Hungary takes gold reserves back home

The National Bank of Hungary announced the return of the country’s 100,000 ounces of gold reserves to Budapest from London.

The central bank’s management decided to keep the gold reserves in the country, so that could further strengthen market confidence in Hungary.

The roughly three tonnes of gold have a market value of 130 million dollars.

The NBH noted that some central banks in Europe, such as those in the Netherlands, Germany and Austria, had recently decided to take home part of their gold reserves.

Another aspect that has become quite important recently is the keeping of gold reserves in places that would be safe even in case of a potential geopolitical crisis.

According to mnb.hu, the National Bank of Hungary has been keeping gold reserves since its foundation in 1924. The amount was continuously growing until WWII, after which 30 tons of gold was delivered to Spital am Pyhrn. The gold reserves were taken back to Hungary shortly after the end of the war.

In the first part of the 70s, Hungary’s gold reserve weighed around 65-70 tons, which fell to 50 tons by 1989. In the period following the break-up of the Bretton Woods gold standard system, the significant changes made in gold reserves were influenced by investment and speculative interests.

In the end of the 1980s, it was decided that the National Bank of Hungary’s gold reserve must be kept as low as possible. This equalled a goal of 10 tons and 3 tons, thereafter, from 1992.

After selling the remaining reserves, the bank decided to invest the money in foreign funds with high yield, which seemed to be the safest option. But the 2008 world crisis completely changed central banks’ approach to gold reserves.

Gold has become a strategic tool, which is capable of strengthening confidence and trust in a country. Hence, the traditional backup tool has been gaining a greater and greater economic-strategic role.

Featured image: www.mnb.hu

Source: MTI/ http://www.mnb.hu/