“World Gold Council” noted in its latest reports that Central banks’ gold purchases have reached a 3 year high. In the first half of 2018, gold purchases of Central banks increased by 8 percent year to year reaching 193 tons. 

Russia, Turkey, Kazakhstan and developing countries are showing this trend more and accounted for 86 percent of the total purchases. According to the IMF’s report Egypt bought gold for the first time since 1978 while India, Indonesia, Thailand and the Philippines participated in the gold market after a long time. The increase in gold demand is to decrease sensitivity to the US dollar explains analysts. 

In times of difficult economies and unstable politics storing gold is considered safe. Moreover with global debts increasing Central banks have interest in increasing their gold reserves according to a “Forbes” report. 

In the World gold council report Central banks with the most gold reserves are led by the Federal Reserves. In the first half of 2018 the United States Central bank had gold reserves of 8,133 tons. This accounts for over 75 percent of their foreign exchange reserves. Following the US, the German central bank had reserves of 3,370 tons with France coming in third with 2,450 tons. In other words the Federal Reserve bank had more gold reserves than the next three banks combined. 

Interestingly, since 2000 the US gold reserves were stable within 8,100-8,150 tons. Meanwhile strategic competitors such as China and Russia increased their reserves by about 5 times during the period. 

For Mongolia’s case the Central bank reported that in the first 9 months they have purchased 14.3 tons of gold. This year they have made a goal to purchase 22 tons of gold which is 10 percent more than last year’s. The Central bank purchased 20 tons of gold in 2017 last year which increased foreign exchange reserves by USD 700 million. 

Bank of Mongolia’s foreign exchange reserves have USD 475 million or 17 percent in gold according to the Central bank. This year just from gold deposits they have planned to increase exchange reserves by USD 700-800 million. 

Within the “Alt-2” initiative they are planning to increase local gold production by 2-3 tons per year and reach 25 tons in 2020. Moreover within the initiative, the Government announced that they are expecting to increase total gold reserves by 100-150 tons with exploration activities. Local gold productions reached 19.8 tons in 2017, while productions were 11.9 tons by August according to the National statistics office. In order to increase gold productions, gold reserve tax was reduced to 2.5 percent in 2014 and gold deposits increased rapidly according to Central banks statistics. The Central bank also expressed that the tax deductions should continue after 2019.

Source: BloombergTv.mn