Indian households have the largest private gold reserves in the world, with about 24,000 metric tons. That figure exceeds the combined official gold reserves of the United States, Germany, Italy, France, China and Russia. Basically, it's the Canadian version of John Paulson. Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions achieve financial freedom through our website, podcasts, books, newspaper columns, radio programs and premium investment services.
You are reading a free article with opinions that may differ from The Motley Fool's premium investment services. Become a member of Motley Fool today to get instant access to recommendations from our top analysts, extensive research, investment resources and more. Learn more There are many reasons why people buy gold. Some invest in the precious metal to protect themselves against inflation, although one of the most common myths about investing in gold is that it can overcome inflation.
Others buy it because of a cultural tradition or because they think gold is a safe investment. Meanwhile, some buy it with the speculation that its price will continue to rise. No matter the reason, the main idea behind this purchase is that gold is valuable and will be even more so in the future due to the many factors that influence the price of gold. We'll explore the many motivations behind investing in gold by looking at some of the world's largest gold investors.
To further illustrate how rare and valuable gold is, U.S. UU. The Geological Survey estimates that there are still about 57,000 tons left in the ground to extract. Dig it up and melt it, and the additional bucket of gold available would only be about the height of an adult giraffe.
Although there is little industrial demand for this gold, most of it goes to jewelry and investments in the form of coins and ingots, and the latter are usually in the hands of gold ETFs and the official sector, such as governments. It contains about 5% of the world's gold. These reserves are greater than those of the next three countries with the largest gold reserves (Germany, Italy and France) combined. It has the largest cache of gold controlled by the government, the largest non-governmental holder of gold is the International Monetary Fund (IMF), which is a group of 189 countries that work together to promote monetary cooperation.
The IMF currently holds 2,184 ounces of gold, placing it between Germany and Italy on a global scale. The IMF has acquired its gold reserves in several ways. After its founding in 1944, the IMF received 25% of its initial quota replacements in the form of gold and required members to pay a quarter of all subsequent increases in gold quotas. In addition to that, member countries can pay interest and credits owed to the IMF in gold, as well as sell their gold to the organization to purchase another member's currency.
Although Indians usually buy gold in the form of jewelry and Germans in coins and ingots, more and more investors have chosen to invest the precious metal through an ETF, the largest of which is the SPDR Gold Trust (GLD -0.17%). Data on the price of gold in US dollars from YCharts So, while you may not be the biggest investor in the gold market, it seems to be the best option that long-term investors can consider. The other group of gold buyers wants to take advantage of its price movement. This type includes hedge funds, such as Paulson's, which usually buy ETFs such as the SPDR Gold Trust, since they can quickly get in and out of that vehicle.
That ease of use is why it was once the most valuable ETF in the world, as speculators flocked to the bottom as the price of gold rose in the hope of capitalizing on that momentum. Now, it's not even in the top 10 because gold's brilliance has diminished as its price has fallen from its peak. The decision to buy gold is often deeply personal. Many do so because they believe that it will hold its value better than that of a government-backed currency in the coming years due to inflationary fears or other concerns.
Others will invest in gold because they believe it is a sign of wealth. Then there are those who want to speculate that the price of the precious metal will rise due to any number of catalysts. Since people invest in gold for different reasons, it's first important to know why you want to buy it. If buying gold will help you sleep more soundly at night or fulfill a deep cultural or personal desire, then, of course, don't hesitate to buy it.
In the meantime, if you see catalysts on the horizon that should push your price up, then a gold ETF is worth considering. However, if you're looking for an investment that will grow your wealth over the long term, gold probably isn't the best option. Market-leading stocks from our award-winning team of analysts. Invest better with The Motley Fool.
Get stock recommendations, portfolio guidance and more from The Motley Fool's premium services. Making the World Smarter, Happier and Richer. The United States has the largest gold reserve in the world by a substantial margin. The government has almost as many reserves as the next three countries with the largest gold reserves combined (Germany, Italy and France).
Russia completes the top five. The International Monetary Fund (IMF) is reported to have more gold reserves than Italy, but less than Germany. Gold has served as a medium of exchange, to varying degrees, for thousands of years. For much of the 17th and 20th centuries, paper money issued by national governments was called gold and acted as a legal claim to physical gold.
International trade was carried out with gold. . No contemporary government requires that all its money be backed by gold. However, governments still house enormous quantities of ingots as a security measure against hyperinflation or another economic calamity.
In fact, every year, governments increase their gold reserves, which are measured in metric tons, in hundreds of tons. For companies, gold represents a basic asset used in medicine, jewelry and electronics. For many investors, both institutional and retail, gold is a hedge against inflation or recession. Continue to safeguard gold that belongs to other countries.
The Federal Reserve Bank of New York is the depositary of gold owned by foreign governments, foreign central banks, and official international organizations. Inside a vault at the Federal Reserve Bank of New York. It is known to contain the largest amount of gold in the world. Gold reserves by country.
S%26P Global. The Central Bank of Russia tries to boost gold exports by paying below the market price. Board of Governors of the Federal Reserve System. Does the Federal Reserve own or hold gold?.
Unlike most countries, where gold reserves are owned by the state and managed by its central banks, Italy's gold is actually owned by the Banca d'Italia and is located in vaults in Rome and in the National Bank of Switzerland, the Federal Reserve Bank of New York and the Bank of England. As this writer points out, gold jewelry is likely to make up a large part of Westerners' gold reserves. The sanctions have expelled the Russian Federation from the global gold trade: London has banned all ingots in Russian refineries and the United States Senate prohibits citizens from making any transactions involving Russian gold. During the gold standard periods of the 19th and early 20th centuries, national governments assumed the obligation to exchange the national currency for a certain amount of gold.
The move was not surprising, as the World Gold Council anticipated that central banks would be net buyers of gold following the excellent performance of the precious metal during the COVID-19 pandemic. The SPDR Gold Trust is one of several ETFs that store physical gold in vaults so that investors can provide them with an easy and affordable way to invest in the precious metal. Those looking for a safe place to store their gold tend to choose Singapore because the country has not been marred by any major corruption scandal, crime is low and so are taxes, and the costs of storing gold are incredibly competitive. The following table, courtesy of the World Gold Council, shows the 19 main owners of gold, as well as their foreign exchange reserves and their percentage of allocation to gold.
The Netherlands is ranked number 10 in the gold reserve ranking, with 612.45 tons of gold in its stocks. Sweden is not an obvious choice as a major player in the gold market, but this Scandinavian country actually has 125.72 tons of gold ingots. Backing Western fiat money, even partially, with gold would entail a drastic upward revaluation of gold, which would amount to tens of thousands. The difference between this ETF, in addition to the size and location of its gold, are the fees it charges to investors, which are 0.25% per annum compared to 0.40% for the SPDR Gold Trust.
While Indians collectively own the most gold in the world, German investors have become the biggest buyers of gold in recent years. .