CaliToday (01/11/2025): The global central bank gold-buying spree is showing no signs of slowing, as South Korea and Madagascar have become the latest nations to signal their intent to increase their national holdings of the precious metal.
This move, coming at a time of record-high gold prices (trading above $4,000/oz), highlights a growing, global "de-risking" trend. From G20 powerhouses to developing nations, central banks are accelerating their diversification away from traditional fiat currency reserves, particularly the U.S. dollar, in favor of tangible, neutral assets.
South Korea: A Strategic Hedge
The signal from South Korea, a top-tier economy and a key U.S. ally, is particularly noteworthy. The Bank of Korea (BOK) holds vast foreign exchange reserves (well over $400 billion), but its gold holdings have remained largely static for over a decade, making it significantly "underweight" in gold compared to its G20 peers.
This new signal suggests a strategic pivot. As a nation heavily reliant on global trade, South Korea's economy is uniquely exposed to the fluctuations of both the U.S. dollar (its key security partner) and the Chinese yuan (its largest trade partner).
By indicating a move to boost gold reserves, the BOK is seeking a powerful hedge against:
U.S. Dollar Volatility: Amidst rising U.S. import tariffs and a shifting Fed policy.
Regional Geopolitical Risk: Tensions in the Asia-Pacific region.
Counterparty Risk: A desire to hold a "risk-free" asset that is not the liability of another nation.
Madagascar: A Foundational Asset
In sharp contrast, the signal from Madagascar highlights the sheer breadth of this global trend.
For a developing, resource-rich African nation, boosting gold reserves is less about diversifying a multi-billion dollar FX portfolio and more about securing a stable, foundational asset. Gold provides a fundamental hedge against domestic inflation and the notorious volatility of the commodity export cycle.
This move aligns Madagascar with other developing nations that view physical gold as the ultimate store of value and a crucial element of national economic sovereignty.
The "New Era" of Central Bank Buying
These two disparate nations are joining a well-established global movement. The G7's decision to freeze Russia's foreign reserves has fundamentally altered the central banking playbook, demonstrating that fiat reserves held abroad are not sacrosanct assets but "claims" subject to political risk.
In response, central banks from China and India to Poland and Turkey have been on a buying and repatriation spree at a historic pace. The unspoken motto, as one analyst recently noted, has become: "If you don't physically hold it, you don't own it."
The fact that both developed and developing nations are now openly signaling their intent to buy even with gold prices near all-time highs demonstrates that this is a long-term, strategic shift, not a short-term trade. This persistent, non-price-sensitive demand from central banks is a primary reason why major financial institutions are forecasting gold prices to climb even higher into 2026.