29 Oct 2018
On October 16, Hungary’s Central Bank, the Magyar Nemzeti Bank (MNB), announced that it had raised its gold reserves from 3.1 tonnes to 31.5 tonnes – with it being physically delivered to Hungary in the first half of October.
Seeing as the recent gold purchases were the first substantial purchases in more than a decade, the announcement was deemed surprising. Back in the early 1970s, Hungarian gold reserves peaked at 65-70 tonnes – however, at the end of the 1980s, a decision was made to reduce the reserves. This lowered the amount to 10 tonnes and later dropped it to the current three tonnes.
In March, the Central Bank transferred back 100,000 ounces of gold from London, saying: “It has become an important consideration to keep gold reserves at a location that ensures safety in case of geopolitical crises.”
Although the MNB did not reveal how much it had paid for the 2,300 bars, one ounce of gold was quoted between $1,190 and $1,230 on the global market earlier in October, when the MNB bought gold for the first time since 1986.
According to the MNB’s statement, possession of gold in Hungary is in line with international trends, supports financial stability and can increasingly strengthen market confidence in the country.
At current prices, the value of the gold reserves stands at about $1.24bn. The share of gold reserves in the Central Bank’s international reserves has risen to 4.4%, which, as the MNB noted, is in line with the average for non-eurozone countries in Central and Eastern Europe. Romania’s shares are higher, with around 10% of its reserves being held in gold, and in Slovakia the share surpasses 25%, according to bne IntelliNews.
In the region, Poland and Romania’s Central Banks have the largest stock of gold – with 112 tonnes and 103 tonnes respectively. On an international scale, the US ranks first with 8,000 tonnes.