The Argument for Australian Gold Reserves to Be Held Domestically

Key Takeaways

• Australia owns 80 tonnes of gold, and 99.9 per cent of it sits in London.
• The Bank of England holds the gold as custodian; Australia keeps legal ownership.
• London storage buys liquidity and lending income, not physical access at home.
• Partial repatriation would spread location risk the way reserves spread asset risk.
• Australia already has the mining, refining and logistics base to store gold locally.

For physical gold investors, one of the most important questions is not simply how much gold a country owns, but where that gold is actually held. The Reserve Bank of Australia holds 80 tonnes of gold as part of the nation’s official reserve assets (RBA, as at 30 June 2026). That amount has remained unchanged since 1997. At the end of August 2026, the RBA reported that gold was worth approximately A$16.3 billion at market prices (RBA Official Reserve Assets, August 2026). The striking fact is where most of that gold is located.

According to the RBA, 99.9 per cent of Australia’s physical gold holdings are stored in the United Kingdom at the Bank of England in London. Only a very small quantity is held at the RBA’s Sydney Holding Point, four bars in total (RBA Gold Verification Audit Report, July 2025). The RBA retains legal and beneficial ownership of the gold, while the Bank of England acts as custodian. Australia owns the gold, but almost all of it is physically located on the other side of the world.

That arrangement is explained: London is historically the world's principal wholesale gold-trading centre, and the Bank of England operates one of the world's largest gold custody facilities. The Bank says its vaults hold around 400,000 gold bars for the United Kingdom, other central banks and certain commercial customers (Bank of England). Holding Australian gold in London therefore gives the RBA direct access to an established market where large quantities of bullion can be traded, transferred and settled.

The RBA has repeatedly confirmed that the gold held at the Bank of England remains Australian property. The Bank of England holds it as bailee, meaning that custody does not transfer ownership to the British central bank. The RBA also conducts physical verification of its holdings. Its 2025 audit examined gold held at both the Bank of England and its Sydney Holding Point, and reported no discrepancies identified.

Why Physical Location Matters

For generations, the conventional approach to official gold reserves has been to place bullion in major financial centres. London, New York, Zurich and other established markets offer deep liquidity, secure vaulting infrastructure and efficient settlement systems. That model makes sense when the primary objective is to maximise the ease with which gold can be traded or used in international transactions. But physical gold has another characteristic that distinguishes it from most financial assets: it does not require an intermediary to preserve its fundamental existence. A gold bar held directly within Australia's borders is physically present within Australian jurisdiction. It is not a promise from a bank, a government or a financial institution. It is an asset that can be independently inspected, secured and, if required, moved.

For investors who own physical metals, the entire attraction of owning bullion rather than merely having exposure to the gold price is that the investor possesses an identifiable physical asset. The same principle can be applied at the sovereign level. If Australia considers gold an important national reserve asset, there is a reasonable strategic question as to whether a significant proportion of that reserve should also be physically accessible within Australia.

The Case for Repatriation

The strongest argument for repatriating at least part of Australia's official gold reserve is that diversification should apply to the location of sovereign assets as well as to their financial composition. Australia's foreign reserves include foreign currencies, Special Drawing Rights, its reserve position at the International Monetary Fund and gold. The RBA's August 2026 figures put total official reserve assets at approximately A$106.0 billion, of which gold accounted for about A$16.3 billion (RBA Official Reserve Assets, August 2026). That makes gold a meaningful component of Australia's official reserves, yet almost the entire physical gold holding is concentrated in one overseas location.

A policy of partial repatriation could therefore be viewed as another form of reserve diversification. Australia could retain some bullion in London to preserve immediate access to the international gold market while holding another portion within Australia. Such an arrangement would not require Australia to abandon the LBMA, it would simply mean that Australian sovereign bullion would have more than one physical location.

The RBA's Side of the Argument

The RBA's stated case for London rests on access, security and income. The RBA says most market participants prefer to take delivery in London, that the Bank of England is secure and cost-effective, and that its bars sit in an allocated account with serial numbers attributable to the RBA. Gold lending runs through that account, and the RBA earned A$0.5 million from lending in 2025/26 (RBA). Bullion in an Australian vault would need its own security arrangements and would be harder to lend or settle against.

Sovereign Risk Is About More Than Ownership

The issue becomes more relevant when the global financial system is experiencing periods of geopolitical tension, financial fragmentation and growing concern about sovereign debt.

Gold is unusual because it is simultaneously a commodity, a monetary asset and a reserve asset. Unlike a government bond, it does not represent a promise by another government to make future payments. The Bank of England itself says that storing gold in its vaults gives central banks easy access to the London market, because ownership can change in its records without bars moving. But liquidity and physical sovereignty are not identical objectives. A country can maintain access to London's gold market while also maintaining a domestic reserve of bullion.

For Australia, if our gold is considered sufficiently important to hold as a national reserve asset, why should almost all of it physically reside outside Australia's borders?

Australia Is a Major Gold-Producing Nation

Australia is one of the world's major gold-producing countries, with a sophisticated mining industry, established refining capacity and a long history of gold production. We are not simply a consumer or importer of gold, we are one of the world's major producers of the metal.

That creates a natural strategic case for maintaining substantial domestic bullion infrastructure. Australia already has the mining, refining, financial and logistical capabilities necessary to support a significant domestic gold reserve. The question is about whether doing so would provide enough strategic benefit to justify the cost of changing the existing arrangement.

Bringing Some Gold Home

For physical bullion investors, the argument for repatriation is ultimately about optionality. Australia could continue to maintain a substantial portion of its gold in London for liquidity and market access while bringing a meaningful portion of the reserve onto Australian soil.

Such a policy would provide two forms of access: immediate access to the London bullion market and direct physical access to gold stored within Australian jurisdiction, and would at least provide an additional layer of sovereign control. It is the same choice Ainslie Bullion clients make when they buy bars and coins rather than paper claims.

The Broader Gold Story

Central banks have continued to treat gold as a strategic reserve asset, while governments face rising debt burdens, persistent fiscal deficits and a more fragmented geopolitical environment. As the international financial system becomes more complex, Australia has an opportunity to reconsider the balance between market liquidity and physical control. For a nation that produces gold, owns billions of dollars of bullion and relies on that bullion as part of its official reserves, the question is no longer simply where the gold can be traded most efficiently.

It is also worth asking where Australia wants its most tangible monetary asset to be when it matters most. With almost 100 per cent of the nation's physical gold held overseas, the case for at least considering a more geographically diversified reserve deserves serious attention.

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This article is general information only and does not constitute financial advice. Past performance is not indicative of future results. Always conduct your own research or consult a licensed financial adviser before making investment decisions.