India Speeds Up Efforts to Bring Its Gold Home

India has sped up efforts to bring its gold home.

According to a Bloomberg report, the Reserve Bank of India repatriated 64 tonnes of gold through the first six months of its fiscal year, which began in April.

The RBI now holds 65 percent of its gold reserves within India’s borders.

India has also been adding to its gold reserves.

The Reserve Bank of India was the third-largest gold buyer in 2024, upping its gold holdings by 73 tonnes. The RBI added to its gold reserves every month except for December. At the end of 2024, the RBI's gold reserves totaled 876 tonnes, accounting for 11 percent of total reserves.

The pace of purchases has slowed, but the RBI has continued to add gold to its reserves this year.

This reflects a longer trend. The RBI has been buying gold since 2017. Over that period, it has increased its gold reserves by over 270 tons. 

The Times of India reported that de-dollarization is one of the primary motives behind India’s gold-buying spree.

“India's central bank has shown a preference for increasing gold reserves instead of U.S. Treasury bills to strengthen its foreign exchange holdings. This is part of a broader global shift towards diversifying national reserves beyond dollar-based assets.”

An 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.”

India isn’t alone. A large number of countries have been increasing their gold holding. According to a report by the Atlantic Council, “In recent years, and especially since Russia’s invasion of Ukraine and the Group of Seven (G7)’s subsequent escalation in the use of financial sanctions, some countries have been signaling their intention to diversify away from dollars.” 

India has slowed the pace of purchases, adding around 4 tonnes of gold. this year, but has indicated that it plans to continue growing its reserves.

There's No Place Like Home!

India currently holds 880 tonnes of gold, with 576 now stored domestically. Gold held within Indian borders only totaled 38 percent of reserves in 2022.

In the spring of 2024, India brought 100 tonnes of gold home, repatriating it from vaults in the UK. Over the past four years, India has repatriated 280 tonnes of gold.

After the big move, an 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.”

While the push for more gold is being driven by a loss of faith in the dollar, repatriation seems to be motivated by a desire to keep Indian assets under Indian control. According to Bloomberg, “The RBI didn’t give a reason for the shift, but the move was aimed at likely enhancing control over the nation’s bullion assets after Group of Seven nations, including the U.S. and the European Union, seized Russia’s reserves in 2022 following its invasion of Ukraine.”

Here again, India isn’t alone.

The world has taken notice of the way the U.S. (and other Western powers) weaponized the dollar after Russia invaded Ukraine. Some countries were already trying to limit exposure to the dollar to minimize the impact of U.S. economic pressure before Russia invaded Ukraine, and de-dollarization has accelerated since.

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.

There has been a growing chorus of voices calling for Germany and Italy to bring their gold home.

There has also been speculation that other countries have been moving gold and other assets out of the U.S. in the wake of economic sanctions on Russia. However, this has been difficult to confirm because the Federal Reserve will not release information on the amount of gold in its vaults. 

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 inside its borders. In 2015, Australia launched efforts to bring half of its reserves home. The Netherlands and Belgium have also initiated repatriation programs.

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