In a world full of economic uncertainties, the countries with the largest gold reserves are far better equipped to deal with difficult situations than other nations. The reason for this is quite simple: when markets crash and the value of currencies drop, the price of gold tends to rise. After all, gold has always been a sought-after commodity, while the demand for national currencies varies according to macroeconomic factors.
In the past, the value of a nation’s currency was tied to the gold standard, which explains why this commodity is considered as the perfect fail-safe. Should a country experience an economic crisis, its central bank can sell gold in order to counteract the loss of value of the national currency. Hence, the countries with the largest gold reserves have more chances than their peers to provide some stability in tough situations. In addition, reserves serve as collateral, making it easier to acquire loans. Taking on debt might not be the best idea during a crisis, yet it is always better to be able to count on this option if necessary.
Before we present you with the list of the 10 countries with the largest gold reserves, there are some things that need to be explained. First of all, it is important to know that central banks are responsible for holding reserves, since they are the primary financial institution in just about any nation. Second, although one would expect the top 10 gold producing countries in the world, which we covered in a previous article, to possess important reserves, this is not necessarily true. In fact, some of the countries in the following list have no gold-mining industry at all! Since gold is a commodity, central banks can easily purchase the desired amount on the open market. Thus, wealthy nations have the best chances of making it onto the list of the countries with the largest gold reserves, presented below.
10. India – 557.7 Tonnes
India might not be the wealthiest of nations, yet it is the most populated country on the planet, and thus has a huge economy. Hence, it shouldn’t be surprising to learn that it holds a great deal of gold reserves as well.
We head to Europe next on our countdown of the countries with the largest gold reserves. Is it Switzerland? Germany? The U.K? Head to the next page to find out.