One can easily tabulate countries with the largest gold reserves but it is meaningless unless it is expressed as a benchmark against a relevant factor. GDP, or rather nominal GDP is a useful benchmark. It is the value of all goods and services from a country, with no taking into account the differing cost of living in other countries.
The caveat here is that China’s gold reserves are actually closer to 4,000 metric tons according to many experts’ newsletters. There have been too many big “unknown” transactions over the past 2 years that can only be linked to China, even though officially it was not recorded as so.
If you divide the GDP (in million) by their gold reserves you will get a pretty picture. Naturally the lower the figure the more gold you have covering your GDP. I would put 2.0-4.0 as being in an astute position, a more than adequate coverage should anything resembling a currency crisis comes about. If ever a reversion to some sort of gold standard or linkage to a gold standard following a major currency paradigm shift, those with a good gold stash relative o their economy would be sitting pretty.
Italy 0.85 – the Italian economy is in the doldrums but thankfully their central bank has amassed a sufficient gold arsenal; in the event of a dislocation of the euro, the Italians would swiftly support any kind of SDR (special drawing rights) with links to the gold standard.
Turkey 1.02 – where the economy has been battered by high-interest rates and constant devaluation but fundamentals show that Erdogan has doubled up on gold reserves over the last few years; while economic winds have not been in their favor, they kind of have a last bastion in gold reserves, which may indicate that their currency has been way oversold. The economy has to stop using USD for most of their transactions, the problem being Turkey does not have many friends to do barter trades on major transactions.
Germany 1.28 – solid fundamentals; the central bank here has protected the integrity of their economy no matter how the economic winds blow.
France 1.2 – same here.
Russia 0.89 – a deliberate strategy to buy gold over the last 10 years and more of late, indicates why Russia is championing de-dollarisation. China is definitely an ally in that strategy.
Switzerland 0.835 – is it because the country is the biggest refinery for gold; anyways, the country is a firm believer, and hence their arrogance to keep having their own Swiss franc as a solid currency exposure.
Taiwan 1.86 – for all the gangsterism in politics, the central bank has shrewdly backed itself with more than sufficient gold reserves; a political pawn in the global chess game, it has tried to shield itself from things “they can control”.
You may be able to get away with holding less in gold reserves if you are a commodity-rich country such as Australia, Malaysia, Indonesia the OPEC nations.
Australia 10.0; Malaysia 11.5; Indonesia 17.8; Brazil 16; Mexico 13.8; heck, Canada does not hold any gold reserves even cause its got tons of gold and other commodities in the ground.
In the comfort zone, 2.0-4.0:
USA 3.3 – for all the talk emanating from the USA in particular, on how gold is a useless thing and the gold standard should never be considered, they are holding a pretty decent amount; of course, their problem is not gold reserves but their unending printing of money and highly excessive debt levels; they do not want others to even consider de-dollarisation as a possibility but their reserves level tells us they are prepared somewhat for it.
Outside the comfort zone, i.e. more than 4.0 to 8.0:
China 4.8 – just outside the comfort zone but judging from the way China has been buying over the last 5 years, I think they will be headed for 3.0 within a couple of years; the country’s disappointment over the US currency’s reserves status, exporting of inflation, the exporting of US economic woes to developing countries via their excessive printing and liquidity injections – all points to ganging with Russia to change the status quo.
Japan 5.2 – just outside the comfort zone but I suspect their gold buying will be keener over the coming years once interest rates start to indicate more buoyant activity; the last two years have seen a deliberate strategy to weaken the yen.
India 4.3 – again India ha shored up its buying activity over the last few years and should see a similar strategy for the foreseeable future.
Danger zone, i.e. more than 8.0:
UK 10.0 – Brown sold UK’s gold reserves poorly over the years; neither is it commodity rich; the Brexit as well – I see cloudy days for the British pound over the next few years.
Argentina 11.8 – the peso was devalued 18% a few days ago; more trouble in store (which is why I think Turkish lira is presently way oversold); lacking the gold backing will limit the options you can take to recharge your economy; any printing of money will result in a disastrous and vicious cycle of devaluation.
South Korea 16.0 – This open economy is kind of vulnerable; very export-oriented but has no legs to stand on in the event of a major financial currency crisis; limit your exposure.
Safe to say this is a crude benchmark but it also should tell us a lot of nuanced economic survival strategies among major nations. In the event of a major currency crisis, those with sufficient gold reserves and other important commodities will have a better seat at the table. I suspect a SDR linked to major currencies/gold and other important commodities will take effect. A de-dollarisation is in effect but not as painful as anticipated in the past for USD.
p/s. 1Q2023 Gold Buying Tally