The Dutch central bank has moved around $12 billion worth of its gold holdings from United States and Canada to London, amid concerns over rising geopolitical tensions worldwide. London is home to the world’s most active and liquid gold market, with precious metal worth hundreds of billions of dollars traded there each week.
This has made the Bank of England a long-standing storage partner for central banks, allowing them to buy, sell or lend large amounts of gold quickly when needed. Gold kept at the Bank of England also complies with global standards for bar weight and purity. This means the bullion can be readily exchanged and traded across international markets.
From March through August, the bank relocated about 86 metric tonnes of gold, representing more than a quarter of its bullion stored in the US and Canada. Following the transfer, London now accounts for almost one-third of the ’ gold reserves, making it the largest holding location.
The Dutch central bank carried out the transfer by selling around 59 tonnes of gold in New York and purchasing an equivalent amount in London. It also physically transported more than 27 tonnes of bullion from the US and Canada to Zeist, with a similar volume subsequently moved from Zeist to London.
Finance Minister Eelco Heinen said the preparations for the transfer were kept confidential until the operation was completed, as the move was considered a matter of vital public interest.
Dutch Central Bank Governor Olaf Sleijpen said on Wednesday that relocating the country’s gold reserves to London had made them easier to trade, while the move was also intended to enhance the Netherlands’ resilience and preparedness. He noted that the country does not expect to need to use the reserves.
“With this relocation, we have improved the tradability of our gold reserves. We expect that we will never need to use them, but we do need to strengthen our resilience and preparedness,” Dutch Central Bank Governor Olaf Sleijpen stated on Wednesday, according to Bloomberg.
The Dutch central bank said bullion held at the “is considered the most easily tradable gold in the world,” adding that “This makes it the quickest for DNB to deploy in a crisis situation.”
It stated that holding a greater portion of its gold reserves in London helps reinforce gold’s role as a trusted financial anchor. It keeps 30.8% of its total 612.4-tonne gold reserves at its cash centre in Zeist, located southeast of Amsterdam.
Central banks have traditionally stored their gold in multiple locations, weighing the safety of keeping reserves at home against the need to access and mobilise them swiftly through major global financial hubs.
Over 60 central banks keep their gold reserves at the Bank of England, its Governor Andrew Bailey said in a recent interview with Sky News months ago. The institution stores roughly 430,000 gold bars in nine vaults, allowing central banks to trade gold among themselves without physically moving the bars out of the Bank of England’s custody.
Where countries keep their gold has become an increasingly important consideration, particularly for nations that are expanding their reserves. India has increased its total gold holdings in recent years while simultaneously cutting the amount of gold it keeps at the Bank of England.
Jan Kubicek, a board member of the Czech central bank, said London serves as Europe’s gold market and that storing reserves in Bank of England vaults helps the country reduce transaction costs.
“is the market for gold in Europe. We save money on transaction costs by using Bank of England vaults,” The New York Times quoted Kubicek as saying.
Central banks generally avoid revealing where their gold holdings are kept, with many treating the information as highly confidential.
China’s central bank has emerged as one of the biggest gold buyers in recent years, adding to its reserves for 17 straight months. However, little information is available about where those holdings are stored. Brazil’s central bank also boosted its gold reserves late last year for the first time in four years, but similarly did not disclose their storage location.
London and New York have been the world’s leading gold storage hubs for decades. However, Hong Kong is seeking to establish itself as an alternative, potentially giving central banks an option outside traditional Western storage centres.
