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Who Has the Gold to Lend?

Very few groups around the globe other than central banks hold gold in large quantities. Due to the costs associated with holding, securing and insuring gold, only large institutions or countries can typically handle large quantities. It is currently estimated that there are more than 150,000 tonnes of gold in existence (4.82 billion ounces). Of this total, roughly 30,000 tonnes (970 million ounces) are held in the vaults of central banks.*

Since gold is a commodity that is not consumed (like gasoline for cars or copper for wiring) the global gold supply stays at a fairly constant level, with steady additions each year from new mine supply. Central banks are far and away the largest holders of gold bullion on the planet, making up roughly 18 percent of the available stock. The remaining stock of gold in the market is utilized for jewelry, held by private investors, or used for coinage, electronics and dentistry.

“In order to earn some income on the stock and compensate for ‘book losses’ caused by its revaluation, a number of central banks have started to place a part of the reserves into deposits with commercial institutions (leasing operations). Data available to me suggest that these banks deposited about 1,000 tonnes in 1991 and ten years later the volume of the deposits reached 4,800 tonnes. Naturally, the central banks’ activity increased market liquidity and thus also put downward pressure on the gold price.”

The LBMA Bullion Market Forum - Moscow 2004
Oleg V. Mozhaiskov
Deputy Chairman, Bank of Russia
http://www.lbma.org.uk/forums/1b.mozhaiskov_LBMAMoscow2004.pdf

* - World Gold Council:
http://www.gold.org/value/markets/supply_demand/central_banks.html

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