What Countries Have the Largest Gold Reserves?

Gold reserves are the amount of physical gold bullion held by national governments and central banks. It’s estimated that a fifth of all the gold ever mined throughout history is currently held by central banks, and that’s no small number. Let’s take a look at how gold reserves work, which countries have the largest gold reserves, and why central banks choose to invest in gold.

Key takeaways:

• Paper money was once directly tied to gold, however this system was abolished by most countries in the mid-20th century. Despite that, central banks still hold gold.
• The top five countries with the largest gold reserves are the United States, Germany, Italy, France, and the Russian Federation.
• Central banks choose to hold gold for various reasons, including its historical performance, ability to maintain value during times of crisis, its hedge against inflation, and to diversify their investment portfolios.

How do gold reserves work?

Gold has played an important role in human economies for thousands of years, serving as a means of exchange and a symbol of wealth and stability. For most of the 17th to 20th centuries, paper money issued by national governments was directly tied to gold. This essentially meant that the paper currency acted as a legal claim to a specific amount of physical gold. Because international trade was also conducted in gold, countries needed to hold substantial amounts of gold for both economic and political reasons.

Most countries abandoned the gold standard in the mid-20th century, with Switzerland being the last to do so in 1999. Even with paper currency no longer backed by gold, governments still continue to hold significant amounts of gold in the form of bullion. These reserves act as a financial safeguard against hyperinflation and other economic crises, providing a reliable asset that can be leveraged in times of uncertainty.

But gold isn’t just valuable for governments and central banks. Its unique properties make it essential for various applications in medicine, jewelry, and electronics. Many investors also rely on gold to provide a hedge against inflation and diversify investment portfolios.

See Similar: Why Buy Gold? Reasons to Invest in Physical Gold Bullion

Countries with the largest gold reserves

According to the World Gold Council, the top five countries with the most gold reserves are the United States, followed by Germany, Italy, France, and the Russian Federation. Let’s take a closer look at how much gold each of these countries hold as of Q1 2024.

United States

The United States holds the largest gold reserve in the world, at around 8,133.46 metric tons. This amounts to roughly $579,050 million dollars and surpasses the combined reserves of both Germany and Italy. The U.S. also has the highest allocation of gold as a percentage of its foreign reserves, with gold making up more than 75% in total. The majority of the gold reserves in the United States are held at Fort Knox in Kentucky.

In the 1940s, the U.S. agreed to house and protect other countries' gold in exchange for dollars in what’s known as the Bretton Woods system. During that period, approximately 90 to 95% of the world's gold reserves were held in the United States. Today, the Federal Reserve Bank of New York continues to safeguard gold reserves owned by foreign governments, central banks, and international organizations.

Germany

Germany has the second-largest gold reserves in the world with around 3,352.31 tons or about $238,662 million. This is less than half of the United States’ holdings and around 67% of the country’s total foreign reserves. Germany’s gold reserves are stored in various locations, including the Deutsche Bundesbank in Frankfurt am Main, the U.S. Federal Reserve Bank of New York, the Bank of England in London, and the Banque de France in Paris.

Italy

Italy holds approximately 2,451 tons of gold, making it the third-largest gold reserve holder in the world. This gold reserve amounts to about $174,555 and accounts for around 64% of the country’s total foreign reserves. Most of Italy’s gold bullion is stored by the central bank, Banca d’Italia, and in the U.S. Federal Reserve Bank of New York. To minimize risk, the country also has gold reserves stored in Switzerland and the United Kingdom.

During the Eurozone crisis, many called for Italy’s government to sell some of its gold holdings, however this never happened.

See: What Drives the Price of Gold?

France

France has the fourth-largest gold reserves in the world, with around 2,436.91 tons of the precious metal or $173,492 million. This equates to about two thirds of their foreign reserve holdings. Most of France's gold is held by the Banque de France.

France plays an interesting role in the history of international gold, with former President Charles de Gaulle Challenging the Bretton Woods system by exchanging U.S. dollars for gold from Fort Knox. This led to then-President Richard Nixon removing the U.S. from the gold standard, collapsing the system and ending the US dollar’s automatic convertibility into gold.

Russian Federation

Last on our list of the largest gold-holding countries is the Russian Federation, which overtook China as fifth place in 2018. The Russian Federation holds around 2,332.74 tons of gold, which is slightly less than France’s holdings and equates to about $166,076 million.

Many see Russia’s increase in gold stores as an attempt to diversify against American investments, particularly considering that they sold U.S. Treasury bonds to fund many of their precious metals holdings.

Keep Reading: When is the Best Time to Buy and Sell Gold

Top 20 countries with the most gold

We’ve explored the Top 5, but to get a better overview of gold reserves by country let’s dive into the top 20 countries with the most gold. These are based on World Gold Council data from Q1, 2024.

Why do central banks buy gold?

It’s clear that gold is valued by many of the world’s central banks, but why is that? In 2023, central banks across the globe were surveyed by the World Gold Council to discover why they choose to hold gold. From the options given, the most popular reasons why central banks hold gold were:

• Historical position
• Performance during times of crisis
• Long-term store of value/inflation hedge
• Portfolio diversified
• No default risk.

Let’s take a closer look at each of these points and see how they drive central banks’ decisions to buy and store gold reserves.

Similar Reading: Why Central Banks Buy Gold

Historical position

Gold has been valued across the world for centuries. It is one of the oldest, most universal assets with a long history of providing economic stability and power. This is due to three core qualities of gold: scarcity, malleability, and durability.

Gold's scarcity makes it rarer than other metals, but not so rare that it's unusable. Its malleability makes it easy to stamp and shape into gold coins, jewelry, and bullion bars. And its durability means that gold can be used extensively without being damaged, and it doesn’t rust or corrode like other metals.

These three factors have contributed to gold’s popularity through the ages, and they also mean that it’s unlikely to go out of favor any time soon. If the financial world as we know it were to crumble, it’s likely that the world will turn back to gold as a store of value. This means gold remains an excellent asset for any central bank to hold.

Performance during times of crisis

Gold has a well-documented history as being a safe-haven asset that maintains its value during periods of economic or political instability and crisis. This is why you sometimes hear it referred to as the 'crisis commodity'.

The most recent example of this was in early 2022 in the wake of the Russia-Ukraine conflict. During this period of political instability and financial uncertainty, gold prices increased by 6%. Gold’s performance during a crisis provides a degree of security to central banks, knowing that when other investments might reduce in value, gold will retain or even increase in value.

Long-term store of value/inflation hedge

Part of gold's value during an economic crisis is its ability to act as a hedge against inflation. During periods of high inflation, the value of paper currencies and other traditional assets tend to depreciate. At the same time, gold has traditionally retained its value during these periods. By holding large amounts of gold, central banks can protect their reserves from the eroding effects of inflation and preserve their purchasing power over time.

See More: Exploring the Role of Gold as an Effective Hedge Against Inflation

Portfolio diversification

Many investors choose to buy gold as a way to diversify their investment portfolios, and it's the same for central banks. Gold tends to move in opposition to traditional financial assets, like stocks and bonds. This means that when these assets depreciate, gold prices tend to increase.

When countries maintain gold reserves alongside other financial assets, they can reduce their dependence on any single asset class. This helps spread risk, protect against market volatility, and stabilize financial standing.

No default risk

A key benefit of holding gold as an investment is that there is no default risk and no third party involved. When central banks buy gold, they own the physical metal themselves and don't need to rely on a third party to make good on any contractual obligations or promises. This is different to say, stocks or bonds, that are dependent on the performance of a separate entity. The lack of counterparty risk provides assurance that gold reserves will remain secure, stable, and reliable.

Summary: What countries have the largest gold reserves?

From central banks to individual investors, gold serves many purposes that makes it an enduring asset that provides security and stability. If you’d like to tap into this valuable precious metal, you’re in the right place.

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