Saudi Central Bank Caught Secretly Buying 160 Tonnes of Gold in Switzerland
Saudi Central Bank Caught Secretly Buying 160 Tonnes of Gold in Switzerland
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Published Sep 12, 2024
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Money Metals Exchange
By
Jan Nieuwenhuijs
The Saudis have joined other Asian countries in ditching their long-term sensitivity to the gold price. Evidence suggests the Saudi central bank has been covertly buying 160 tonnes of gold in Switzerland since early 2022, contributing to the current gold bull market.
Although the Saudis played a key role in the birth of the global dollar standard in the early 1970s, this time around they might even become a lynchpin for its dissolution.
Introduction
Until recently, Saudi Arabia’s gold demand would decline when the gold price went up and strengthen when the price went south. This dampened volatility in the gold market, which for many decades was ruled by the West.
Ever since the West immobilized Russia’s dollar assets in February 2022, those with diplomatic disagreements with the West are increasingly exchanging their dollars for physical gold. Saudi Arabia is the latest country—after
China and
Thailand—of which I have found cross-border trade statistics showing it has shifted from being price sensitive to a price driver.
Saudi Arabia Net Gold Import
As the chart above reveals, when the gold price went up (2016, 2017, 2019, and 2020), the Saudis cut back imports or became net exporters. Since 2022, however, the gold price has escalated, yet Saudi Arabia continued to import gold.
During the entire rally from late 2022 until present, the Saudis have been a constant net importer which has boosted the gold price. The icing on the cake is that part of the flow into Saudi Arabia, the gold coming from Switzerland, actually goes to the Saudi central bank, aka the Saudi Arabian Monetary Authority (SAMA).