(Bloomberg) — Earlier this year, the head of the Czech Republic’s central bank flew to London to take a look at a swelling pile of gold bars stored in the Bank of England’s concrete-encased vaults beneath Threadneedle Street.
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Ales Michl’s mission to inspect the precious metal held for the Czech National Bank was part of the governor’s stated ambition to double the country’s stockpile to 100 tons in the next three years. It has grown fivefold since he took office in 2022, with the aim of diversifying the bank’s reserves.
“We need to reduce volatility,” Michl, who became animated when questioned about the subject, told Bloomberg Television earlier this month. “And for that we need an asset that has no correlation to equities, and that asset is gold.”
The Czech policymaker is not the only one accelerating the purchase of precious metals. Peers from Warsaw to Belgrade are joining the gold rush as a way to diversify investments and bet on future price rises, making Eastern Europe one of the metal’s biggest buyers and fueling the gold rally.
Central banks around the world are stockpiling their gold arsenals as a shield against external shocks, such as future trade wars brought on by Donald Trump’s second presidency and geopolitical tensions in Ukraine and the Middle East. But the Eastern European monetary guardians have made a special show of replenishing their gold piles.
In addition to Michl’s trip to London, his counterpart in Warsaw has written a film script about the history of Polish gold. Serbian authorities brought home their supplies stored abroad to keep Belgrade safer – and to help reduce storage costs.
The pursuit of a sense of security is a powerful motif in a region ravaged by Europe’s past wars – and now juxtaposed with the continent’s deadliest conflict since World War II.
‘An exclusive club’
Poland, which shares a border with Ukraine and is a staunch supporter of Kiev’s war aims, was the world’s biggest buyer of gold in the second quarter, according to the latest data from the World Gold Council.
Polish Central Bank Governor Adam Glapinski said gold and hard currency reserves are crucial to protect the economy from catastrophic events. He increased his bullion holdings to about 420 tons as of September, about half the stock of India or Japan.
“We are joining the exclusive club of the largest gold owners in the world,” Glapinski exulted at a press conference last month, reinforcing his goal of increasing gold’s share to 20% of all reserves.
The head of the National Bank of Poland regretted that he did not have time to work on his draft script. A YouTube video shot by the central bank in February shows Glapinski basking in a vault full of sealed boxes containing 6,000 gold bars, saying the stash “belongs to all Polish people.”
The Czechs are also aspiring club members. The central bank in Prague has about $150 billion in foreign reserves – almost half of gross domestic product – one of the largest in the world in proportion.
Michl, whose diversification drive includes buying US stocks, has drawn some criticism for his purchase of gold as it hit a market record this year. Monetary officials have pushed back, insisting that the long-term purchases are done gradually, reducing the impact of price volatility.
With the geopolitical winds blowing, gold purchases have been a good choice for monetary policy makers. Goldman Sachs Group Inc. called the metal one of the top commodity trades for 2025 and said prices could rise during Trump’s presidency and reach $3,000 an ounce by December next year.
“Geopolitical fragmentation favors gold, while the gradual weakening of the dollar should be a further tailwind,” Bank J. Safra Sarasin said in a Nov. 10 report.
For Eastern European leaders, gold is seen as a safe haven – and a political selling point – as they often conduct complex balancing acts between the West, Russia and China. The Hungarian central bank has increased its gold reserves by more than a tenth this year to 110 tons.
The country’s Prime Minister, Viktor Orban, relishes being the EU’s main disruptor, thanks to his ties to the Kremlin and Trump.
Budapest’s central bank has also praised the metal as a safe haven. But gold plays a role in the country’s historical identity.
The Money Museum, located in one of the palaces of the Hungarian National Bank, features a steam locomotive made of yellow beams. The sculpture, called ‘The Rumble’, depicts central bank staff who fled the Soviet army at the end of World War II in a train full of gold reserves to avoid falling into foreign hands.
The associations are no less important in Serbia, where President Aleksandar Vucic, who like Orban has a firm grip on power, had the country’s stock repatriated outside the country in 2021. This year he promised to buy precious metal with “any surplus money.” that is left in the public treasury ‘to be safe in difficult times’.
Serbia’s central bank governor Jorgovanka Tabakovic has overseen a tripling of gold reserves to 48 tons since taking office in 2012. The accumulation was handled closely with Vucic, who provided the “strategic thinking, knowledge of global geopolitical relations and information” to support the gold purchases, she said.
“Gold gains value and importance in times of global turbulence, especially in geopolitical conflicts and periods of high inflation,” Tabakovic said in response to emailed questions. “Unfortunately, in recent years we have seen that both factors play a role.”
–With help from Krystof Chamonikolas, Andras Gergely, Andrea Dudik, Francine Lacqua and Robert Brand.
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