Serbia has by far the largest gold reserves in the Western Balkans – twice as much as all other countries combined
During this year, the gold market is going through dizzying jumps in price. It records a new record almost every month. As experts say, in the current economic environment, where economic growth is unstable and most economies are recovering from record inflation, gold has become a very attractive investment. Both for central banks and citizens. State reserves are growing, and in parallel, gold “straws”.
The price of gold and the intense growth of the previous months are driven by the biggest markets. As statistics show, China, India and the USA are the biggest players on the yellow metal world stage at the moment.
The three largest markets annually “turn over” more than 2,000 tons of gold
Every year the Chinese market grows by about 984 tons of gold! In addition, the People’s Bank of China is also a huge buyer of this precious metal. In the past three years, this institution bought about 300 tons.
“If China continues at this pace in the future, it will overtake many Western countries such as Italy or France in terms of gold reserves,” says Georgi Hristov from Tavex zlato&srebro and adds „When it comes to the demand for gold, this Far Eastern country holds the absolute first place, producing and buying the most gold. Gold is seen as a traditional and stable investment in China. Gold is also an indispensable gift at all ceremonies in China, especially at weddings. It is such a popular investment that even many commercial banks in China offer to buy gold on the spot or through a bank account. China is also a big producer, so gold is bought a lot for industrial purposes as well.”
After China, India has the highest demand. This market buys about 850 tons of gold every year. Gold is treated as a safe and traditional investment that is necessary to preserve its value. And Indian weddings are known for the amount of gold used in them. Also, like the People’s Bank of China, the central bank of India is also a big buyer of gold. In the past two years, this institution bought about 100 tons of gold.
In third place is America, on whose market about 190 tons of gold are bought every year. In addition, America has by far the largest gold reserves in the world, which is about 8,133 tons. This reserve at current market prices is worth about 700 billion dollars!
“Like the financial center of the world, the American market has the greatest influence on the price of gold. Elaborate trading system `paper` A gold exchange allows US investors to use gold as an exchange-traded financial instrument to protect their portfolios from inflation and economic volatility. In addition, physical investment gold in America is also treated as a safe investment that can be used for a pension fund. Which means that the profit from the gold is not taxed if it is used for the purposes of the pension fund”says Hristov.
In addition to these three largest markets, significant trade in this precious metal also takes place in Germany, Turkey and Saudi Arabia. As experts explain, a significant player would be Russia, but if the war in Ukraine had influenced a different “shuffle of cards”.
Russia has about 2340 tons of gold in its reserves and is a significant producer of gold. Of course, after the war with Ukraine, Russia is excluded from many international financial flows. Their gold market is now much more isolated and has less influence on the world gold price.
Serbia, the “golden champion” of the Western Balkans
According to the latest information from July 2024, the National Bank of Serbia bought an additional five tons of gold worth 350 million euros, which puts our gold reserves at about 47 tons of gold worth almost 4 billion dollars.
“This is an incredible jump, especially when we consider that Serbia had around 15 tons of gold at the beginning of 2012 and that it tripled its gold reserves in a decade. Price jump investment gold in the past 10 years, it shows that this investment has really paid off for the National Bank of Serbia”says Hristov.
Serbia has by far the largest gold reserves in the Western Balkans, it even has more than twice the amount of reserves of all other countries combined. Macedonia is second in the Western Balkans with 7 tons of gold, followed by Albania with 3.5 tons, Slovenia with 3.1 tons, Montenegro with 1.9 tons, Bosnia and Herzegovina with 1.5 tons.
“When we look at the other neighbors, Romania (103 tons), Bulgaria (40 tons) and Hungary (94 tons), we can see that Serbia copes well when the difference in the size of the countries is taken into account. Moreover, Serbia ranks much better than many other European countries such as the Czech Republic (41 tons), Slovakia (31 tons) and is even at the same level as Finland (49 tons).” says Hristov and adds that Croatia is at the bottom of this ranking.
Since it sold them in 2001, the Croatian National Bank was officially disinterested in further purchases. They treated gold as an unattractive investment. Of course, over time this changed and it turned out that it was not the best decision and that gold reserves are somewhat necessary. Two years ago, Croatia joined many countries of Central and Eastern Europe and bought around two tons of gold.
Hristov emphasizes that a small or zero amount of gold reserves puts the country in an awkward position where if a serious recession occurs and the country cannot secure external financing, its economy is in trouble.
A refuge from inflation
Most of the countries that buy gold, treat it as a shield against inflation, consider it a safe haven investment with the least risk. A survey by the American fund Invesco revealed last year that 96% of central banks around the world view gold as the safest investment. And two-thirds of banks plan to buy more.
“In periods of geopolitical tensions, economic instability and high inflation, gold appears as the safest reserve that a country can have. It is universal and accepted everywhere unlike paper currencies”, says our interlocutor and adds that gold reserves instill confidence in an economy and in the currency of that country.
He indicates that, in situations where there is a period of severe economic decline, when borrowing is no longer an option, the country must settle its debts and balance its budget. Strong gold reserves are, explains Hristov, a savior in such a situation and a signal to investors and other countries that the country is monetarily responsible, that in times of crisis it can pay off its debts on its own.
“A current example of this is the current situation in Argentina, which has been going through a series of bankruptcies and recessions for the past 30 years. In addition, they also record the highest inflation rate in the world – 266 percent. The new government in Argentina is trying to solve these problems as soon as possible, but the problem is that they have lost the trust of international financial institutions. Argentina has no one left to borrow money from. Now Argentina’s government wants to offer its gold reserves as collateral to secure the financing it needs. This short example represents the importance of gold reserves”says Hristov.
Photo: pixabay
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