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The Mystery of a Gold Reserve Less Than China and Russia, Under a Tenth of the US: Why is Japan's Gold Reserve so Low?

5, 01. 2015
Japan's gold reserves ranked ninth in the world.
Japan's gold reserves ranked ninth in the world.

   Gold is known as preparation for contingencies. Central banks throughout the world, particularly those in emerging countries, are increasing their gold reserves.

   On the other hand, as of December 2014, Japan's gold reserves are a mere 765.2 tons. Although the quantity has not changed over the last three years, it accounts for only two percent of the country's foreign currency reserve, which is extremely low compared to other developed countries. Is Japan moving backward while central banks in the world boost their gold reserves?

Japan's gold reserves ninth in the world at 765.2 tons

   According to Gold Demand Trends Full Year 2014 published by the World Gold Council (WGC), an international market development organization that conducts research on gold dealers, the full year gold demand in 2014 totaled 3,923.7 tons, which decrease by four percent in comparison to a year earlier. Demand for gold in the jewelry sector stood at 2152.9 tons, a 10% YOY decrease, demand in the investment industry rose two percent to 904.6 tons, and demand in the area of technology was down by 4.7 percent to 389 tons, falling below 400 tons for the first time in 11 years.

   Under such conditions, the volume of gold purchased by central banks increased by 68 tons to 477.2 tons in 2014, a 16.6% increase over the steady purchase of 409 tons in 2013. This was the second highest year of central bank purchases of gold over the past 50 years after they bought 544 tons in 2012. This was the fifth consecutive year of net purchases of gold by central banks.

   Since the previous year, Russia continued to stand out for its gold reserve, increasing it by 173 tons (16.7 percent) to 1,208.2 tons, accounting for 12 percent of its foreign currency reserve.

    Russia, which had been in a standoff with the Ukraine since the beginning of 2014 and continues to be faced with international sanctions, had encountered a serious economic crisis toward the end of the year. Gold turned out to be its "preparation for contingencies" indeed.

   Both Kazakhstan and Iraq also increased their gold reserves by 48 tons in comparison to a year earlier. This meant that Iraq tripled its gold reserve in a single year. The Republic of Azerbaijan increased its reserve by 10 tons, while Turkey increased its reserve by 9.4 tons. Countries of the commonwealth of independent states near Russia continued to reinforce their gold reserves, while the sale of gold remained limited to around 19 tons by Ukraine.

    In a comparison of gold reserves by breakdown of countries, the United States placed first with 8,133.5 tons, accounting for 73 percent of its foreign currency reserve. Germany was second with less than half that of the United States at 3,384.2 tons (68 percent), followed by the IMF at 2,814.0 tons, Italy at 2,451.8 tons (67 percent), and France at 2,435.4 tons (66 percent), with Russia rising to sixth place from its 2013 position of eighth place. China placed seventh with 1,054.4 tons (one percent), while Japan was ninth.

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