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About Me

Darren Winters is a self made investment multi-millionaire and successful entrepreneur. Amongst
his many businesses he owns the number 1 investment training company in the UK and Europe.
This company provides training courses in stock market, forex and property investing and since
the year 2000 has successfully trained over 250,000 people.

Thursday, 10 July 2014

Who Has The Gold and Why It's Important.

There’s about 31,500 tons of gold held in national treasures today. Virtually every sovereign nation holds foreign reserves, of which most of it is held as precious metal, gold. Perusing over a list of countries with the largest gold holdings and it becomes apparent that those at the top of the list tend to be characterized as usually having robust economies; they tend to be technically advanced; usually score good credit rating and are normally dominant players on the world stage.

Predictably, number one on the list, by a considerable amount, is the US with the largest overall gold reserve holding of 8,133.5 tones, according to the World Gold Council, February 2013. Approximately 75.1 percent of the US’s foreign reserves are held in gold. While Fort Knox, situated in Kentucky and home of the US Army Armor Centre, is probably the world’s most famous storage keeper of gold, more of the precious metal is currently being held in the US Federal Reserve Bank of New York's, underground vaults. 

Coming at a distant second is Germany amongst the countries with the largest gold reserve. Duetsche Bundersbank recently reported that it has 3,391.3 tonnes (approx.141 billion USD at today’s quote) of gold. Germany’s gold reserves represent 72.1 percent of the nation’s total foreign reserves, but not all of the gold is held in Germany. Indeed, currently 45 percent is held in the US Federal Reserve Bank vaults in New York; 13 percent in London; 11 percent in Paris and the remain gold is being held in the Bundersbank vaults in Frankfurt.

Coming at a respective third and fourth is Italy and France. The Italian Central Bank, Bank De Italia holds 2,451.8 tons of gold, valued at 90 billion USD at current prices, representing 71.3 per cent of its foreign reserves. However, Italy gold reserves may have actually fallen during the 2008 financial crisis when it needed to sell some of its gold reserves to pay the bills. France holds similarly 2,435.4 tons of gold representing a little less than three quarters of its foreign reserves. 

China, the world’s most populous country, is the fifth largest holder of gold reserves. The People’s Bank of China has reported to hold1054.1 tones, but it only represents 1.6 percent of the country’s total foreign reserves. However, a number of gold analysts believe that China’s gold reserves might actually be higher at around 2,000 tons of gold.

Then there is Switzerland, with the highest nominal wealth of adults in the world, according to a Credit Suisse report. Switzerland came in sixth place on the list with 1041.1 tons of gold reserves, representing approximately a quarter of its overall foreign reserves, in 2012.

Russia holds the seventh position among the countries with the largest gold reserves. The Central Bank of the Russian Federation has 976.9 tons of gold in reserves, which is 9.5 percent of its total foreign reserves, according to The World Gold Council. Russian production of gold has been steadily stepped over the years. In 2009 Russia produced an extra 21 per cent of gold and in 2010 the figure was 24 percent. Russia’s reserve bank has plans to increase its foreign reserves in gold with the aim of bolstering confidence in its currency, the ruble, as a reserve currency for trading its natural resources amongst its Slavic neighboring countries and beyond.

Japan has slid down to eighth position on the list, probably due to the fact that the Bank of Japan sold 20 trillion Yen of its gold reserves during the major 2011 tsunami and nuclear disaster that ensued to calm investor fears. Latest figures now indicate that the Bank of Japan holds about 765.2 tons of gold.

The Netherlands comes in at ninth position on the list with holdings around 612.5 tons of gold. The country’s foreign reserves, of which 58.7 percent are held in gold, were considered a saving grace during the last financial crisis of 2008. 

Making the tenth position on the list is India, which holds around 557.7 tons of gold. Gold only makes up 9.6 percent of India’s overall foreign reserves, according to the World Gold Council report in 2013.

Surprisingly Britain, who once held vast gold reserves, doesn’t even make the top 10 list now, sitting somewhere at the lower end of the top 20 countries holding gold reserves. This slide was partly due to what many commentators believed to be the then Chancellors catastrophic decision to sell off approximately half of the nation’s gold reserves between the years 1999-2002.

As we have noted from recent past financial disruptions and natural disasters, in times of difficulties, nations rely on their foreign reserves to cushion the adverse impact. Whether it’s a sovereign debt crisis or a natural disaster resulting in a huge cleanup cost, such as seen with the 2011 tsunami in Japan or the austerity cuts imposed on Italy in 2008, having some gold reserves to tap into to pay the bills can prevent a bad situation becoming even worse. Moreover, as seen in the Bretton Woods Agreement, the ability to ty a country’s currency exchange value to the value of gold, provided currency stability in times of turmoil. So it’s no coincidence then that since the 2008 financial crisis Germany is eager to implement a plan to repatriate 300 tons held in US Vaults by 2020. But to date just a little more than 10 percent of that figure has been returned to Germany. The progress to repatriate 635 billion USD of gold held in US vaults has been slow, which apparently has never been fully audited by Germany. This has led conspiracy theorists to believe that the gold no longer exists. “Even after one decade of requesting this information from the Fed there is not a least one shred of evidence that German gold is untouched in New York feds vaults we are still missing published gold bar number lists, even though the Federal Reserve does publish this list for their own gold,” said Peter Boehringer, founder of repatriate our gold campaign. But Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank dismisses the rumors, calling them absurd conspiracy theories. 

Nevertheless, the trend for nations to physically hold their gold has been growing steadily over the past few years.


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