In 2024, as the global economy is turbulent and central banks are slowing down interest rate hikes, the international gold price has soared from $2,350 at the beginning of the year to a record high. For many countries and individuals, this undoubtedly means that the return on gold investment is huge. So, which country has benefited the most from this surge in gold prices?
In recent years, affected by inflation, the Federal Reserve has taken a series of interest rate hikes to control buildings. Monetary policy tends to tighten in the central bank of the eurozone and the Bank of Japan. As a direct result, the global gold supply is tight, and the demand has risen sharply, pushing the international gold price to soar 25% since next year, from $2,350 all the way up. As the country with the largest gold reserves, the United States is naturally the biggest beneficiary.
According to the US Treasury report, US gold reserves are as high as more than 8,100 tons. So far in January 2024, the price of gold has soared from $2,350 to $2,900, an increase of more than 23%. This means that in just a few months, US gold assets have increased by almost $150 billion. At the exchange rate at the time, it had brought nearly 1 trillion yuan in revenue to the United States.
The role of this top-level "business" in replenishing the treasury of the dollar should not be underestimated. It is worth noting that, despite such huge profits, the United States is further increasing its gold reserves. According to the US Federal Reserve, US gold reserves increased by almost 200 tonnes in the first quarter. This shows that the United States expects the gold rally to be sustained and is still increasing its holdings at low prices.
If the price of gold continues to rise in the next year, the United States is likely to reap another 100 billion profits. Compared to the United States, other large gold reserves have not been able to achieve as much as the returns. Germany is followed by a gold reserve of about 3,380 tons, which has increased by nearly $40 billion in recent months, but it is a huge difference compared to the United States.
China, as the third largest gold reserve country, has only 2,950 tons, and the increase is only more than 30 billion US dollars. Others, such as Italy and France, with their gold reserves, are also difficult to compare with the United States.
Unlike central banks in the United States, which have been established for more than 240 years, most of the central banks in other countries have been established for a relatively short period of time and have less flexibility in the use of gold reserves. As the originator of global quantitative easing, the Fed has rich experience in asset allocation and operation, allowing the United States to take advantage of gold price fluctuations more efficiently to reap profits. In this round of global gold surge, the biggest beneficiary is undoubtedly the United States.
Not only is it the first place in reserves, with nearly 1 trillion yuan in revenue from gold in a few months, but more importantly, the Fed is also increasing its holdings at low prices, and expects more income in the future. It will provide continued support to the US dollar treasury and the financial system. The US dollar is facing challenges as an international currency, and the Federal Reserve's quantitative easing has also sparked inflation concerns, prompting more countries to turn to gold.
It can be expected that with the adjustment of the global economic pattern, the proportion of gold holdings held by central banks will further increase. At that time, the impact of this gold surge will be long-lasting. There will also be new changes in the degree of benefit for different countries. But in any case, the United States, as a gold power, will still be the biggest winner in the short term.
As the country with the largest gold reserves, the United States has made nearly 1 trillion profits from gold in just a few months, which is extremely huge. What's more, the Fed is still buying heavily at low prices and expects higher returns in the future. This will provide continued support to the US dollar treasury and the financial system.
Compared to other countries, the extent of benefits is still limited. However, with the adjustment of the global pattern, the gold reserves of central banks will tend to be balanced, and there will be new changes in the income model.
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