The Central Bank of Poland (NBP) became the largest central bank gold buyer in the second quarter. According to Euronews, the country is preparing for the worst-case scenario.

The Central Bank of Poland included 19 tons of gold in its reserves in the second quarter. According to a report by Euronews, this buying spree has increased the country's total gold reserves to 377.4 tons.

Poland will become the second largest buyer of gold in 2023, purchasing an additional 130 tons of gold last year. Currently, gold accounts for approximately 14.7% of Poland's total reserves.

NBP President Adam Glapi ń ski recently stated that the Central Bank of Poland will continue to increase its gold reserves, with the goal of holding at least 20% of its reserves in the form of gold.

This makes Poland a more credible country, we have a higher position in all ratings, we are a very serious partner, and we will continue to buy gold. Our dream is to reach 20%

In 2021, Glapi ń ski announced plans to expand the country's gold reserves by 100 tons. The Central Bank of Poland achieved this goal in September 2023 and continues to purchase.

When he announced the initial plan to expand his gold reserves, Glapi ń ski stated that holding gold was for financial security and stability considerations.

Gold will maintain its value even in the event of a power outage in the global financial system and the destruction of traditional electronic accounting records. Of course, we do not believe this will happen. But as the saying goes - be prepared.

The Central Bank of Poland must be prepared for the worst-case scenario. That's why we consider gold particularly important in our foreign exchange management process

Glapi ń ski also pointed out that "gold has no credit risk and will not be devalued by any country's economic policies. In addition, it is very durable and almost indestructible

In 2021, Glapi ń ski also hinted that concerns about the stability of the US dollar were one of the factors determining the increase in the country's gold reserves.

The correlation between gold and major asset classes, especially the dominant position of the US dollar in the NBP reserve portfolio, is relatively low, which means that including gold in reserves can reduce financial risks in the investment process

According to Euronews, the Central Bank of Poland is currently purchasing gold to "diversify its reserves and protect against macroeconomic uncertainty and geopolitical shocks

Therefore, the relatively stable performance of gold during times of crisis and its anti inflation properties were the factors driving the Polish Central Bank to choose this metal. It is also an effective way to diversify the Polish Central Bank's investment portfolio and is considered highly liquid with no default risk

Euronews also pointed out that gold provides a hedge against the weaponization of the US dollar, as this yellow metal is "less affected by policy risks and can serve as valuable collateral and policy tools

In some cases, gold can also help countries facing international sanctions, such as Russia, avoid these sanctions. This in turn incentivizes these countries to purchase more gold and use it to maintain liquidity in case other financing channels are blocked or difficult to obtain

After the epidemic and the Russia-Ukraine conflict, the demand for gold in Poland surged. Euronews said, "Investors are also worried that the Russia-Ukraine conflict may spread to Poland, and hope to prepare for this situation by increasing gold investment."

Over the past three years, Poland's physical gold market has consistently held a leading position in the European market.

The Central Bank of Poland is one of the many central banks that has increased its gold reserves. Global central banks net purchased 483 tons of gold in the first six months of the year, a 5% increase from the record of 460 tons in the first half of 2023.

Last year, the gold purchases by central banks of various countries only increased by 45 tons compared to several decades in 2022.

According to the World Gold Council, the total net gold purchases by central banks of various countries will reach 1037 tons in 2023. This is the second consecutive year that central banks of various countries have increased their reserves by over 1000 tons.

The gold purchases by central banks of various countries in 2023 are based on the records of the previous year. The total gold purchases by central banks of various countries in 2022 were 1136 tons, the highest level since 1950, including the suspension of US dollar convertible gold in 1971. China is the largest buyer of gold in 2023.