance of payments and the level of inflation.

The state can use its gold and foreign exchange reserves to cover the balance of payments deficit, maintain the exchange rate of the national currency, pay external debts and transactions with other countries, for internal social payments to the population and other budget needs.

In simple words, gold and foreign currency reserves are a safety net for unforeseen and emerging negative economic circumstances (for a rainy day).

Australia (310 tons)

Although gold production increased by 9 tons compared to the previous year, according to MinEx Consulting, production in the country is expected to fall in the near term unless exploration funding doubles. Note that the mining industry produces more than half of Australia's total exports and generates about 8% of GDP. The main producers and deposits of Australia at the end of the year: Cadia Valley, Newcrest Mining - 751,965 thousand ounces. (545.869 thousand ounces in 2017); Boddington deposit, Newmont Mining - 709 thousand ounces. (787 thousand ounces in 2021); Super Pit, joint venture (JV, 50x50) of Barrick Gold and Newmont - 628 thousand ounces. (738 thousand ounces in 2017); Tanami, Newmont - 496 thousand ounces. (419 thousand ounces in 2021); Tropicana, a joint venture (JV, 50x50) of AngloGold and Independence Group - 477.908 thousand ounces. (461.7 thousand ounces in 2021). In the fourth quarter of 2021 alone, production amounted to 81 tons, the third quarter in a row above 80 tons, and 1 ton higher than the same period in 2017.

Gold and foreign exchange reserves of Russia

In general, since the 2000s, gold and foreign exchange reserves have been growing steadily, but there were also significant declines during the crisis years. In 2008-2009, during the international financial crisis, Russia's gold and foreign exchange reserves fell from $596,000 million to $390,000 million. In 2014, during the Ukrainian crisis and sanctions from the United States and other countries, Russian gold and foreign exchange reserves also decreased significantly from $520,000 million up to $350,000 million at the moment. However, in recent years, until the summer of 2021, Russia’s gold and foreign currency reserves have been growing steadily.

Currently, Russia ranks fourth in terms of gold and foreign exchange reserves among all countries in the world. The volume of all Russian gold and foreign currency reserves as of January 17, 2021 is about $558,900 million , which allows it to overtake Saudi Arabia and rise from fifth to fourth place in the ranking.

As for the structure of Russia's gold and foreign exchange reserves, since 2008 Russia has been actively increasing the share of gold reserves in gold and foreign currency reserves. So, if in 2008 the share of monetary gold was only 2.5%, then in 22019 its share was already about 19%. In recent years, Russia has become the world leader in purchasing gold, having overtaken China in terms of the total amount of gold reserves and taking fifth place in the world after the USA, Germany, Italy and France.

The first place in the share of Russia's gold and foreign currency reserves is occupied by the euro, and is about 32-34%; in recent years, the share of the dollar has been declining and currently it is only about 20%, although a couple of years ago the share was 30+ percent. The share of the Chinese yuan has increased significantly, its share in the first quarter of 2021 is about 14%. There are also other currencies in the gold and foreign exchange reserves: British pound - 6%, Japanese yen - 4.5%, Canadian dollar - 2.8% and Australian dollar about 1%.

Gold mining in 2021

Gold production in 2021 increased for the tenth time in a row and amounted to 3,260 tons (Fig. 2). New mines in Canada and Russia and increased production at the Grasberg mine (Indonesia) more than compensated for the decline in gold production in China and the United States (due to stricter environmental regulations). However, the leaders of the TOP 10 remained in their places (Table 1). As can be seen in Figure 3 (p. 9), China ranks first among global gold producers by a wide margin, producing 91 tons more than second place Australia (Table 1). Note that of the leading producers, Russia received the largest annual increase, increasing production by 25 tons. The share of countries with a relatively small volume of gold production (Argentina, Bolivia, Chile, Colombia, Mali, Morocco, Papua, the Philippines, Tanzania, etc.) increased noticeably and amounted to just over 30% of total world production in 2021. In 1969 this share was less than 10%. Below, according to the Mineral Commodity Summary 2019, is the ranking of the leading gold producing countries in 2021.

Rice. 2.

Global gold production, t/year

Rating of gold and foreign exchange reserves by countries of the world

Below I present to your attention the ranking of the top 100 countries in the world by the amount of gold and foreign exchange reserves in millions of US dollars as of 2018-2019.

And that’s all for today about the gold and foreign exchange reserves of the world’s countries. I hope you were interested in reading the ranking of the world’s countries by gold and foreign exchange reserves. Add the rating to your bookmarks! See you again in new publications on the Tyulyagin project!

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Investment demand

Since 2003, investor demand for gold has grown at the fastest pace. Between 2007 and 2011, the value of gold increased by approximately 534%. Numerous factors force institutional and retail investors to seek out and invest in gold. The key factor here is gold's ability to hedge against volatility and protect against risk. The positive price outlook is supported by expectations that growth in demand for the metal will continue to outpace supply. In turn, positive price expectations themselves became the reason for further growth in investment demand. The rise in investment demand has led to the emergence of new ways of investing, including selling bullion to online ETFs. There is now a wide variety of investment products on the market to suit both the private and institutional investor.