India Brings More Gold Home for Safe Keeping

India has brought more of its gold home.

Last spring, the Reserve Bank of India repatriated 100 tons of gold, moving it from the UK to vaults within India's borders. 

According to a report by the New Indian Express, the RBI recently moved another 102 tons of gold home.

According to the latest data, the Indian central bank holds 854.73 tons of gold, with 510 tons now held within the country's borders. That's about 60 percent of its total reserves. 

When the Reserve Bank of India moved the first 100 tons of gold earlier this year, an unnamed official told the Times of India the bank decided to move the gold for “logistical and storage diversification” reasons.

“RBI started purchasing gold a few years ago and decided to undertake a review of where it wants to store it, something that is done from time to time. Since stock was building up overseas, it was decided to get some of the gold to India.”

The Reserve Bank of India has been buying gold since 2017. Over that period, it has increased its gold reserves by over 260 tons. 

An Indian economist told the Times of India that the push to accumulate gold was based on both political and economic reasons. He said that the "reliability" of the U.S. dollar has "diminished." He noted the "noticeable decline" in the confidence in U.S. dollar assets.

Another economist told the Times, “It makes a lot of sense (to invest in gold), given the increased volatility in the FX market, elevated interest rates in the U.S., and, of course, also as the central banks in each economy would like to diversify the asset classes in which they are parking their reserves.”

The Gold Repatriation Trend

India is one of several central banks that have repatriated some of their gold holdings for safekeeping in recent years.

According to a World Gold Council survey in 2023, a “substantial share” of central banks expressed concern about potential sanctions after the U.S. and other Western countries froze almost half of Russia’s $650 billion gold and forex reserves in the wake of its invasion of Ukraine. According to the WGC, 68 percent of the banks surveyed said they plan to keep their gold reserve within their country’s borders. This was up from 50 percent in 2020.

One anonymously quoted central bank official told Reuters, “We did have it [gold] held in London… but now we’ve transferred it back to our country to hold as a safe haven asset and to keep it safe.” 

Invesco head of official institutions Rod Ringrow told Reuters this reflects a widely held view.

"‘If it’s my gold, then I want it in my country’ has been the mantra we have seen in the last year or so.”

There has been speculation that countries have been moving gold and other assets out of the U.S. in the wake of economic sanctions on Russia, but it’s been difficult to confirm because the Federal Reserve won't release information on the amount of gold in its vaults. 

Earlier this year, Federal Reserve Chairman Jerome Powell evaded Rep. Alex Mooney’s (R-W.Va) questions about the central bank’s foreign gold holdings. The U.S. central bank has also declined to comply with a Freedom of Information Act request for records about such holdings.

As investigative reporter Ken Silva wrote, Headline USA filed a FOIA request with the Fed for records reflecting how much gold the Federal Reserve Bank of New York currently holds in its vault, as well as records reflecting the ownership stake that each of FRBNY’s central bank/government clients have in that gold following Powell’s evasive response. The FOIA request also sought records about the Fed’s gold holdings prior to Russia’s February 2022 invasion of Ukraine. 

The Fed denied the request.

The gold repatriation trend started long before the West slapped sanctions on Russia. In 2019, Poland brought home 100 tons of gold. Hungary and Romania also repatriated some of their gold reserves around that same time. In the summer of 2017, Germany completed a project returning roughly half of its gold reserves back inside its borders. In 2015, Australia launched efforts to bring half of its reserves home. The Netherlands and Belgium have also initiated repatriation programs.

This gold repatriation trend underscores the importance of holding physical gold free from counterparty risk.  

If you store your gold and silver with a third party, you could lose your metal through theft, fraud, or an act of God. Of course, you could lose silver and gold stored in your home the same way (except for fraud), so you have to weigh the risk of using third-party storage and keeping large amounts of silver and gold at home.

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