Europe is in political turmoil now. The migrant crisis, nations wanting to leave the European Union (EU), economies weakening, and debt levels surging. It is a bad time to reside on the continent.
Is this why yet another central bank is repatriating its gold?
Last week, the Hungarian National Bank (MNB) announced that it is ordering the return of Hungary’s gold reserves. For years, 100,000 ounces, or three tons, of the yellow metal were held in London.
Hungary now wants its $130 million worth of gold back within its borders.
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MNB has been holding gold reserves since its foundation in 1924. Towards the end of World War II, it had been transported to Austria on the famous Gold Train, captured by the Americans, then repatriated in full in 1946.
The highest amount Hungary has ever had was around 65-70 tons at the beginning of the 70s. At the end of the 1980s, however, a decision was made to decrease gold reserves to the lowest possible level and rather to invest in sovereign debts, which as a consequence of the collapse of the Bretton Woods system are considered safer, more liquid and potentially of higher yields. At the beginning of 2010 this tendency changed again and central banks started to accumulate gold as a potential response to the financial crisis.
The Largest gold reserves in the world belong to the US and Germany, while in comparison to other Central-European countries Hungary has one of the tiniest amounts of the precious metal; for instance, Romania and Poland both have 103 tons, and Serbia has 13 tons. Since 1992, Hungary’s activity has remained steady, as the MNB hasn’t bought or sold any of its gold reserves.
Many nations, particularly since the economic collapse, have decided to repatriate their gold.
Last summer, for instance, the German central bank (Bundesbank) announced it was repatriating 50,000 28-pound gold bars, or $28 billion, from the United States and France.
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