For several years, central banks around the world have added sizable amounts of gold to their reserves.
The precious metal equated to approximately 10% of central banks’ reserve portfolios in 2019. After further robust purchasing — including a 152% buying boost in 2022, the highest level since 1950 — in 2024, gold composed 15% of banks’ reserve portfolios, according to a State Street Global Advisors report.
In addition, a number of banks seem to be holding on to the metal, according to Everett Millman, a precious metals specialist at Gainesville Coins.
“Only a select few central banks are selling any gold,” Millman says. “That appears to be a steady, consistent trend that’s likely to continue.”
Possible Metal Motivations
Central banks have said they find several of gold’s qualities appealing, according to a 2024 World Gold Council survey.
National banks from both emerging markets and developed economies said gold’s status as a long-term store of value and inflationary hedge, performance during times of crisis and effective portfolio diversification capabilities were three of top elements that have prompted them to hold gold.
“It’s becoming clear that, particularly for economies that are emerging markets, they’re trying to diversify away from dollar-denominated assets,” Millman says. “Gold is just the most logical alternative. Gold is valued everywhere; everybody is happy to take gold in trade.”
Because silver, like gold, has a long history of being a monetary metal, central banks holding equal amounts of both precious metals might seem like a reasonable assumption. They tend, however, to favor gold, according to Millman — who says the current demand for silver may be a deterrent.
“Much of the silver supply — more than half — every year is consumed by various industrial processes,” he says. “It would be similar to if central banks [were] stockpiling copper; eventually, there would be massive shortages of copper in the market for industrial purposes. That strikes me as the main reason why they don’t hold silver, although historically a few countries like Mexico and India have held silver reserves historically.”
The price differential between gold and silver, coupled with logistical challenges, could be another factor.
“Silver is over 80 times less valuable than gold, [which] means central banks would have to have a lot of space to put all of that silver,” Millman says. “Gold is pretty compact; $1 million worth takes up a surprisingly small space — whereas with silver, they would probably just run out of room.”
Gainesville Coins on Pursuing Precious Metal Ownership
While central banks may have shown an inclination for gold, silver’s traditionally lower price point can make it a potential asset choice for individual investors with a budget that might not allow them to enter the gold market at today’s pricing levels.
Silver, as of Feb. 18, was $33.17 an ounce — roughly 88% less than gold, which was $2,944.59 per ounce.
If that’s still more than you were hoping to spend, Millman advises using a dollar-cost averaging strategy — consistently buying a pre-determined dollar amount of silver each week or month, such as $50 per purchase, which can help average out price fluctuations that occur.
“Anyone can get started buying silver on a budget of less than $100,” the Gainesville Coins specialist says. “The barrier to entry is not as strong as a lot of people might think.”
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