The amount of gold bought by central banks in 2018 has reached the second highest annual total. Since 1967, this is the most amount of gold volume bought by central banks. According to the World Gold Council estimate central banks now hold about 34,000 tons of gold.

Recently, CNBC reported that the Federal Reserve holds the most, “amounting for almost three quarters of the nation's foreign-exchange reserve pot.” The WGC stated the bulk of buying has been carried out by only a handful of central banks.

Russia is leading these banks as it looks to swap out dollars from its portfolio as it sold almost all of its US treasurer stock to buy about 274 tons of gold last year.

Now, the Russian finance ministry is considering complete abolition of value added tax (VAT) on gold purchases which would provide the Russian savers an option to invest in gold instead of foreign currencies.

Other central bank buyers are Turkey, India, Iraq, Hungary, Kazakhstan, and Poland. Meanwhile, the net sales from central banks total just 15 tons. In the past three months, the price of gold has risen about 9 percent.

“Heightened geopolitical and economic uncertainty throughout the year increasingly drove central banks to diversify their reserves and re-focus their attention on the principal objective of investing in safe and liquid assets,” stated the report.

Founder partner at Adamant Capital, Tuur Demeester shared the “Bitcoin circulating supply equivalent of Central Bank gold reserves.”

He further shared, “If the Dutch Central Bank wanted to hold as much weight in the Bitcoin world as it does in the Gold world, it could do that by investing $250M in BTC today.”

Nick Szabo, computer scientist and a cryptographer shared the reason behind gold reserves:

“A central bank holds gold because they need a portion of their reserves that is trust-minimized and therefore a fallback to and anti-correlated with trust-based assets like government bonds and foreign currencies.”

He further shared that when central banks’ need for trust minimization outweighs Bitcoin risks, the switch would be made.

“With good key management control over Bitcoin can be much more closely mapped to political legitimacy and much less vulnerable to physical invasion than gold,” further stated Szabo while providing an answer to why Bitcoin being trust minimized but has no demand from central banks.

“It's currently too volatile and it's security hasn't yet, AFAIK, been battle-tested in a war.”

Earlier this month, crypto analyst Willy Woo shared,

“This is the reason why I think Bitcoin will easily exceed golds market cap. *Mathematical scarcity beats perceived scarcity* Perceived scarcity comes only from the technological limitations of today.”

This is the reason why I think Bitcoin will easily exceed golds market cap.

*Mathematical scarcity beats perceived scarcity*

Perceived scarcity comes only from the technological limitations of today. https://t.co/TtIh41zz3F

— Willy Woo (@woonomic) February 1, 2019

This has been in response to a crypto enthusiast’s Tweet stating,

“$700 Quintillion Asteroid Ignites Space Mining Gold Rush Between Mars and Jupiter – exploration to start 2022. Enough gold, iron to give each person on earth billions worth of the…..not so precious metals.”

$700 Quintillion Asteroid Ignites Space Mining Gold Rush Between Mars and Jupiter – exploration to start 2022.

Enough gold, iron to give each person on earth billions worth of the…..not so precious metals….. https://t.co/i0V2d4wwuX via @outerplaces

— Coolhandcanuck (@coolhandcanuck) January 30, 2019

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