Are We Holding Gold?

In January 2025, Australia exported approximately AU$4.6 billion worth of gold to the United States, a record-breaking Australian Bureau of Statistics figure since tracking began in 1995. This export volume equates to roughly 47 tonnes of gold, assuming an average gold price of around US$2,600/oz in January 2025. A significant export considering Australia’s total annual gold production is projected to reach 390 tonnes in 2025, with exports historically directed to over 55 countries, though Hong Kong often leads at AU$11.2 billion annually. 

The export reflects the strong global demand for gold as a Tier 1 asset, driven by a myriad of macroeconomic and geopolitical indicators, namely new Basel III regulations, fears of Trump tariffs, and the fact the Bank of England is revealing itself to not hold the physical gold it claimed it did. This begs the question, why are we sending Australian gold overseas, especially when foreign central banks are making moves to acquire more? 

The Reserve Bank of Australia (RBA) reportedly holds a static 80 tonnes of gold in its reserves, unchanged since 1997 when it sold 167 tonnes at AU$450/oz, a decision that cost the nation billions in potential gains as gold prices soared to over AU$2,000/oz in recent years. Compared to the top five central banks by gold holdings—the U.S. (8,133 tonnes), Germany (3,351 tonnes), Italy (2,452 tonnes), France (2,437 tonnes), and Russia (2,336 tonnes), totalling 18,709 tonnes—Australia’s 80 tonnes is a mere 0.43% of their combined reserves. Globally, central bank gold reserves stand at 36,699 tonnes (end of 2023), meaning Australia’s share is just 0.22%. This pales in comparison to active buyers like China (2,264 tonnes, up 34 tonnes in 2024) or Poland (448 tonnes, up 90 tonnes in 2024), who rank 6th and 19th, respectively.

Australia ranks near the bottom among central banks for net gold purchases since 2021, effectively at zero, as it has neither bought nor repatriated significant amounts in over two decades. Unlike India, which repatriated 100 tonnes from the UK in 2024, or Germany, which completed a 674-tonne repatriation by 2017, Australia keeps 99.9% of its gold at the Bank of England, with only four bars in Sydney. Globally, central banks have been net buyers since 2010, adding over 7,800 tonnes, with 1,037 tonnes purchased in 2023 alone. Emerging markets like China, Turkey (585 tonnes), and India (841 tonnes) lead this trend, driven by de-dollarisation, inflation hedging, and geopolitical risk mitigation. Australia, however, stands apart, with the RBA viewing gold as less critical for economic stability, citing the nation’s stable economic climate and lack of crises necessitating gold as a hedge. Given the current crisis with the hundreds of Bank of England’s customers standing for delivery with a 4- 8 week wait time, it is unbelievable that the RBA could still hold this outdated view given the current Basel III regulation implementation and watching gold tonnes being repatriated and accumulated by some of the largest central banks in the world.

Why isn’t Australia buying?

The RBA’s stance reflects a historical shift post-1997, when it pivoted to foreign currency reserves (now at AU$96 billion in January 2025) over gold, which it lends out (up to 80 tonnes at times) to earn income rather than accumulate. Unlike Poland, which is aiming for 20% gold in reserves (currently 18%), or China at 5%, Australia’s gold is just 6% of its total reserves, a figure inflated by price appreciation rather than volume growth. The RBA argues gold hasn’t mitigated past economic crises here, and with robust exports—AU$4.6 billion to the U.S. alone in January—gold production (second globally at 390 tonnes annually) bolsters the economy without needing to stockpile it domestically.

In the current gold market, Australia is positioned as a key supplier rather than a country with a large reserve. Gold’s 38% surge in AUD terms in 2024, fuelled by a 10% weaker AUD, geopolitical risks, and central bank buying (483 tonnes in H1 2024), underscores its value. Yet, Australia’s inaction and unwillingness to keep our gold on home soil means it misses out on leveraging the safety, liquidity and diversification benefits of holding gold. With the AUD under pressure and global physical gold reserves growing, Australia’s static 80 tonnes that has not been added to for years – signals an over-reliance on export revenue—70% of its gold output (218 tonnes) comes from Western Australia—leaving it vulnerable if demand shifts or production falters. Conversely, Australia’s export strength - January’s AU$4.6 billion move - reinforces its role as a global gold powerhouse with an obvious prioritisation on market flow over reserve accumulation, a potentially shortsighted stance as the rest of the global market accumulates amid Basel III regulations and the current geopolitical uncertainties.