Where's All the Gold? Start with the Federal Reserve

The bull market in gold show no signs of abating
The bull market in gold show no signs of abating

The bull market in gold shows no signs of abating, as investors big and small pile into bullion, coins, mutual funds and exchange-traded funds (ETFs) -- and who can blame them? With the world awash in more than $200 trillion in household, corporate and government debt, it's not unreasonable to question the long-term value of fiat currency like the almighty dollar.

It sure looks like a bunch of country's central banks have caught the gold bug. The dollar might be the world's reserve currency, but something about the U.S. being $13 trillion in debt -- or roughly the equivalent of its gross domestic product -- has other nations taking on greater reserves of the yellow metal.

Central Bank Gold Reserves Are Growing

Gold reserves held by countries now total 27,069 metric tonnes, up from 26,356 a year ago, according to the latest findings of the World Gold Council, an industry group that tracks all things gold-related. Gold futures, meanwhile, hit a record closing high of $1,258.30 an ounce last week on the Comex division of the New York Mercantile Exchange (CME), up 35% year-over-year, making some big central bank moves look pretty canny, indeed.

The U.S. government remains by far and away the world's biggest hoarder of gold, with more than 8,100 tonnes in reserve, according to the World Gold Council. (The Fed still stores much of this wealth at the U.S. Bullion Depository in Fort Knox, Ky. And as anyone who's seen Die Hard: With a Vengeance knows, the world's biggest gold vault sits 50 feet below sea level under the Federal Reserve Bank of New York. You can even take a tour.)

After the U.S., governments holding the biggest gold reserves are Germany, Italy and France. The central banks of Germany and Italy made no changes to their gold reserves over the last year, while France pared its holdings by about 15 tonnes, according to World Gold Council data (see chart below).

gold holdings
gold holdings

Most interesting is the rapid rise of China and India as gold bugs. The Middle Kingdom's gold reserves presumably held steady at 1,054 tonnes year-over-year, according to the World Gold Council, but then secrecy is one of the communist government's strengths. It was just little more than a year ago when China revealed it had quietly purchased 454 tonnes of gold over a six-year period. That's roughly equivalent to the current holdings of Turkey, Greece, Romania and Poland combined.

India, the world's largest consumer of gold, made a splash when its central bank bought 200 tonnes from the IMF back in November. Russia, meanwhile, has been stocking up on gold for years, boosting its reserves by about 132 tonnes in just the last 12 months.