Earlier this year, Czech central bank president Ales Michl flew to London to check the gold bars piled up in the Bank of England's vault.

Michl inspected the precious metals held by the Czech central bank as part of the ambitious plan he announced to increase the country's gold reserves to 100 tons over the next three years. Since he took office in 2022, this number has increased fivefold, aimed at diversifying the central bank's reserves.

"We need to reduce volatility," Michl excitedly told Bloomberg Television earlier this month when asked about this issue. "For that, we need an asset with zero correlation to stocks, and that asset is gold."

The Czech central bank president is not the only one accelerating the purchase of gold and silver. Colleagues from Poland to Serbia have joined the gold rush to diversify investments and bet on future rising gold prices. Eastern Europe has thus become one of the largest buyers of gold, helping to drive up prices.

Central banks around the world are reserving gold to fend off external shocks, such as trade wars that may arise during Trump's second term and geopolitical tensions in Ukraine and the Middle East. However, central banks in Eastern European countries are particularly prominent in increasing their gold reserves.

In addition to Michel's trip to London, the president of the Polish central bank has written a film script about the history of gold in Poland. Serbian authorities have repatriated their stockpiles stored abroad to ensure their safety and reduce storage costs.

In Eastern Europe, which has been ravaged by war, the pursuit of security is a powerful motivation for increasing gold holdings. Now, this region is near the deadliest conflict in Europe since World War II.

According to the latest data from the World Gold Council, Poland borders Ukraine and is a staunch supporter of Ukraine in the Russia-Ukraine conflict, making it the largest buyer of gold globally in the second quarter.

Central banks with the strongest increase in gold purchases in Q2 2024

Adam Glapinski, the president of the Polish central bank, stated that gold and hard currency reserves are crucial for protecting the economy from catastrophic events. As of September, he increased gold holdings to about 420 tons, roughly half of India's or Japan's reserves.

"We are entering the exclusive club of the world's largest gold holders," Glapinski proudly stated at a press conference last month, reinforcing his goal of raising the share of gold reserves to 20%.

The president of the Polish central bank lamented that there was no time to write his script draft. In a video produced by the central bank on YouTube in February, Glapinski was seen basking in the sun in a vault filled with sealed boxes containing 6,000 gold bars, reciting that these bars "belong to all Polish people."

The Czech central bank is also a potential member of this "exclusive club." The central bank has about $150 billion in foreign exchange reserves, almost half of the country's GDP, which ranks among the highest in the world.

Michl's foreign exchange reserve diversification initiative includes purchasing American stocks. He faced some criticism for buying gold when prices reached historic highs this year. However, he responded that the long-term purchases were gradual to minimize the impact of price fluctuations.

With geopolitical tensions rising, buying gold has been a good choice for monetary policymakers. Goldman Sachs lists gold as one of the most important commodity trades for 2025, suggesting that gold prices may continue to rise during Trump's presidency, reaching $3,000 per ounce by next December.

Gold reaches historic highs

"Geopolitical divisions are favorable for gold, while the gradual weakening of the dollar should be a driving force for further increases," said J.Safra Sarasin in a report on November 10.

For Eastern European leaders, gold is seen as a safe haven and a political selling point, as they often need to maintain a complex balance between the West, Russia, and China. The Hungarian central bank has increased its gold reserves by more than one-tenth this year, reaching 110 tons.

The country's Prime Minister Viktor Orban is eager to be the main disruptor in the EU, having close ties with the Kremlin and Trump.

The Hungarian central bank also praises gold as a safe haven. Gold plays an important role in the history of this country.

The Hungarian Coin Museum is located in a palace owned by the central bank and features a steam locomotive made of yellow bars. The sculpture called "The Rumble" depicts central bank staff fleeing the Soviet army with a train loaded with gold reserves to prevent gold from falling into foreign hands at the end of World War II.

The influence of gold in Serbia is also significant. Like Orban, Serbian President Aleksandar Vucic, who firmly holds power, repatriated the country's stockpiles stored abroad in 2021. This year, he pledged to use "every remaining dollar" from the treasury to buy gold, "to ensure safety during difficult times."

Since taking office in 2012, Serbian central bank president Jorgovanka Tabakovic has doubled gold reserves to 48 tons. She stated that these increases were closely guided by Vucic, who provided "strategic thinking, knowledge of global geopolitical relations, and information" to support gold purchases.

"During times of global turmoil, especially amid geopolitical conflicts and high inflation, the value and importance of gold are increasing," Tabakovic said in an email response to questions. "Unfortunately, we have seen both factors at play in recent years."

Article reposted from: Jin Shi Data