In March, Hungary began repatriating its gold from London vaults. Today, we learn Hungary has been mad stacking all year long. Here are the details…
Editor’s Note: Use this link for our two previous articles on Hungary’s gold repatriation from London storage.
Press Release from the Hungarian National Bank as translated by Google
The Hungarian National Bank increased the gold reserves of Hungary by ten times, thus raising the amount of gold stock to the historic level of 70 years ago.
Budapest, October 16, 2018 – In view of the long-term national and economic strategy goals, the Monetary Council of the National Bank of Hungary has decided to increase the gold reserves of the country. As a result, in October 2018 the precious metal stock ranges from the previous 3.1 to 31.5 tons increased tenfold. Since 1986, the Hungarian National Bank has been buying gold for the first time since 1986. After the substantial increase in the stock of gold reserves in physical form, its repatriation has already taken place.
The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary. In keeping with the historical role of gold, it remains one of the safest instruments in the world, which, even under normal market conditions, exposes its stability and confidence-building function. With a current stock of about $ 1.24 billion in gold reserves of 31.5 tonnes, it reached the historical level that was available to our country at the time of the “golden train”. Within the international reserve, the share of gold reserves rose to 4.4 per cent, which corresponds to the average of non-euro area Central and Eastern European countries.
The role of gold reserves in the nation and economy strategy is becoming more and more appreciated while both the possession and the increase of the precious metals nationwide appear to be a decisive international trend. In this process, according to the strategic decision of the Hungarian National Bank, the domestic gold reserves rose to 31.5 tons. The raising of the gold reserve and the returning of it in physical form took place in the first half of October 2018.
Increasing and repatriating gold reserves can be considered a significant step in economic history. Since the founding of the Hungarian National Bank in 1924, gold reserves have been maintained, but the stock of the population has fluctuated considerably over the decades, depending on the purpose of keeping. The amount of gold reserve is in the II. World War II, and at the end of the day, he pulled out some 30 tons of gold balloons and gold coins on the MNB’s legendary “gold train” in the Spital am Pyhrn in Austria. This amount was fully returned to the country after the war, while providing cover for the introduction of the new currency of the country, the forint, thus supporting financial consolidation and the stabilization of the post-war Hungarian economy. At the end of the eighties, Hungary’s gold reserves, driven by short-term investment objectives, fluctuated between 40 and 50 tons and then, at the time of the change of regime (between 1989 and 1992), the ruling central bank executives decided to reduce to a minimum level of about 3.1 tons by the end of September 2018. level. With the decision of the MNB today, the stock of 31.5 tonnes of gold reserves reached the level of the stabilization period of 1946 by October 2018.
Gold reserves are held for short-term investment and / or long-term stability purposes by country central banks. The current decision of the Hungarian National Bank was led by the stability goals, and there are no investment concerns behind the holding of gold reserves. Gold also has a confidence-building effect in the normal period, that is, it can play a role in stabilizing and defending it not only in the extreme market environment, structural changes in the international financial system or in deeper geopolitical crises. Gold is still considered to be one of the safest assets that can be attributed to unique properties such as the finite supply of precious metal, which is not linked to credit and counterparty risk, since gold is not a claim against a specific partner or country.
Over the past few years, more and more countries have decided to continue to play a decisive role in the use of precious metals, which serve as traditional reserve assets, and raise their gold reserves. This was followed by Poland, in spite of the fact that it had one of the highest gold reserves in the region. When raising domestic gold reserves to 31.5 tons, the MNB also paid attention to the international and regional role played by precious metals in central bank reserves. As a result, the Hungarian gold reserve increased to 4.4 percent in the Central Eastern European region averaging the entire international reserve ratio. This move from the end of the international rankings to the middle of the way has progressed, both in terms of size and proportion of gold reserves.
On the occasion of the announcement, the National Bank of Hungary also published a “golden book”, which gives an insight into decisive periods such as centuries of golden coins, the rescue of our national treasures by gold trains, or the recent homecoming of the country’s gold reserves.