Singapore Adds To Its Gold Pile For The First Time In Decades

Singapore increased its gold reserves by about 20% earlier this year in a largely under-the-radar move that saw holdings expand for the first time in decades.

The purchases, which totalled about 26.3 tons, took place over May and June, according to data from the Monetary Authority of Singapore's (MAS) International Reserves and Foreign Currency Liquidity reports. The move came to wider prominence when it was picked up in the International Monetary Fund's monthly update, which shows it was the first increase in figures dating back to 2000.

Here’s something interesting in the latest IMF stats: The Monetary Authority of Singapore added 26t of #gold to its reserves over May and June 2021. This is its first gold purchase since at least 2000, and another instance of a developed market CB buying (along with Ireland). pic.twitter.com/UeHmAbxRt9

— Krishan Gopaul (@KrishanGopaul) November 25, 2021

“The change in gold holdings is a result of the continuous and ongoing efforts by MAS to ensure that the official foreign reserves (OFR) portfolio remains well-diversified and resilient through economic and market conditions,” an MAS spokesman said. “The change is a modest step in relation to the overall size of the OFR portfolio.”

MAS did not disclose how much it paid for the bullion but at today's price, that would be about US$1.5 billion (S$2 billion). Its total gold holdings amounted to about 154 tons, MAS data showed. 

Singapore's central bank may have preferred to not draw attention to the amount of gold in its international reserves as this might encourage foreign-exchange markets to view the purchase as a move that strengthens the Republic's reserve position and potentially put upward pressure on its exchange rate, according to Mr Ronan Manly, a precious metals analyst.

After sitting on the sidelines for much of last year, central bank appetite for gold has resumed, in part due to inflationary pressures globally along with disruptions in the energy market, FXStreet said in a report on Nov 11. Gold is seen as a long-term hedge against inflation risk.

The central banks of Serbia, Hungary, Thailand, France, Germany and Brazil added gold to their reserves in recent months, said the report. Russia, which built up its gold holdings to well over 20 per cent of its reserves, is now ranked fifth in the world for the size of its gold reserves, the report added.

The heavy gold accumulation by central banks points to an ongoing shift away from the US Federal Reserve Note “dollar” as the global reserve currency of choice and points to the ongoing shift in global economic dynamics, said the FXStreet report.