This year has been shaping up to be a strong one for central bank gold buying. This is despite the official absence from the buy side of central bank gold powerhouses such as Russia and China. Instead, there has been a noticeable trend of a diverse group of central banks who are not regular gold buyers, deciding to step up and make substantial gold purchases over short periods of time. Thailand, Hungary and Brazil First up in Europe was the central bank of Hungary, Magyar Nemzeti Bank (MNB), which stunned the gold market in early April, when it announced that it had bought 63 tonnes of monetary gold during March 2021. Next up in Asia was the central bank of Thailand, Bank of Thailand, which revealed that over the two months of April and May 2021, it had added a total of 90 tonnes of gold to its reserves, specifically 43.5 tonnes during April, and another 46.5 tonnes in May. And now most recently, the attention has moved to South America, where IMF data submitted by Brazil’s central bank, the Banco Central do Brasil (BCB), reveals that after adding 11.7 tonnes of gold in May, the Brazilian central bank bought another 41.7 tonnes of gold in June, making a 2-month buying total of 53.5 tonnes of monetary gold. This now boosts Brazil’s gold reserves to a claimed 121 tonnes and puts South America’s largest economy in 32nd position in the sovereign monetary gold holding rankings. These three sets of gold buying from Thailand, Hungary and Brazil now make this trio the top 3 central bank gold buyers so far in 2021. In the case of Thailand, 2021 was the first time since 2011 that the Bank of Thailand had made a substantial purchase of gold. In the case of Hungary, the 2021 purchase was only the second time it had entered the market for many years (the other time being Hungary’s large gold purchase of 28.4 tonnes in October 2018). In the case of Brazil, 2021 was the first time since 2012 that the Banco Central do Brasil (BCB) had gone out and purchased gold, and at 53.5 tonnes, was BCB’s largest gold purchase since the year 2000.
Brazil’s Gold Reserves – No Transparency And then it suddenly struck me. No one seems to know very much at all about Brazil’s sovereign gold reserves. Look on the main pages of the BCB website about Brazil’s gold reserves, and you will find nothing. For a top 3 purchaser of gold during year-to-date 2021, this seems very odd. For example, where are these gold reserves held and stored, and in what form? More importantly, where did the Banco Central do Brasil buy the gold that it claims to have bought so recently during May and June, and who was the seller? What were the BCB’s gold buying motivations in adding 53.5 tonnes? And critically, does Brazil lend out its gold and only hold ‘claims on gold’, or does it hold only allocated and unencumbered gold bars in set-aside accounts with foreign central banks? So I decided to put my questions to the BCB directly, whose headquarters are in Brazil’s federal capital in Brasilia. And this is where it gets interesting. For while Hungary’s central bank was very forthcoming in explaining why it purchased 63 tonnes of gold during March (and even published a press release and photos of the gold bars purchased), the same cannot be said of the Banco Central do Brasil.
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