Central Banks Hiding Vast Majority of Gold Buys?

Central banks and major institutions appear to be looking at the same global picture as everyone else, but they’re not playing by the same rules. Publicly, we hear that central banks are adding modest amounts of gold, while strategists at global banks talk up the prospect of a strong year-end rally in equities. Beneath the surface, however, recent data points to a very different story. Actual official gold buying may be far larger than the market realises, even as houses like HSBC urge investors to stay risk-on into the final stretch of the year.

The first issue is how little visibility we truly have on central bank gold flows. As the Financial Post notes, reporting on official purchases is voluntary and often incomplete. Central banks have every incentive to keep their activity quiet — they don’t want to be front-run, and they prefer to accumulate metal without pushing prices higher.

Estimates cited in the article suggest only about a quarter of central bank buying appears in official statistics. The World Gold Council has previously indicated that only around one-third of purchases show up publicly, reinforcing the picture of substantial hidden flows.

Unlike oil, where satellite imagery and shipping data give traders a reasonable sense of global movements, physical gold can be shifted and stored with far greater discretion. Analysts are left watching order patterns in the 400 oz bar market and attempting to deduce who is taking delivery.

China is the most obvious suspect. Officially, Beijing reports around two tonnes of buying per month this year. Yet Société Générale suggests Chinese purchases could reach 250 tonnes for the full year, implying that the published figures may represent only a small portion of the real total.

The same note argues Chinese reserves may already be roughly double what is acknowledged. If even partly accurate, the true scale of official demand is being significantly understated. The article also points out that someone has clearly been acquiring meaningful quantities of gold this year — and it is reasonable to assume it’s the same major trading partner now facing both recent and proposed US tariffs.

If only a fraction of central bank demand is visible, the physical market is operating with a constant, largely unseen bid that spot traders and chart-watchers simply can’t observe. This also helps explain why gold has often held firm during periods of US dollar strength or rising bond yields. It further suggests that any shift toward greater transparency, or even one major central bank updating its reported holdings, could trigger a rapid repricing.